Commons Sitting of 2 December 1964

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  EDINBURGH CORPORATION ORDER CONFIRMATION BILL
  Considered; to be read the Third time Tomorrow.
ORAL ANSWERS TO QUESTIONS
  AGRICULTURE, FISHERIES AND FOOD

    Seals
    Mr. Haleasked the Minister of Agriculture, Fisheries and Food whether he will make a statement of future Government policy for the preservation of the seal population and protection from extermination with special reference to the Fame Islands.
    Mr. Wallasked the Minister of Agriculture, Fisheries and Food if he will make a statement about the culling of Farne Island seals and the shooting of seals in the Wash area.
    The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart): I have nothing to add to the reply made to the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) on 26th November last about grey seals.
    Common seals are not protected and my Department has no power to intervene in regard to those that were shot by private individuals in the Wash area. I will, however, look into the matter further and see whether there is anything that needs be done.
    Mr. Halle: Can my right hon. Friend confirm or deny the report that it has been the practice, and was intended to be the immediate practice here, to send
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    people with humane killers, or alleged humane killers, to slaughter young female three-week-old seals up to a certain number which were being driven or moving across the shore to the sea? If that is the practice, will the Minister reconsider it? If the problem is overpopulation, will he consider the provision of a birth control pill for male Protestant seals? As an alternative, would he care to discuss the whole matter with his noble Friend the Great Seal?
    Mr. Peart: I hope that my hon. Friend, who I see is wearing leather shoes, will realise the implications of his question. This has been a difficult operation. I understand how it was carried on previously, but I will carefully watch it. The Nature Conservancy, which advises on wild life population, supports this action.
    Mr. Wall: While accepting the need for controlling the seal population, may I ask the right hon. Gentleman whether he will consider doing this as quickly and as humanely as possible? With regard to the common seal, is the Minister aware that there have been reports of wounded seals being washed up in the Wash area? Will he consider whether there is a case for prosecution for unnecessary cruelty to these animals?
    Mr. Peart: Certainly, on the first part of the hon. Gentleman's question, and, on the second part, I shall look into the matter.
    Mr. Blenkinsop: Will the right hon. Gentleman try to make sure that effective research is continued into this matter, as the scientific evidence is very conflicting on the whole issue?
    Mr. Peart: I am anxious to do that, and as a former member of the Nature Conservancy I appreciate what my hon. Friend said.
    Mr. Grimond: Is the Minister aware that this is a practice which causes concern in Scotland as well as in England? Will he ensure that the number of seals to be killed is based on better evidence than has so far been produced? The evidence that has so far been produced is largely from stake netters on salmon rivers, and is to some extent suspect. But, in so far as it has to be done, is the Minister satisfied that there is proper

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    inspection so that the numbers killed are observed, and will he ensure, as far as possible, that when it must be done local people who can make use of the seal skins are employed on this job?
    Mr. Peart: That is a matter for the Secretary of State for Scotland, but I will consult my right hon. Friend.

    Import Charges
    Mr. Wingfield Digbyasked the Minister of Agriculture, Fisheries and Food whether he will give an assurance that the cost to agriculture of the 15 per cent. surcharge will be fully taken into account in the next Price Review.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. John Mackie): The purpose of the import charge is to reduce the volume of imports. Nevertheless, any increased costs will be taken fully into account at the next Price Review, along with all other relevant circumstances.
    Mr. Digby: Does that mean that there will be full recoupment? Is the hon. Gentleman aware that since I tabled this Question there have been heavy additional charges for farmers in the shape of the Government's 7 per cent. Bank Rate, so that there really is something of a problem here for farm incomes?
    Mr. Mackie: My right hon. Friend will answer a later Question on the 7 per cent. Bank Rate, but, as I said, everything will be taken into account when the Review discussions take place.
    Mr. Prior: Is the hon. Gentleman aware that in a reply given by his right hon. Friend last week he said that raw materials, and particularly fertilisers, would not be affected by the surcharge? A lot of small fertiliser producers have to import some of their raw materials, and these are affected by the surcharge. If it is the Government's intention to keep the smaller producers of fertilisers in operation, will the Minister see whether the surcharge can be reduced on these commodities?
    Mr. Mackie: If they come into the question of increased costs, account will be taken of them.

    County Council Smallholdings
    Mr. Wingfield Digbyasked the Minister of Agriculture, Fisheries and Food when he expects to receive the report of the Committee on County Council Smallholdings.
    Mr. Peart: I would refer the hon. Member to the reply given to the hon. Member for Harwich (Mr. Ridsdale) on 25th November.
    Mr. Digby: Can the right hon. Gentleman say in what month this report will be published? Is he aware that farmers' sons are experiencing increasing difficulty finding holdings of their own? What is the Government's policy to be on this matter?
    Mr. Peart: I agree that there is a problem, but the Committee was set up by my predecessor and I am anxious to see that it expedites its report. As soon as the report is ready I will make an announcement.
    Mr. Ridsdale: Is the right hon. Gentleman aware that the increase in the stamp, and in the petrol duty, and the increase in what these small farmers will have to pay as a result of the Bank Rate, is placing a heavy burden on them. Will he take urgent action to help them in this respect?
    Mr. Peart: The hon. Member knows that his supplementary question has nothing whatever to do with the main Question.

    Hill Farmers (Grants and Subsidies)
    Mr. Ensorasked the Minister of Agriculture, Fisheries and Food if he will review the system of grants and subsidies to hill farmers with a view to rationalisation of the entire system.
    Mr. Peart: Yes, Sir. My hon. Friend the Parliamentary Secretary announced on 10th November that such a review is to be carried out as a matter of urgency and he is already in touch with representatives of the interests concerned.
    Mr. Ensor: Can the right hon. Gentleman tell the House when he is likely to meet the representatives of the interests concerned?
    Mr. Peart: Yes. As a first step, my Parliamentary Secretary will be meeting

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    the Hill Farming Advisory Committee next week.
    Mr. Manuel: Will my right hon. Friend take cognisance of the fact that the real complaints which are reaching Members of Parliament are coming from the owners of hill dairy farms? Before the next Price Review, will he consider the possibility of their attaining parity with their neighbours in lowland areas?
    Mr. Peart: During the review period I will always take into account any factor affecting their position.

    Cereal Marketing
    Mr. Ensorasked the Minister of Agriculture, Fisheries and Food what plans he has for improving the system of cereal marketing.
    Mr. Peart: As will be seen from the Order Paper, I have given notice of presentation for later today of the Cereals Marketing Bill. This is designed to give effect to the agreement reached with the farming and trade interests in September on a plan to set up a marketing organisation for home-grown cereals.
    Mr. Ensor: Can the right hon. Gentleman tell the House when these arrangements are likely to come into force?
    Mr. Peart: I hope that after the relevant legislation has gone through the House the authority can be set up, ready for the next harvest, which will be in July, 1965.
    Mr. George Y. Mackie: Can the Minister tell us when the plans for cereal import boards, as set out in the Labour Party manifesto, are coming forward?
    Mr. Peart: That has nothing to do with the Question. At this stage I am anxious to ensure that an agreed measure between the trade and the industry which will create orderly marketing for home-grown grain proceeds quickly and effectively. For this reason it is right and proper that a Bill of the kind to which I have referred should be presented during this Session.
    Mr. Soamesasked the Minister of Agriculture, Fisheries and Food, what decisions he has now reached on the creation of a producer marketing board for cereals and a cereals commodity commission.
    Mr. Peart: The responsibility for promoting a producer marketing scheme for cereals under the Agricultural Marketing Act, 1958, rests with the producer interests. I have had no approach from them but, as the right hon. Member is aware, they were parties with the trade interests to the agreement reached in September on a plan to set up a marketing organisation for home-grown cereals. The Government are satisfied that this could make an effective contribution towards improved marketing arrangements and, as I have said earlier today, it will be seen from the Order Paper that I have given notice of presentation for later today of the Cereals Marketing Bill which is designed to give effect to it.
    Mr. Soames: The right hon. Gentleman will be aware that during the election and before the election his party were constantly saying that they intended to set up a producer marketing board for cereals and a cereals commodity commission. Are we now to understand that he has jettisoned these doctrinaire ideas and is settling for the reasoned arrangement made by the last Government in consultation with all the interests concerned?
    Mr. Peart: The right hon. Gentleman really must be his age occasionally. I hope that he will be much more responsible as shadow Minister of Agriculture. [HON. MEMBERS: "Answer."] I shall answer the question. The right hon. Gentleman knows full well—Interruptionl.]—I am trying to answer the question—behave yourselves. Mr. Speaker, may I answer the question?
    Mr. Speaker: It is a good idea.
    Mr. Peart: We are anxious to bring in this Bill which will give improved marketing, and we think that it is a right step to take. The concept of a commodity commission for imports is another matter, and we did not say specifically that we would introduce in this Parliament a producer board for cereals.
    Mr. Shinwell: Would not my right hon. Friend agree that it would take longer than six weeks to correct all the mistakes of his predecessor?
    Mr. Peart: I think that at least six months would do very well.
    Mr. Soames: May I remind the right hon. Gentleman that there is a good deal of uncertainty both in industry and in the trade upon this, and that it would be most beneficial if the right hon. Gentleman would be prepared to clear it up? He now says that he did not say specifically that either the commodity commission or the cereals marketing board would be introduced during this first Session, and will he now state specifically that it will not be?
    Mr. Peart: The right hon. Gentleman knows full well that during the election campaign I endorsed the decision to create an authority on the lines of the agreement which he concluded. I have acted with speed since I came into office, and I shall present a Bill today.

    Fish Meal
    Mr. Wolrige-Gordonasked the Minister of Agriculture, Fisheries and Food what is the present percentage of imported fish meal on the home market; from which countries it comes; and what steps he will take to improve the market for home-produced fish meal.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy): In 1963, 79 per cent. of our fish meal supplies were imported. In order of importance, the main sources of imports were Peru, South West Africa, Iceland, Norway, Denmark and South Africa. 1 understand that supplies of home-produced fish meal are being readily taken up at present prices which are now higher than at any time since 1959. I see therefore no reason to intervene.
    Mr. Wolrige-Gordon: Is the hon. Member aware that I was informed, in a letter from the Scottish Office the other day, that the price paid at Norwegian ports for herring for oil and meal purposes was roughly 40s. a cran, which is higher than the price paid to our own fishermen in this country? Our fishermen are mystified by this discrimination. Can the Minister explain how the Norwegians still manage to export so much fish meal to this country?
    Mr. Hoy: If the hon. Member had really wanted an answer to his supplementary question he should have put
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    down a Question on the subject. However, I can tell him a little. White fish enjoys a partial subsidy—and, as he knows, our herring industry is not dependent merely on fish meal for its income. In fact, it would prefer to sell its product to the consuming public. But fish meal plays an important part in respect of that part of the herring catch which cannot be sold for human consumption.
    Mr. Hector Hughes: Does my hon. Friend realise that this imported fish meal competes adversely with home-produced fish meal in Scotland, thereby tending to create unemployment? Will he state what steps he is taking to avoid creating that unemployment?
    Mr. Hoy: I must tell my hon. and learned Friend that it does nothing of the kind. We sell all the fish meal that is being produced at present and, as one can see by looking at the market prices, it has no effect on the prices that our own people are getting.

    Sugar Beet, Norfolk
    Mr. Hawkinsasked the Minister of Agriculture, Fisheries and Food whether he will invite the British Sugar Corporation to consider the erection of a new sugar beet factory in the centre of Norfolk to cut down transport costs, which have become a cause of concern to farmers in this area.
    Mr. Hoy: No, Sir. There are already three factories in Norfolk, at Cantley, King's Lynn and Wissington. I am informed by the British Sugar Corporation that the capacity of these factories is adequate to deal with the beet grown in Norfolk.
    Mr. Hawkins: Does the Minister agree that the provision of an additional factory would enable the campaign in East Anglia to finish before the worst of the weather came on, which would mean that a lot of beet which is now left on our farms in Norfolk would be able to get to the factory? In that case will the hon. Gentleman ask the Sugar Beet Corporation to investigate this matter again and report to him?
    Mr. Hoy: No. I must point out to the hon. Gentleman that factory accommodation is quite adequate to meet all

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    that the farmers care to supply. We cannot argue about who should lift it—that is a job for the farmer—but provided he lifts it and delivers it, factory accommodation is more than sufficient to meet requirements.
    Mr. Loveys: Is the Minister aware that many sugar beet growers in the south of England feel that those in East Anglia are jolly lucky to have as many factories as they have there? If there are to be more factories, should not priority be given to my part of the country?
    Mr. Hoy: That feeling is shared by other parts of the country.
    Mr. Soames: Will the Minister say whether the existing factories have sufficient capacity to take all the sugar beet produced, including the increased acreage allowed by the previous Government?
    Mr. Hoy: Yes. The present factory accommodation can take what is produced, but if the situation should change we should have to reconsider it. At present, I repeat, factory accommodation is sufficient to take all that is produced.

    Farm Costs
    Mr. Evelyn Kingasked the Minister of Agriculture, Fisheries and Food what estimate he has made of the annual gross total of additional costs imposed on farmers as a result of wage increases and import duties; and whether he will take steps to recoup them for this loss in advance of the annual Price Review.
    Mr. Peart: In a full year, the estimated additional cost on all products of increases in agricultural wages awarded in the United Kingdom since the 1964 Annual Review is about £16½ million. As regards the temporary import charge, I would refer the hon. Member to the reply given him by my hon. and learned Friend, the Financial Secretary, on 17th November. It is clear, however, that these cost increases are not sufficient to call for a special review under the terms of the agreement reached with the Farmers' Unions in 1956.
    Mr. King: Is it not a fact that there used to be one Budget and one Price Review? If we are to have two Budgets, is it not reasonable that we should have two Price Reviews—or at least an interim payment to the farmers? Is it reasonable
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    that farmers should be asked to lend money to the Government?
    Mr. Peart: The hon. Member, who has been absent from the House for a long time, should be aware that in 1956 there was a White Paper on Long-term Assurances to Agriculture. I must keep intact the spirit of that White Paper and the existing legislation.
    Mr. Woodburn: Is my right hon. Friend aware that there is no evidence as yet that many foreign countries will not reduce their prices to counteract the 15 per cent. surcharge, and that many of these questions are therefore based on a quite false assumption?
    Mr. Peart: I agree with my right hon. Friend. Therefore, it is right and proper that when we come to the actual review we should consider every factor.
    Mr. Soames: Would it be right, from what the right hon. Gentleman has said—namely, that the wage increase means an extra cost of £16½ million a year—that if, on top, we add the extra cost brought about first by the surcharge, secondly, by the Bank Rate and, thirdly, by the increase in the petrol tax, the increased cost to farmers in the coming year is likely to be well over £25 million?
    Mr. Peart: The right hon. Gentleman is now indulging in speculation, and he knows it. He knows what the procedure is, namely, that all costs will be considered at the annual Price Review.
    Mr. Henry Clarkasked the Minister of Agriculture, Fisheries and Food if he will make arrangements to reimburse farmers with the additional cost of petrol and diesel oil used on their farms.
    Mr. John Mackie: Changes in the cost to farmers of petrol and diesel oil will be taken into account at the forthcoming Annual Review along with all other relevant circumstances.
    Mr. Clark: Will the Joint Parliamentary Secretary ensure when the Price Review is being considered that full note is taken of the fact that the small farmer, in particular, uses his motor car 90 per cent of the time as a piece of farm machinery and that it is vital to his interests? Will he also remember when the Price Review comes round that

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    pennies added to prices here and there get through to the small farmer, who will have to pay much more in the months ahead because of increases in the prices of his raw materials?
    Mr. Mackie: I am not sure that I quite agree with the first part of the hon. Gentleman's supplementary question about the small farmer using his motor car for 90 per cent. of the time as a piece of farm machinery. However, we will take what he said into account.

    Young Cow Subsidy
    Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food if he will bring back the special young cow subsidy, to encourage the production of more calves for beef rearing.
    Mr. John Mackie: Any question of re-introducing a special young cow subsidy would be for consideration at the Annual Review. I do not propose to anticipate the Review by commenting at this stage. The hon. Member may however be interested to know that the September 1964 census for England and Wales showed that there were 117,000 more calves under one year old than a year before. Some 60 per cent. of these were male calves which can certainly be expected to be reared for beef.
    Mr. Mills: In view of that Answer, will the Minister make a statement about how he proposes to increase the number of calves to meet the undoubted shortage of beef which will occur later?
    Mr. Mackie: We can do a lot of things in 100 days, but producing a calf is not one of them. As I stated in my reply, this is a question for the Price Review, and any incentive would be given then. I cannot possibly anticipate the Review.
    Mr. Soames: We appreciate perfectly that we cannot expect the hon. Gentleman to produce a calf in 100 days. Is he aware that, nevertheless, we do expect him to indicate whether he wishes to see calves produced at a greater rate in the future and if he does whether he is going to take action to bring that about?
    Mr. Mackie: Naturally, we know that we could do with more beef in the country. We have been on the job only
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    a month and if the right hon. Gentleman will give us time, we will give him an answer to his question.

    Potato Deficiency Payment, Northern Ireland
    Mr. Henry Clarkasked the Minisster of Agriculture, Fisheries and Food whether he will now authorise the Northern Ireland Government to pay from the funds which they hold the deficiency payment due to farmers who have registered as potato growers in the 1960 season.
    Sir Knox Cunninghamasked the Minister of Agriculture, Fisheries and Food if he will make payments to the Ulster potato growers for the 1960 crop on the lines suggested by the Ulster Farmers' Union.
    Mr. John Mackie: The United Kingdom Agricultural Ministers are now re-examining this long-standing question of the disposal of the 1960 potato deficiency money. A decision will be reached as soon as possible.
    Mr. Clark: May I ask the Parliamentary Secretary to remember the importance of making a decision on this point before the farmers draw up their crop plan for next year? Is he aware that this has caused a great deal of doubt among potato growers in Northern Ireland?
    Mr. Mackie: As a potato grower I can tell the hon. Member that I have sympathy with the thought that there is money due to potato growers at a future date. This has been a longstanding grievance from 1960 and in considering it, notice will be taken of the point made by the hon. Gentleman.
    Sir Knox Cunningham: Will the hon Gentleman realise that these growers feel a strong sense of grievance about this matter? Will he consider that very carefully? Is he also aware that hon. Members who represent constituencies in Ulster have been pressing his Department for a long time about this and that they will continue to do so until there is some satisfactory result?
    Mr. Mackie: If I remember rightly, the hon. and learned Gentleman had very close access to the powers that be in the last Parliament. If he could not

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    do it in four years, he cannot expect us to do it in a month. I will bear in mind what he has said.
    Mr. Chichester-Clark: Can the hon. Member say what would be the average benefit to each grower if this payment were obtained?
    Mr. Mackie: I could not do so without notice.

    Horned Cattle (Shipment)
    Mr. Pounderasked the Minister of Agriculture, Fisheries and Food whether he will introduce legislation to prohibit the shipment of horned cattle.
    Mr. John Mackie: No, Sir. The Orders governing the transport of cattle by sea are adequate to secure that horned cattle shipped from Great Britain travel without damage or injury.
    Mr. Pounder: Is the hon. Gentleman aware of the recent prohibition on the shipment of horned cattle introduced by the Northern Ireland Ministry of Agriculture, and is not he prepared to follow a similar enlightened course of action?
    Mr. Mackie: We think there are sufficient safeguards in the restrictions which we have made, such as the tying up of cattle and so on. Of course, dehorning cattle is an important thing to do and I am amazed at how few farmers take advantage of this operation. I had experience 25 years ago of dehorning a herd of Ayrshire cows which were very wild with each other, and in little more than a week's time after being dehorned they were quite mild. That is one of the greatest lessons which I have had in favour of the argument for dehorning.

    Meat Marketing
    Mr. J. E. B. Hillasked the Minister of Agriculture, Fisheries and Food what plans he has for improving the marketing of meat.
    Mr. Peart: I have been examining, in the light of the views expressed by the interested parties, the various proposals made by the Verdon Smith Committee and others. I have not reached any final conclusions yet and I shall not do so until I have had an opportunity for discussions with the main interests concerned.
    Mr. Hill: In his progress towards a conclusion can the Minister assure us that he does not share the blind conviction of some of his colleagues of the need for a commodity commission with full trading powers? In the interval while he is awaiting agreement, could not he initiate action on some of the recommendations of the Verdon Smith Committee which are non-controversial, in particular the improvement of marketing intelligence? Cannot he institute for meat a similar series of Ministerial statements on market intelligence—bearing in mind supply, demand and prices—as was introduced by my right hon. Friend the Member for Bedford (Mr. Soames) in the case of cereals?
    Mr. Peart: The hon. Member knows full well that the concept of a commodity commission which I advocated and which was advocated by my colleagues, who are enlightened, was to phase imports with home production. The Verdon Smith Committee did not make a survey of the international aspects of meat marketing. If the hon. Gentleman reads the Verdon Smith Committee's Report again, he will see that I am right and that my hon. Friends were right. Added to that, the Verdon Smith Committee concentrated on the marketing of home supplies. I would only repeat what I have said, that in the short period that I have been at the Ministry I have already initiated discussions, and I hope that I shall take a much shorter time than his right hon. Friend in coming to a conclusion.
    Mr. Soames: Is the right hon. Gentleman aware that he will not find in the Report of the Verdon Smith Committee support for the setting up of a commodity commission? That is the first point. The second point is, will he tell us whether he is intending to introduce legislation during this Session for the marketing of home-produced meat in the same way, as he has said, that he intends to do in relation to marketing arrangements for cereals for which a Bill is coming forward today?
    Mr. Peart: The right hon. Gentleman should know if he has read the Verdon Smith Committee's Report that the Committee did not deal with the international aspects. The commodity commission proposed by the Labour Party when in opposition, and which I myself advocated,

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    was essentially to deal with imports. The Verdon Smith Committee's Report deals with home supplies, as the right hon. Gentleman knows full well. Because this is a very difficult matter I have initiated discussions and we are at this stage examining the implications of the Verdon Smith Committee's Report and consulting all the interests concerned.

    Milk
    Mr. Dempseyasked the Minister of Agriculture, Fisheries and Food what is his policy in regard to controlling the price of milk; and if he will make a statement.
    Mr. Peart: I have no present proposals for modifying the existing system of control.
    Mr. Dempsey: Is the Minister aware that I have received complaints from pensioners to the effect that, according to Press reports, the price of milk could go up by 5d. a pint this year? Can he say whether existing legislation could prevent such an increase in the price of milk which would bear hardly on many sections of the community?
    Mr. Peart: In my statement yesterday to farmers, very responsible farmers, I said that the price of milk would not go up this winter. I think that any report in the Press about a rise of 5d. is an exaggeration.
    Sir C. Osborne: Does not the Minister think that an industrial worker, who earns about £16 a week, ought to pay the proper price for his milk, so that the agricultural worker, who is paid less, can get a better wage for producing it? Why should the industrial worker expect the farm worker to subsidise his food?
    Mr. Peart: I think it would be very wrong to try to divide the rural worker against the industrial worker. I have always found that the industrial worker would like to see the rural worker get an adequate return for what he gives. All factors concerning the price of milk will, as I have repeated so often, be considered at the Annual Price Review.
    Mr. Charles Morrisonasked the Minister of Agriculture, Fisheries and Food in view of the rate at which farmers are going out of milk production, what
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    proposals he has for improving profit margins to farmers in the industry.
    Mr. Peart: The net income of milk producers will be taken into account at the coming Annual Review. I cannot, of course, anticipate the outcome.
    Mr. Morrison: Is the Minister aware that in the first three months of this year almost 1,700 milk producers went out of production and that unless the right hon. Gentleman takes steps to reverse this trend there will, in due course, be a serious shortage of milk?
    Mr. Peart: The hon. Gentleman must be aware that even from 1954 to 1964 the number of milk producers who went out of production totalled 28 per cent. I was not responsible for that.
    Mr. Snow: Whence comes all this new-found sympathy for the small farmer and small milk producer?
    Mr. Speaker: Order. It is not necessary for the Minister to answer a question of that description. I do not think that the Minister has responsibility for it.

    Beef Cattle, East Anglia (Exports)
    Mr. Wallaceasked the Minister of Agriculture, Fisheries and Food how many head of beef cattle were exported from East Anglian ports and airports during the period January to September, 1964; what was the total value; and what were the comparative figures for the first nine months of 1963.
    Mr. John Mackie: In the period January-September, 1963, nearly 13,000 head of cattle for slaughter worth £880,000 were exported from Boston, Great Yarmouth and Harwich. About 75,000 head worth nearly £5·3 million were exported in the first nine months of this year. Separate figures for East Anglian airports are not available but exports of cattle from all airports have been insignificant.
    Mr. Wallace: Is my hon. Friend aware, in view of the great importance of home beef production for home consumption, that the position in regard to the export of beef cattle should be carefully watched?
    Mr. Mackie: I agree, but I should point out to my hon. Friend that these

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    exports have fallen by about half since the high peak period of May and June this year.
    Mr. Soames: Since the Joint Parliamentary Secretary pressed me earlier in the year to take some action to inhibit the export of beef cattle from this country, will he give an assurance that he does not intend to do so now that he is in power?
    Mr. Mackie: No, Sir. I will not give such an assurance. If this will make any great difference to our meat supplies we will certainly take some action.

    Livestock (Intensive Husbandry)
    Mr. Rankinasked the Minister of Agriculture, Fisheries and Food when he expects to receive the report from the committee appointed on 20th June last to examine the conditions in which livestock are kept under systems of intensive husbandry and to advise on standards in the interests of their welfare.
    Mr. Peart: There is nothing I can add to the replies I gave on 25th November. I am hopeful that this report will be completed by next summer.
    Mr. Rankin: Does my right hon. Friend recollect—as I am sure he must —that earlier today the House manifested its concern over the methods of slaughtering seals? Does he realise that there is equally widespread concern about the methods by which domestic animals are reared and slaughtered on intensive farms, to which this Question refers? Does my right hon. Friend also realise that the committee mentioned in the Question was appointed on 20th June last, so could he not encourage its members, in view of the urgency of this problem, to try to report a little earlier than next summer?
    Mr. Peart: As I am sure my hon. Friend appreciates, this committee is a very important one and has a big job to do. I am anxious that its report should be full. We must, therefore, give the committee an opportunity to make a proper investigation.
    Mr. Turton: Will its report be published?
    Mr. Peart: I would think so, but obviously I must make that decision when I receive it.
    Sir H. Harrison: Will the Minister bear in mind—and I think that he has given an undertaking to this effect—that there are many sides to this problem and many new methods of farming which are not necessarily against the interests of animals? Of course we are all animal lovers—[Interruption.] Of course we are.
    Mr. Manuel: Animal lovers?
    Sir H. Harrison: Yes. Most hon. Members are animal lovers. Nevertheless, this committee must study new methods which are entering all forms of production.
    Mr. Peart: That is precisely what the committee will do.

    Tractors (Hilly Country)
    Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food whether he will bring in legislation prohibiting the use of tractors on slopes steeper than a determined safety gradient.
    Mr. Hoy: No, Sir. There are a number of other factors besides gradient, such as soil and weather conditions, which influence the liability of tractors to accidents in hilly country. The best way of preventing such accidents is careful driving with knowledge of the hazards involved, and this is something which my Department does its best to drive home by advisory action including films, posters and leaflets.
    Mr. Mills: Will the Joint Parliamentary Secretary take into account the fact that the number of deaths and serious accidents involving tractors is increasing, particularly in the South-West? Might it not be possible for legislation to be introduced, possibly to ensure the fitting of safety cabins or roll-over bars to tractors? Since this is a very real problem, will the hon. Gentleman consider it seriously?
    Mr. Hoy: I can assure the hon. Gentleman that we appreciate the seriousness of the position. We do not think that legislation along the line suggested in the Question would be effective. However, considerable thought is being given to the question of safety cabins and I think that we have power to take by Order the sort of action the hon. Gentleman describes in his supplementary question if such a recommendation were considered to be the correct one.
    Mr. Manuel: Will my hon. Friend bear in mind the fact that many of the deaths and accidents involving tractors on slopes have occurred to employees under the age of 18? Could the problem be looked at in the light of some possible prohibition on teen-age farm employees driving tractors instead of qualified men?
    Mr. Hoy: I do not have the accident figures for the different age groups, but since my hon. Friend has raised that point I will certainly look into it.

    Eggs
    Mr. Scott-Hopkinsasked the Minister of Agriculture, Fisheries and Food what was the amount of eggs imported into this country on the latest convenient date; and what percentage this is of the total United Kingdom requirements.
    Mr. Hoy: In the first 10 months of this year, 233 million shell eggs were imported, representing 1·8 per cent. of total supplies for the period.
    Mr. Scott-Hopkins: Can the Joint Parliamentary Secretary say what percentage of these went to the shell egg market and what percentage to the liquid egg market?
    Mr. Hoy: About 9,100 tons of egg products were imported in the first 10 months of this year, 13,800 tons in the same 10 months of 1963 and 15,600 tons in the same months of 1962. I do not have the exact figures of how much of the shell imports went into the shell market and how much went to the liquid market, but I will find out and let the hon. Gentleman know.
    Sir H. Harrison: Would the hon. Gentleman agree that, in view of the large amount of shell eggs produced in this country, there is now a case to prohibit the importation of shell eggs?
    Mr. Hoy: No. I do not think so. I suggest that the figures I gave in my original Answer prove that there is no need for that.
    Mr. Priorasked the Minister of Agriculture, Fisheries and Food what representations he has received from the Poultry and Egg Producers' Association on the low prices for eggs.
    Mr. Hoy: None, Sir.
    Mr. Prior: Is not that reply rather surprising, as the right hon. Gentleman was president of the Association until six weeks ago? Is it not the fact that the subsidy for eggs is now at a rate of about £30 million, and that egg prices are lower than they have been for many years? What does the Minister intend to do about it?
    Mr. Hoy: The reply may well be surprising, but it is correct. The job previously filled by my right hon. Friend is not likely to be rushed for by ex-Ministers, as there is no salary attached to it.
    Mr. Fletcher-Cooke: Will the Minister, sooner or later, give us some policy on eggs? Will he say whether there are too many eggs, or too few? I think there are too many, but a great many of my constituents are continuing to produce more eggs. I think that they should be advised whether or not to go on with this expansion.
    Mr. Hoy: It does cause some concern, and conversations will take place between the Association and my Department. Of course, as the hon. and learned Gentleman knows, such conversations will take place, in any case, before the Annual Price Review.

    Republic of Ireland (Export of Live Animals)
    Sir Knox Cunninghamasked the Minister of Agriculture, Fisheries and Food what undertakings have been given by the Government of the Republic of Eire with regard to the non-re-exportation of live animals, imported from the United Kingdom, to those foreign countries to which the exportation of live animals from the United Kingdom is forbidden.
    Mr. Peart: None. The export of live animals for slaughter from Northern Ireland to the Irish Republic is not subject to control except that, when it is known that such animals are destined for shipment to another country the same control is applied as if they were to be shipped direct to that country. The export of live animals for slaughter from Great Britain to the Republic is not at present permitted.
    Sir Knox Cunningham: Would the right hon. Gentleman say whether he is satisfied with the undertaking he has received about transfer to other countries? May not this be used as a backdoor method of getting live exports from the United Kingdom to countries which do not comply with the satisfactory conditions of slaughtering?
    Mr. Peart: The hon. and learned Gentleman has been dealing with questions concerning the Republic of Ireland which affect Northern Ireland. I am prepared to consult the Home Secretary with a view to discussing the matter with the Government of Northern Ireland. On the wider issue of the Balfour assurances, it may be that this is the sort of matter about which we could have action in the Council of Europe.

    Dairy Farmers (Milk Officers)
    Mr. Walderasked the Minister of Agriculture Fisheries and Food why the routine visits of milk officers to registered dairy farmers are to be made in future without prior appointment with the farmer concerned.
    Mr. John Mackie: Unannounced routine visits by milk officers are not new and are often unavoidable owing to the need for economy and efficiency. The officer normally calls on the farmer or his representative before making an inspection. The hon. Member may have in mind instructions given locally requiring follow-up visits to be made without notice only after the milk producer has been advised at an earlier visit that this may be done. These instructions are intended to save time and transport without discourtesy.
    Mr. Walder: Is not the Minister aware that many farmers regard this as an unnecessary duplication, as their milk is inspected and their premises are inspected—often, in the case of the producer retailer, by two authorities independently?
    Mr. Mackie: I do not think so. My own experience, and that of other farmers, is that there is a considerable amount of good will between the milk officers and the farming community, because the farming community know what those officers are there to do. So far,
    454
    we have not found anything of the kind to which the hon. Member refers.

    Channel Islands Milk
    Mr. Scott-Hopkinsasked the Minister of Agriculture, Fisheries and Food whether he will now make a statement on the future of Channel Islands milk.
    Mr. John Hallasked the Minister of Agriculture, Fisheries and Food what representations have been made to him about the shortage of Channel Islands milk; and what action he is taking to encourage the increased production of this quality milk.
    Mr. Peart: The industry have represented that the maximum retail price of Channel Islands milk should be increased so as to improve their remuneration and thus encourage further production. I am considering the application as a matter of urgency and shall make a further statement as soon as possible.
    Mr. Scott-Hopkins: Would not the Minister agree that a case has been made out for the Channel Islands milk producers to have an increase, and would he not support the recommendation of the Thorold Committee that Channel Islands milk should be freed from control?
    Mr. Peart: The hon. Member knows that we are to have full discussions. Until I have had those discussions I cannot come to any conclusion. When I have come to a conclusion, I shall make an announcement.
    Mr. Prior: Was there not a leak into the newspapers last week, emanating from the right hon. Gentleman's Department, to the effect that he would turn down a recommendation to free Channel Islands milk from control? If the Minister has changed his mind, why did it take him six weeks to make up his mind in the first place?
    Mr. Peart: The hon. Member has no right to make an accusation against my Department or officials—[HON. MEMBERS: "Oh."]—I would ask the hon. Member to substantiate his statement, when I will be delighted to hear his evidence, but he has no right to impugn the Civil Service.
    Mr. Speaker: Order. We cannot do this at Question Time.
    Mr. Soames: The right hon. Gentleman will be aware, will he not, that all these representations had been listened to, and that a decision had been taken by the previous Government to free the price of Channel Islands milk, subject to the approval of Parliament? If the right hon. Gentleman has not accepted that view, will he say why he has not accepted it? We would like him to know that we are glad that at last this Government are starting to enter into discussions before taking decisions, so some progress is being made there.
    Mr. Peart: The right hon. Gentleman knows that in reply to a Parliamentary Question last week I gave an assurance that I would consult. I have often stated that I would consult. I will honour that assurance, and I will wait until I have had my discussions.
    Mr. Prior: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter at the earliest opportunity.

    Meat (Quality)
    Sir R. Nugentasked the Minister of Agriculture, Fisheries and Food whether he is aware that the quality of British meat could be improved by better methods of handling; and what steps he is taking to achieve this improvement.
    Mr. John Mackie: We are aware that the quality of meat reaching the consumer can be affected by the handling it has received at all stages, from the pre-slaughter treatment of the animal until the meat is cooked. Steps to improve methods of handling are primarily a matter for the trade itself, but my right hon. Friend is considering, as part of his general examination of fatstock and meat marketing, whether there is anything the Government could do to improve handling methods.
    The problems of handling meat are among the subjects on which research will be undertaken by the Meat Research Intitute, which is to be established by the Agricultural Research Council. In the meantime, research on these problems is being undertaken by the Low Temperature Research Station at Cambridge.
    Sir R. Nugent: Is the Parliamentary Secretary aware that the Verdon Smith Report called attention to the fact that much carcase meat is hung for only about five days, and that the optimum period, in hygienic conditions, is about twenty-one days in order to get the maximum benefit of cleanliness and flavour? Will he take that point into account in the review; and see what steps can be taken to encourage the distributors and the butchering trade to hang the meat longer, in the interests of taste and tenderness for the consumer?
    Mr. Mackie: I take the hon. Gentleman's point very well. Well-hung meat is half the battle in regard to quality, but he will realise that many small butchers find difficulty in keeping the meat for so long. But we will certainly keep that point in mind.
    Mr. P. Walker: Is the Minister aware that the delay in regard to this part of the Verdon Smith Report is causing uncertainty in the industry? Would he give an undertaking that the Government will decide on a course of action before the next Price Review?
    Mr. Mackie: I think that my right hon. Friend replied to that question before the hon. Member came into the Chamber.

    Bacon
    Mr. Priorasked the Minister of Agriculture, Fisheries and Food what is to be the home producers' share of the bacon market under the market sharing agreement for the coming year; what this represents in tonnage of bacon; and how this compares with the figure for the current year.
    Mr. Peart: There will be no change for 1965–66 in the basis on which shares under the Bacon Understanding are formally allocated. We have taken the view, as have other parties to the Understanding, that there has been insufficient experience of its operation to justify a change at this time. What this will represent for the home producer in terms of minimum tonnage cannot yet be stated, because the minimum total quantity has yet to be decided. Moreover, the opportunity to meet demand in excess of the minimum quantity may arise next year, as it has been doing so far this year, through allocations from the reserve.
    Mr. Prior: Is the Minister aware that his reply will cause great disappointment amongst home bacon producers? Is he further aware that when he spoke from this side of the Chamber he gave the impression that he would do everything he could to expand home production, and is not this answer in direct contradiction to what he then said?
    Mr. Peart: The hon. Gentleman knows that what he says does not meet the facts. As I have stated, the minimum total quantity has yet to be decided,
    Mr. Soames: Is not the Minister aware that there was specifically provided in the agreement a provision that at the Review we would be able to alter the home producer's share of the market upwards? Is he not further aware that as our pig production is rising it would be highly satisfactory if we could get a greater share of the marker? Is it not the fact that the imposition of the 15 per cent. Surcharge made relationships between Her Majesty's Government and the Danish Government so difficult that it has inhibited him from altering the rate?
    Mr. Peart: I am sorry, but the right hon. Gentleman is quite wrong. The imposition of the surcharge has nothing to do with this at all. I felt, and I think that he, too, would feel, that in regard to the agreement we concluded, as it had been running only for a period of seven months, the evidence showed conclusively that the percentage he negotiated was, perhaps, satisfactory in the circumstances. We can look at it again later, but I am anxious to make a decision on the minimum total quantity.
    Mr. Bessell: Is the Minister aware that there have been wide reports that about 8 per cent. of the total home market in bacon is supplied by Poland; and that this has caused considerable dissatisfaction to home producers, particularly as Poland is not one of the E.F.T.A. countries, or a Commonwealth country?
    Mr. Peart: We are here dealing with a bacon-sharing agreement that was negotiated by my predecessor, and which I supported in principle. I think
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    that it is a right agreement, but we will always consider any factor that may affect home production.

    Agriculture and Horticulture (Bank Rate)
    Mr. Soamesasked the Minister of Agriculture, Fisheries and Food what is his estimate of the extra cost to the agricultural and horticultural industries of the recent rise in the Bank Rate.
    Mr. Peart: About £5¼ million on credit supplied by the banks and hire purchase companies for current farming purposes. No estimate is yet possible for the cost of any increases in the charges for credit supplied by agricultural merchants since it is not yet clear to what extent the merchants will raise their charges.
    Mr. Soames: In view of the fact that one of the first actions of this Government was to increase the price of money to this extent to the farmers, is he aware that during the General Election he wrote an article in one of the farming papers where he told the agricultural industry that he would create a new agricultural credit organisation, backed by the Treasury, to provide farmers with credit at reasonable rates of interest? Does this mean that he intends to ensure that the agricultural industry does not have to pay the full 7 per cent. Bank Rate?
    Mr. Peart: No, not at all. I am glad that the right hon. Gentleman has read my excellent article. Indeed, it may well be that at a later date we shall certainly complete our election programme. [Interruption.] Why not?

    Fishing Industry (Bank Rate)
    Mr. Wallasked the Minister of Agriculture, Fisheries and Food what will be the estimated effect of the 7 per cent. Bank Rate on the fishing industry in general and on the White Fish Authority loans in particular.
    Mr. Hoy: The fishing industry will already be paying higher interest rates on bank loans and overdrafts. It is too early to say yet what the effect will be on the rate charged on their longer term commercial loans or on further loan monies from the White Fish Authority. There will be no increase in the interest rates on monies already on loan from the White Fish Authority.
    Mr. Wall: Would the hon. Gentleman agree that this will be a considerable increased burden on the industry and bear in mind that there is no annual price review for the fishing industry? Would he also bear this in mind when renegotiating grants and loans schemes next year?
    Mr. Hoy: The hon. Gentleman was party to his Government's legislation which meant a diminishing subsidy each year under the Act made by his own Government.
    Sir C. Osborne: While being grateful to the White Fish Authority for the generous treatment it has given to the small trawler owners in the past, may I ask the hon. Gentleman to give an undertaking that the stringency of money will not cause the Authority to make more stringent repayment of the loans that already exist?
    Mr. Hoy: So far as these applications are concerned, the White Fish Authority will deal with them very sympathetically as it has done in the past.

    Brucellosis
    Mr. Kitsonasked the Minister of Agriculture, Fisheries and Food when he intends to introduce a scheme to eradicate brucellosis; how long he anticipates it will take to complete; and what would be the cost of the scheme.
    Mr. John Mackie: My right hon. Friend hopes to be able to make a statement on this matter after considering the results of the recent brucellosis survey due to be published shortly and of further studies which are being undertaken by the Department.
    Mr. Kitson: Does the Parliamentary Secretary realise that his right hon. Friend said in June this year that we cannot delay this any longer? We are now far behind any other country in Western Europe in dealing with this matter. We cannot go on waiting for further reports; we must get on with this.
    Mr. Mackie: I think that the House knows of the interest which the hon. Member has taken in this and the excellent debate which he initiated in June this year, but I think that it would be invidious of us not to take careful note
    460
    of the study group which his right hon. Friend appointed at the end of June, and discourteous not to await its report before we take action.
    Mr. Gibson-Watt: Would the hon. Gentleman consider starting a pilot scheme for the eradication of brucellosis in Wales as was so successfully done in the case of the eradication of tuberculosis?
    Mr. Mackie: I will certainly put that to my right hon. Friend to consider.

    Fish (Minimum Price Scheme)
    Lady Tweedsmuirasked the Minister of Agriculture, Fisheries and Food what progress is being made with a minimum price scheme for fish.
    Mr. Hoy: I expect to have a progress report from the White Fish Authority in the very near future and I can say nothing until I have received this.
    Lady Tweedsmuir: While we all hope that this scheme will come about and bring greater stability to the fishing industry, can the hon. Gentleman say, on the negotiations so far achieved, whether, so far as the consumer is concerned, the prices of fish on average will go up or be lower?
    Mr. Hoy: I am not carrying out these negotiations. This is a matter that must be left to the White Fish Authority and the people concerned. When I receive its Report, I can reach a conclusion on it.
    Lady Tweedsmuir: Will the Parliamentary Secretary make representations to the White Fish Authority that there is concern among many consumers as to whether the scheme will in fact mean higher prices for fish, and that it is most important to safeguard against this, as the Government have done so much already to increase the cost of living?
    Mr. Hoy: I think that the hon. Lady had better make up her mind which way she wants to deal with it, whether to maintain the industry, or the merchant or the consumer. My responsibilities cover all three, and the interests of the consumer will be no less safeguarded than other parts of the industry.

    Mechanical Potato Harvesters
    Mr. Emrys Hughesasked the Minister of Agriculture, Fisheries and Food to what extent mechanical potato harvesters are now used to harvest the potato crop; and what steps he will take to encourage their use.
    Mr. John Mackie: The agricultural machinery censuses in England and Wales in December, 1963, and in Scotland in February, 1964, showed 4,054 complete harvesters as compared with 2,607 three years previously. The advisory services will continue to inform farmers on the range of machines available and their potentialities, and to co-operate with the Potato Marketing Board in its annual demonstrations. Research on various aspects of mechanised potato harvesting is continuing at the National Institute of Agricultural Engineering and its Scottish Station.
    Mr. Hughes: Does the Joint Parliamentary Secretary agree that it is just as necessary to have mechanical potato harvesters as it is to have supersonic aircraft? Will he do his best to convince the new Minister of Technology that machines of this kind are likely to ease the back-aching work undertaken by children who are employed in harvesting in many parts of the country?
    Mr. Speaker: The part about supersonic aircraft is out of order.
    Mr. Mackie: I have to admit that I am in favour of potato harvesters. I agree with my hon. Friend about the hack-aching business of gathering potatoes, as I have done a lot of it myself.
    Mr. Manuel: Will my hon. Friend take note of the fact that the Perthshire education authority still releases many children from school to lift potatoes? Will my hon. Friend take this matter up with the Leader of the Opposition and ask him to exert some influence with his county council in the installation of potato harvesters so that children are not denied education in order to pick potatoes?
    Mr. Mackie: I think that is a question for my right hon. Friend the Secretary of State for Scotland.

BILLS PRESENTED
  CEREALS MARKETING
  Mr. MackieBill to provide for the establishment of a Home-Grown Cereals Authority, and to make provision as to the functions and finances of the Authority; and for purposes connected therewith, presented by Mr. Peart; supported by Mr. George Brown, Sir Frank Soskice, Mr. Ross, Mr. James Griffiths, Mr. Niall MacDermot, Mr. Hoy, and Mr. John Mackie; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 37.]
  REPRESENTATION OF THE PEOPLE (EXTENSION OF VOTING FACILITIES)
  Mr. MackieBill to amend the Representation of the People Act 1949 so as to enable persons temporarily absent from their qualifying address to vote as absent voters; to provide penalties for false declaration; and for purposes connected therewith, presented by Rear-Admiral Morgan Giles; supported by Mr. Iain Macleod, Mr. Richard Wood, Mr. John Hay, Mr. Richard Sharples, Mr. Patrick Wall, Mr. Rees-Davies, Sir John Eden, Mr. Lubbock, Sir Frederic Bennett, Mr. Charles Morrison, and Mr. Evelyn King; read the First time; to be read a Second time upon Friday, 12th February, and to be printed. [Bill 18.]
  SPORTS FACILITIES
  Mr. MackieBill to regularise for purposes connected with the advancement of association football, other sports and recreational activities, the negotiating or receiving of bets or the conducting of pool betting operations by way of business on or reference to association football matches; and for connected purposes, presented by Mr. Harry Howarth; supported by Mr. Jack Dunnett, Mr. Emlyn Hooson, Sir Donald Kaberry, Sir Cyril Osborne, Mr. Ellis Smith, and Mr. Tiley; read the First time; to be read a Second time upon Friday, 29th January, and to be printed. [Bill 19.]

  EMOLUMENTS OF TOP MANAGEMENT (DISCLOSURE AND REGULATION)
  Mr. MackieBill to provide for the disclosure of emoluments and of other relevant information by directors and other senior officers in certain private and public

  463
  enterprises; for the supervision and regulation of such emoluments in the national interest, including a national incomes policy, higher efficiency in British industry and greater comparability of rewards between public and private enterprise; and for matter connected therewith, presented by Mr. Peter Shore; supported by Mr. Ennals, Mr. Michael Foot, and Mr. Francis Noel-Baker; read the First time; to be read a Second time upon Friday, 26th February, and to be printed. [Bill 20.]

  TRAVEL AGENTS
  Mr. MackieBill to provide for the registration of travel agents; to regulate the conduct of persons carrying on business as travel agents and to make further provision with respect to such persons; and for purposes connected therewith, presented by Mr. Charles Doughty; read the First time; to be read a Second time upon Friday, 12th March, and to be printed. [Bill 21.]
  NATIONAL INSURANCE (FURTHER PROVISIONS)
  Mr. MackieBill to make provision for the payment of pensions out of the National Insurance Fund for certain classes of persons not eligible for pensions under the National Insurance Act 1946, presented by Mr. Airey Neave; supported by Sir John Vaughan-Morgan, Mr. Tiley, Dame Edith Pitt, Sir John Eden, and Mr. Emery; read the First time; to be read a Second time upon Friday, 26th March, and to be printed. [Bill 22.]
  HOUSEBUILDING (PROTECTION OF PURCHASERS)
  Mr. MackieBill to provide for the observance of certain standards by housebuilders; to secure safeguards for purchasers; and for connected purposes, presented by Mr. Keith Stainton; supported by Mr. Corfield, Mr. Prior, Sir Leslie Thomas, Mr. Eric Lubbock, Mr. John M. Temple, Mr. Eldon Griffiths, Mr. Harold Gurden, and Mr. Norman Miscampbell; read the First time; to be read a Second time upon Friday and to be printed. [Bill 23.]
  ESTATE DUTY (DEFERMENT OF PAYMENT)
  Mr. MackieBill to provide for deferring payment of estate duty on that part of any estate which passes to a widow on the death of her husband, and for purposes connected therewith, presented by Mr. Ian Lloyd; supported by Mr. Mark Wood-nutt, Mr. Bryant Godman Irvine, Mr. Colin Jackson, Mr. Terence L. Higgins, Miss Quennell, Sir Jocelyn Lucas, Sir George Sinclair, and Sir John Fletcher-Cooke; read the First time; to be read a Second time upon Friday, 12th February, and to be printed. [Bill 24.]
  CLIENTS' MONEY (ACCOUNTS)
  Mr. MackieBill to make special provision for safeguarding clients' money or deposits; and for purposes connected therewith, presented by Mr. William Clark; supported by Sir Frederic Bennett, Mr. John Hall, Mr. Michael Clark Hutchison, Sir Harwood Harrison, Mr. Donald Box, and Mr. Bryant Godman Irvine; read the First time; to be read a Second time upon Friday, 29th January, and to be printed. [Bill 25.]
  LICENSED BETTING OFFICES (RESTRICTION)
  Mr. MackieBill to require local authorities to consider and make recommendations on applications for betting office licences within their area; and to establish a minimum interval between successive applications for licences for betting offices on the same or an adjacent site; and for purposes connected therewith, presented by Mr. Bernard Weatherill; supported by Mr. Philip Goodhart, Sir Richard Nugent, Colonel Sir Tufton Beamish, Mr. Hornby, Mr. David Mitchell, Mr. Rees-Davis, Mr. Jopling, and Mr. David Walder; read the First time; to be read a Second time upon Friday, 12th March, and to be printed. [Bill 26.]

  PLUMBERS (REGISTRATION)
  Mr. MackieBill to provide for the registration of plumbers and to regulate the practice of plumbing, and for purposes connected therewith, presented by Mr. Geoffrey Wilson; supported by Mr. Ray Mawby, Mr. Bernard Braine, Mr. John Osborn, Mr. John Biggs-Davison, Mr. Bence, Mrs. Braddock, and Mr. Arthur Lewis; read

  465
  the First time; to be read a Second time upon Friday, 26th March, and to be printed. [Bill 27.]

  HIGHWAYS (AMENDMENT)
  Mr. MackieBill to amend the procedure for enforcing the duty imposed on highway authorities and other persons by section 129 of the Highways Act 1959, presented by Mr. Oscar Murton; supported by Dame Irene Ward, Mr. Temple, Mr. Peter Blaker, Mr. Hawkins, Mr. Terence L. Higgins, and Mr. Evelyn King; read the First time; to be read a Second time upon Friday, 29th January, and to be printed. [Bill 28.]
  PUBLIC HEALTH (NOTIFICATION OF BIRTHS)
  Mr. MackieBill to amend the enactments relating to the notification of births to medical officers of health, presented by Mr. Kenneth Lomas; supported by Dr. A. E. P. Duffy, Dr. Shirley Summerskill, and Mr. Harold Walker; read the First time; to be read a Second time upon Friday, 9th April, and to be printed. [Bill 29.]
  SALMON AND FRESHWATER FISHERIES ACT 1923 (AMENDMENT)
  Mr. MackieBill to repeal and re-enact with amendments section 9 of the Salmon and Freshwater Fisheries Act 1923, presented by Colonel Sir Tufton Beamish; supported by Mr. Clifford Kenyon, Mr. Emlyn Hooson, Mr. Scott-Hopkins, Mr. David Ensor, Rear-Admiral Morgan Giles, Mr. Temple, Sir Hugh Lucas-Tooth, Mr. Doughty, and Mr. Marcus Kimball; read the First time; to be read a Second time upon Friday, 12th March, and to be printed. [Bill 30.]
  ARMED TRESPASS
  Mr. MackieBill to make armed trespass a criminal offence and for related purposes, presented by Mr. Bryant Godman Irvine; supported by Sir Frederic Bennett, Mr. Biffen, Mr. Costain, Rear-Admiral Morgan Giles, Mr. Marcus Kimball, Mr. Evelyn King, Mr. Kitson, Mr. Loveys, Mr. Scott-Hopkins, Mr. Simon Wingfield Digby, and Mr. Richard Wood; read the First time; to be read a Second time upon Friday, 29th January, and to be printed. [Bill 31.]
  PRESERVATION OF SUPERANNUATION BENEFITS
  Mr. MackieBill to provide for the preservation of benefits arising under superannuation schemes, whether statutory or otherwise, and for purposes connected therewith, presented by Mr. Patrick Jenkin; supported by Mr. Robert Carr, Mr. John Harvey, Mr. Longbottom, Mr. John Biffen, Mr. Bruce-Gardyne, Mr. Paul Dean, Mr. Grant, Mr. Terence L. Higgins, Mr. Howe, and Mr. Cranley Onslow; read the First time; to be read a Second time upon Friday, 26th March, and to be printed. [Bill 32.]
  TOWN AND COUNTRY PLANNING (AMENDMENT)
  Mr. MackieBill to confer certain rights upon parish councils in connection with applications for planning permission under the Town and Country Planning Acts; and for purposes connected therewith, presented by Sir Frank Pearson; supported by Mr. Ramsden, Mr. Roots, Mr. Jeremy Thorpe, Mr. Antony Buck, Mr. David Price, Lord Balniel, and Mr. Francis Noel-Baker; read the First time; to be read a Second time upon Friday, 26th March, and to be printed. [Bill 33.]
  ADMINISTRATION OF ESTATES (SMALL PAYMENTS)
  Mr. MackieBill to provide for increasing the limits in enactments and instruments which allow property to be disposed of on death without probate or other proof of title, or in pursuance of a nomination made by the deceased; to extend certain of the said enactments relating to an intestate's property to cases where the deceased leaves a will; and for connected purposes, presented by Mr. Peter Mahon; supported by Mr. Simon Mahon, Mr. Ronald Brown, Mr. James Hamilton, Mr. Bingham, and Sir Knox Cunningham; read the First time; to be read a Second time upon Friday, 29th January, and to be printed. [Bill 34.]

  CARRIAGE OF GOODS BY ROAD
  Mr. MackieBill to give effect to the Convention on the Contract for the International Carriage of Goods by Road, signed at Geneva on 19th May, 1956; and for purposes connected therewith, presented

  467
  by Sir Keith Joseph; supported by Mr. John Page, Mr. du Cann, Mr. Daniel Awdry, Mr. Anthony Kershaw, Mr. John Hall, Mr. Corfield, and Mr. Longbottom; read the First time; to be read a Second time upon Friday, 12th February, and to be printed. [Bill 35.]

  EVIDENCE (ROAD TRAFFIC) (SCOTLAND)
  Mr. MackieBill to amend the law of evidence in Scotland by excluding the admissibility of judicial admissions arising out of the road traffic enactments in subsequent civil proceedings, presented by Mr. Wylie; supported by Mr. Michael Noble, Mr. Michael Clark Hutchison, Mr. Forbes Hendry, Mr. James McInnes, Mr. W. W. Hamilton, and Sir Myer Galpern; read
  468
  the First time; to be read a Second time upon Friday, 29th January, and to be printed. [Bill 36.]

  CONGO (BRITISH SUBJECTS)
  Mr. Fell: On a point of order, Mr. Speaker. This is really, perhaps, more a point of inquiry than a point of order, Sir, but are we to understand that after the Cabinet meeting yesterday, although it may be that an awful mistake has been made, there is to be no statement today by the Government on the safety of British lives in the Congo?
  Mr. Speaker: The Clerk will now proceed to read the Orders of the Day.

ORDERS OF THE DAY

  FINANCE BILL
  Further considered in Committee [Progress, 1st December].
  [Dr. HORACE KING in the Chair]

  Schedule 1.—(EXEMPTED GOODS.)
  3.37 p.m.
  Mr. W. R. van Straubenzee: I beg to move Amendment No. 24, in page 13, line 13, at the end to insert:

  06·02

  …

  Other live plants, including trees, shrubs, bushes and roots; buds, eyes and stems for grafting and budding: cuttings and slips: Mushroom spawn.

  The Chairman: I think that it would be to the convenience of the Committee if we took, with this Amendment, Amendment No. 93, in Schedule 1, page 17, line 10, at the end to insert:

  06·02

  …

  Mushroom spawn.

  Mr. van Straubenzee: I make no apology for saying that I have a strong constituency interest in this Amendment in that, as the Committee will know, many of the leading horticulturists are situated in east Berkshire. The effect of this Amendment is to bring into the Schedule certain raw materials which are at the moment omitted from it.
  The Government's statement of 26th October, relating to the 15 per cent. surcharge, made it clear that the surcharge would not apply to basic raw materials for industry and, as far as possible, as I understand it, the Schedule as drawn carries the Government's intentions into effect in that respect, although there are later—if you call them, Dr. King—certain Amendments to the Schedule to bring in certain raw materials which, perhaps inadvertently, have so far been left out.
  The principle that raw materials should be exempted from the surcharge has also been extended to horticulturists. I could give the example of seeds for sowing which are exempted from the surcharge by the terms of the Schedule as it is at present drawn. The point I wish to make is that the principle has already been conceded that with horticulturists, as with others, it is reasonable for what I
  470
  will loosely call their raw material to be eexempted for the 15 per cent. surcharge. By one of the provisions of the Schedule, seeds for sowing used by horticulturists are proposed to be exempted from the 15 per cent. surcharge. I suggest to the Committee, therefore, that the principle has been conceded to horticulturists, and I do not complain about the application of that principle.
  I would draw the Committee's attention, however, to the fact that the effect of Schedule 1, as at present drawn and unless it were to be amended at least partially in the way which I now suggest, would be that all the headings under Chapter 6 of the Customs and Excise tariff chapters will be taxed. I submit that by including the whole of Chapter 6 we are including some raw materials used by horticulturists, and I use the phrase "raw materials" broadly, because, plainly, the process of horticulture is of a kind different from an industrial process.
  They are entirely contained in Subheading 06.02 to Chapter 6 and that is why, as the Committee will observe, I have limited my Amendment to 06.02. I do not seek to argue that the whole of Chapter 6 should be exempt. I am concentrating my attention on a subsection only and 06.02. for example, includes buds, eyes and stems for grafting and budding, and what are known as cuttings and slips. It also includes important and defined descriptions of rose stocks.
  The point which I think the Committee may not have fully appreciated, and which possibly hon. Members opposite have not had an opportunity fully of appreciating, is that almost all roses grown in this country commercially are budded on imported stocks. These stocks, I am told, are overwhelmingly raised by the Dutch. The Dutch, as a nation, have cornered the market, world-wide, in the raising of these imported stocks. They are blessed with a suitable soil for this purpose. Through their energy and initiative they have developed large-scale production and they are very efficient producers of these rose stocks. I am told that they also grow large quantities of fruit stocks.
  Ornamental nursery stocks also have very specialist production. I am told that if one visits the production units in Holland one will find that there are specialist individual plots concentrating extensively

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  on individual types of ornamental nursery stocks. It is from them that we import a great deal to this country. There are, for example, 25 of a particular kind, and it would be totally uneconomic to propagate these stocks individually in this country. The result is that, with the strong backing of very specialist research, the Dutch have this market on which we rely. I am advised that there is in the United Kingdom no nurseryman who can offer anything approaching such a wide range of plants to the trade.
  It might interest the Committee to know that, according to figures provided for me, in the calendar year 1963 we imported just short of 50 million rose stocks valued at £453.000. I dare say that when the Minister without Portfolio replies he will be tempted to argue to the Committee that what I have been talking about does not fairly qualify as raw material within the terms of the Government's statement. If he is so tempted, I ask him to have regard to the process which follows when these imports take place.
  3.45 p.m.
  I am told that the budding process takes place in June-July and that the rose trees, for example, which derive from that process are not saleable for a period of about 15 months. In other words, the point which I make is that the stock which is imported is not by itself saleable goods. It remains a process which takes approximately 15 months to develop and to that extent I am, therefore, suggesting to the hon. Gentleman that to the horticulturist this is a raw material of his trade. I am told that all the catalogues are already printed, and 95 per cent. of the orders of at least one nationally known firm in my constituency were placed before the General Election, let alone before the imposition of the surcharge. The whole process is closely analogous to the raw materials used in industry.
  It is quite possible that the Minister will also seek to say to me that even if I persuaded him on my point about raw materials, as I hope I have, nevertheless the Amendment as drawn goes wider even than that. Although it is a limited Amendment and deals only with a small part of the chapter, I concede to the Minister that as drawn it brings
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  in one or two items which are wide of my definition of raw materials. I will tell him exactly how that arose.
  As he knows, we had very little time to draw Amendments between the time when the Bill was received by us and the time when the Committee stage began. The Minister has been an Opposition back-bencher and I venture to think that the time will come when he will be again in opposition, though next time a Front Bencher. He knows the traps of drafting which can easily beset a back bencher so that an Amendment, perfectly properly, is not called by the Chair.
  The Government, on the other hand, have at their disposal all the artifice and skill of Parliamentary draftsmen. If the Minister were to say that he would concentrate in an Amendment on subheads of the subheading which I have chosen, I would be prepared to accept that if, by so doing, we were to exempt the raw materials of the horticultural industry. Indeed, so anxious was I to make this point clear that I put it in a letter to the Financial Secretary so that he might be in no doubt about it.
  To summarise, the points I make are these. First, it is not the Government's intention that the 15 per cent. surcharge shall apply to raw materials. Secondly, they have conceded the principle to horticulture already. I gave the example of seeds for sowing. Thirdly, they have, nevertheless, perhaps through inadvertence because of the highly detailed nature of the subsections of the headings in this lengthy document, included the raw materials of this most important trade. Horticulturists cannot sell directly that which they import, but for them it is a raw material upon which they work and which they subsequently sell as far as 15 months ahead.
  I hope, therefore, that, if the Minister accepts that there is genuine substance in my argument, and if he bears in mind the technical point on the drafting of the Amendment which I have made clear to him, he will be able to accept the principle of the Amendment.
  Mr. Terence L. Higgins: I support what has been said by my hon. Friend the Member for Wokingham (Mr. van Straubenzee), and I urge acceptance of Amendment No. 93, to include mush-

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  room spawn. We have constantly been told by Government spokesmen that the object of the Bill is not protection but the improvement of our balance of payments. It seems reasonable, therefore, to exclude from it items which can properly be regarded as raw materials. My hon. Friend has made abundantly clear that the items covered by his Amendment and mine should rightly be regarded as raw materials.
  The international Customs classification is a most useful document, but it would be quite wrong to apply it dogmatically in the present context rather than make exceptions when the chapter headings need to be broken down into their component parts. Moreover, it is vital, when considering the balance of payments and the effect of the surcharge, to remember that some of these items which are essential raw materials for horticulture will have to bear the surcharge whereas some of the products which they will be used to produce, which are largely food—mushrooms, for instance—will not bear the surcharge.
  Logically, therefore, if one puts the surcharge on raw materials but does not put it on the import of foodstuffs produced by such raw materials, the effect on the balance of payments must be adverse rather than favourable. I believe that the exclusion of these items must he the result of oversight, and we ought to look again at the Customs list to provide for their inclusion in the Schedule of exemptions.
  Sir Cyril Osborne: May I make a plea especially on behalf of rose growers? [An HON. MEMBER: "No."] I intend to make it, whether my hon. Friend likes it or not.
  The Chairman: An hon. Member in a recumbent position should not interrupt.
  Sir C. Osborne: I put this point to the Government not in any aggressive way. One of my neighbours, who is a great rose grower, rang me up on Sunday in a terrible state of anxiety to tell me that his trade imports briars mostly at about this time of the year. He sells vast quantities of roses in the Canadian market and earns many valuable dollars for us, but he has to sell them in competition with other European producers who will not have to pay the 15 per cent. Surcharge
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  on their imports. He asked me to make this point on his behalf and on behalf of the trade generally, and I do so in support of the Amendment.
  The Minister without Portfolio (Sir Eric Fletcher): The hon. Member for Wokingham (Mr. Van Straubenzee) put his case for the Amendment with great restraint and persuasiveness, and I have no doubt that, during the series of debates which we shall have on the Amendments to the Schedule, we shall hear, as we have heard on this one, a number of arguments indicating the hardship which will arise if particular items are not exempted. It may be convenient, therefore, if I explain at the outset the general principles on which my right hon. Friend the Chancellor has acted both in drawing up the Schedule and, since it was drawn up, in putting down certain Amendments which we shall be considering a little later.
  The Committee will realise that, with the best will in the world, it is difficult to draw a logical or hard and fast line in many cases between what should be subject to charge and what should be exempt. The hon. Member for Wokingham was quite correct in saying that the basic principle was that we should exclude foodstuffs, raw materials, and certain crudely processed materials. I recognise that the products of one industry are the raw materials of another, and, therefore, in using the term "raw material" we are not using a term which is capable of precise definition. Nevertheless, as we go along, we shall find that my right hon. Friend has endeavoured to secure the maximum of justice in the exemptions which were either originally in the Bill or are now to be added.
  As my right hon. Friend said on Second Reading, there were no generally accepted rules which could be applied precisely and consistently over the whole field, and it was for that reason that he said that he would, after Second Reading, consider a small group of items which, on the strict application, should be added to the Schedule. It may help hon. Members if I explain the conditions which had to be satisfied to justify my right hon. Friend in making the additions which we find on the Notice Paper.
  Those conditions are, first, that the items represent anomanes in the sense that they are either materials which have

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  undergone only elementary processes or are foodstuffs and should have been included originally in the exemption list; secondly, they are items in respect of which there is evidence that levying the charge is causing hardship; and, thirdly, they are items the exemption of which would not, in the Government's view, endanger the whole fabric of the scheme by starting a chain reaction through creating a series of other anomalies.
  The Schedule is inherently and necessarily based upon the Customs Tariff of 1959. Incidentally, this is the first Measure in which statutory recognition is given to the existence of this tariff. The tariff was based upon an international convention at Brussels and has great international convenience because there is now brought into existence a tariff in which practically every article one can think of is listed and classified in a commonly agreed and accepted uniform code. If the Committee is interested, the statutory authority for it is contained in Statutory Instrument No. 403 of 1961, the Import Duties (General) (No. 3) Order, 1961, made under the Import Duties Act, 1958. As some hon. Members know, most people, for convenience, refer to the bound volume, which, notwithstanding various additions made to it since 1959, is always known as the Customs Tariff, 1959.
  4.0 p.m.
  This tariff classifies all goods under various headings. The Committee will see that in Schedule 1, consistent with the principle enunciated by the Chancellor, all articles in Chapters 1 to 5 and in Chapters 7 to 21 and 23 are exempted. The reason is that they are all either foodstuffs or raw materials or in the nature of foodstuffs or raw materials.
  Miss J. M. Quennell: I notice that, under Chapter 4, natural honey is properly exempted, but I am puzzled to know whether this means that synthetic honeys which are imported but which are also foodstuffs will be subject to the charge.
  The Chairman: Order. For the convenience of the Committee, I am allowing the Minister, on this first Amendment, to enumerate the considerations which he is applying to the various Amendments, but we must not have a general debate on those matters now.
  Sir E. Fletcher: Chapter 6 deals with vegetable products, and, consistent with their general approach to this problem, the Government have excluded from the exemptions all the items in Chapter 6 because they are neither foodstuffs nor raw materials. It would be stretching language to describe any, or at least many, of the items in Chapter 6 as raw materials. They start with bulbs, tuberous roots, crowns, rhizomes, dormant, in growth or in flower; and they include cut flowers, foliage, and so forth. One could not regard any of them in the ordinary sense of the word as raw materials.
  Mr. John Hall: In what way are these any less raw materials than, say, natural grown woods under Chapter 44.01–12?
  Sir E. Fletcher: I think that we shall get into difficulties if we try to draw analogies with woods and wood products at this stage. No doubt, there will be arguments as to where the line should be drawn in that section when we come to it.
  Sir Kenneth Pickthorn: I am sorry to be awkward but it is a little awkward for us having the three categories, so to speak, not written. What about roses, particularly new species of roses? Neighbours and constituents of mine live on the very wholesale sale of roses, especially new varieties. Are they their raw materials?
  Sir E. Fletcher: The hon. Member can argue that point when we come to it. I was submitting to the Committee that in the sense in which the Chancellor has tried to draw a line of demarcation it is not realistic to treat flowers—cut flowers or bulbs or seeds—as raw materials.
  One of the basic reasons why I could not advise the Committee to accept the Amendment is that it would be very difficult to separate mushroom spawn from the variety of bulbs and flowers contained in Chapter 6. It is essential that the Committee should look at all the items contained in 06.02 as a whole. The hon. Member for Wokingham conceded that, with respect to some of the items listed in his Amendment, he would find it difficult to treat them as raw materials—and I do not intend to make any debating point on that. I prefer

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  to stress the substance of the reason why my right hon. Friend thinks that it would be contrary to his intention in imposing the surcharge in general if he were to make exemptions of this kind.
  Hon. Members will realise that unless the surcharge applied to a fairly wide field it would be necessary to increase the rate of the surcharge on other goods in order to achieve the same revenue result. If they look at this class of goods as a whole, most people will consider that these horticultural products, in so far as they are imported into the country, are luxury goods rather than necessities.
  The hon. Member for Louth (Sir C. Osborne) spoke of hardship to a rose grower in his constituency who imported some of these briars for re-export. But when his constituent re-exports them he will get a drawback. If it is found on entry that he is importing them for re-export, the whole of the surcharge will be remitted and he will have to make no payment at all.
  Mr. Keith Stainton: Does the hon. Member appreciate the inevitably long time-lag which occurs in growing on these root stocks? For roses it is at least 15 months and more often than not 18 months. For ornamental trees and shrubs, which are large dollar earners, the period can be three, four or five years.
  Sir E. Fletcher: I have considered that, and the hon. Member will be able to make the point later in the Clause in the Bill which deals with drawback, if he wishes. The Bill has been designed to give every importer who imports anything liable to this surcharge, which may, either in the imported form or following some process, subsequently be re-exported, the maximum advantage in getting rebate when he re-exports or remission of duty on importation—subject to his being able to show that the article is subsequently to be exported in one form or another.
  For those reasons—both from the way in which the provisions have been drawn up and from the fact that none of these articles can be considered either a foodstuff or a raw material—I cannot advise the Committee to accept the Amendment. I can, however, give the assurance
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  that when the Chancellor reviews the content of the Schedule in the spring he will bear in mind representations which have been made in these discussions. As the Committee appreciated last night, there are powers under Clause 3 for the Chancellor to make additions to the Schedule at any stage by an Order in Council.
  4.15 p.m.
  Mr. James Scott-Hopkins: I found the Minister's reply most disappointing and I am sorry that he has rejected the Amendment. In view of comments yesterday, however, I am glad to see the Parliamentary Secretary to the Ministry of Agriculture on the Front Bench.
  As hon. Members realise, this is a matter of great importance to parts of the horticultural industry. As was explained yesterday, horticulture is not in a position to get any benefit from any Price Review adjustments which may be made next year. This is a straight impost on the industry or on its customers.
  I was rather confused by the Minister's arguments. I understand why the Chancellor excluded Chapter 6. At first blush it seemed that most of the products in Chapter 6 were not the kind of raw materials which my hon. Friend the Member for Wokingham (Mr. van Straubenzee) mentioned when he made his excellent speech. But on further examination it becomes apparent that some parts of the chapter—06.02(A) and (B)—include the very materials which the grower needs if he is to be able to carry on his horticultural business. A very small proportion are grown in this country and a large number are imported. They are basic raw materials for him.
  As I suspected, the argument on this Amendment, and probably on many others, will centre around what is a raw material. I expected that the Minister would use that as a basis for opposing the Amendment. He said that these are not raw materials. But I beg him to look at the matter again, because, in the light of what my hon. Friends have said, it is clear that these are basic raw materials. It is on these that the later product is grown which is sold to the public. Quite often it is a very long time before the grower gets any return—often it is many

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  months. My hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) pointed out that it may be as long as 15 months.
  The Minister was not correct in his answer to my hon. Friend the Member for Louth (Sir C. Osborne). My hon. Friend did not say that the briars which were imported would subsequently be re-exported to Canada. It is a product from those briars which will be re-exported. The situation is that the horticulturist may have to pay an impost but may get no drawback later—or, if he gets a drawback, it may be several months after he has paid the surcharge on the product. I ask the Minister to look very closely at this matter again. In his heart of hearts he knows that, as my hon. Friend the Member for Wokingham said, this is a basic raw material. I do not think that there is much between the Committee on this fact.
  But the Minister stated at a subsidiary reason for not accepting the Amendment That it was difficult to make a distinction in Chapter 6. I respectfully submit that this need not be so. There is no reason whatever why we should not include in the Schedule a particular reference to subheadings of Chapter 6—06.02(A) and (B). I will not take issue with the Minister on the other part of Chapter 6 when he said that some things could not be included because they would not qualify as raw materials.
  The hon. Gentleman mentioned cut flowers. But he is arguing falsely when he says that it is impossible to isolate a particular subheading in Chapter 6, and I ask him to look at the matter again. It may be that the drafting of the Amendment needs further clarification, but at least he could give us an assurance that he agrees with us in respect of all raw materials and that he will put down an Amendment later to meet the point made by my hon. Friend.
  I found the Minister's arguments quite extraordinary when they were related to the comments of my hon. Friend the Member for Worthing (Mr. Higgins) about mushroom spawn. He outlined the principles on which the surcharge has been laid down and said that food was excluded from any impost. Mushrooms are, therefore, excluded. Mushroom spawn, from which mushrooms will be produced in this country, will suffer the surcharge
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  and will be in competition with mushrooms imported without the 15 per cent. surcharge. The mushrooms produced in this way will have to be sold against unfair competition. This cannot be the basis of a fair argument. Last night much comment was made by Ministers about fairness. I thought that my hon. Friend the Member for Worthing had a very fair point. These provisions are unfair to those horticulturists who import mushroom spawn and then sell the mushrooms on the open market in competition with imported mushrooms. The Minister says that he cannot isolate this item in the chapter but I think that it can be done.
  The Minister then fell back on the argument that if he began to exclude various products it would mean a higher incidence than 15 per cent. over the rest of the field. This is a most unfortunate argument for him to put forward. Surely the whole argument throughout the debate, since the Chancellor's announcement, has been that the 15 per cent. surcharge was aimed at correcting the balance of payments position. We on this side of the Committee do not accept the problem in the same degree as the Minister has put it. Nevertheless, that has been the argument. The Minister is now saying that exempting small items such as these, adding up to a not appreciable total, will affect the amount of money being received from the surcharge to such an extent that the rate will have to be increased over the rest of the field. In other words, he would want more money from the surcharge.
  But this was not the reason given by the Chancellor for imposing the surcharge. He said that he imposed it to stop imports from coming into this country. His hon. Friend today states that he wants to collect more money from the 15 per cent. import surcharge and that if he exempts some items he will have to consider raising the level of surcharge on other items. I submit to the Committee that the argument is false, or, at least, contradictory, and that the Minister cannot have it both ways.
  I beg the Minister to look once more at this Amendment. If it is possible, and I fully believe that it is and would like to advise the Committee that I think it can be done, we should put in Chapter 6 those items which are raw materials

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  on equal terms with foodstuffs. If the Minister could put down an Amendment at a later stage, then I think we shall have fairness for that part of the horticultural industry which would otherwise be unfairly hit.
  Mr. John Hall: I think that the Committee will agree that we have had a rather disappointing reply from the Minister. This is no personal reflection on the Minister without Portfolio; he did the best he could with a very bad case. The Amendment was moved very persuasively by my hon. Friend the Member for Wokingham (Mr. van Straubenzee) and supported very well by my hon. Friend the Member for Worthing (Mr. Higgins), who made a good case for the inclusion of mushroom spawn. The problem that always faces us, and will face us throughout the whole of our debates is: when is a raw material not a raw material? Nothing could be more raw as a raw material than mushroom spawn. I fail to understand why we cannot include mushroom spawn with many of the other items which have been mentioned.
  The point deployed by the Minister, that it was impossible to exclude these items because they were all under one heading, just does not hold water. Many of these goods come under the headings of exceptions which the Minister enunciated this afternoon. I should have thought that it would be quite simple to include them under the exemptions. There are two points, which are of great interest to the Committee and on which we want further information. The Minister has made clear the principles that are guiding the Chancellor in deciding what additional materials shall be included in the list of exemptions, and the principles which guided the further Amendments put down on behalf of the Chancellor. They deal with, generally, raw materials that have undergone processing, or foodstuffs, or in cases of hardship, or where the inclusion would endanger the whole fabric of the scheme.
  I ask the Minister to make clear whether any material which we are asking should be exempted has to comply with each one of these principles.
  Sir Eric Fletcher Sir Eric Fletcher indicated assent.
  Mr. Hall: It does.
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  The other point to which my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) very properly drew attention was the statement by the Minister about revenue. He said that if the exemption which my hon. Friends are seeking is allowed it will be necessary to increase the surcharge on other items in order to raise the same amount of revenue. What is the real object of this exercise? Is it to raise revenue, or is it merely to discourage imports?
  We have been led to believe the whole time that the purpose of this was to discourage imports, that it was quite incidental and, perhaps rather unfortunate and would cause hardship, and that the Government did not want it, but that it was just one way of achieving their objective of limiting imports. What are the Government trying to do? If they are trying to raise revenue by means of this surcharge, then the surcharge will not be for a few months, but for 12 months or two years, because a source of revenue of this kind is a very valuable source. I think that the Government will be very reluctant to let go once they have imposed it. Could we have a little guidance on this?
  Sir Eric Fletcher: I think that the hon. Member misunderstood. My argument was that if one extends the exemption and therefore narrows the field on which the surcharge is to operate, to any considerable extent, the same result in reducing our balance of payments would not be achieved unless the rate of surcharge was increased.
  Mr. Hall: That explanation leaves me even more puzzled than before. I cannot believe that the cost of exempting, shall we say, mushroom spawn will unbalance the whole scheme, or that the exemption of any of the items which are included in this Schedule would do so.
  Sir Eric Fletcher: I am sure that the hon. Member does not want to misrepresent me. What I said in my opening remarks was intended to apply both to this Amendment and to the series of Amendments which we shall be discussing later. If Amendments for every case in which individual Members are interested were accepted and, therefore, there was a large number of additional exemptions put on to the Schedule, it would obviously not achieve the balance

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  of payments correction which my right hon. Friend the Chancellor of the Exchequer is aiming at achieving. Therefore, if the exclusion is increased, to achieve the same result the rate of the surcharge would have to be increased.
  Mr. Hall: I do not want to develop the argument to cover the whole of these Schedules. I thought that it would have been the Government's intention to look at their Schedule from the point of view of its effect on the industrial and productive efficiency of the country and also its effect on the export potential. We have already heard of the damage that is being done to our export potential in roses and rose trees. I personally view this with a good deal of regret. I would have preferred roses to be included in the list, as I am very fond of roses and live in a house called "Rosebank", which is very appropriately named.
  I hope, nevertheless, that the Minister will take the earliest opportunity of looking at this again, because there is a great deal of feeling about it, and my hon. Friends spoke on the Amendment with a good deal of feeling. They have been asked to do so by people who will be considerably affected by the surcharge. We hope that the Minister will think about this again and bring something forward on Report.
  Mr. J. B. Godber: It is a long time since I intervened in a debate concerned with horticulture or agriculture, and I do so with some hesitation. But I wish to add a word to the pleas of my hon. Friends for three reasons. First, I am, and have always been, connected with horticulture and I know something of these problems, though I am not directly connected with any particular matters in this Amendment. Secondly, I have had the strongest representations in my constituency about the actual harm that will come to some of my constituents. Thirdly, having listened to the Minister, I must admit that I was very deeply disappointed.
  I recognise, of course, that this is a complicated matter, and not readily understandable to many hon. Members, but it seemed to me that he had not grasped some of the salient points. I ask him to consider again the cogent points put by my hon. Friend the Member
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  for Cornwall, North (Mr. Scott-Hopkins) and by other of my hon. Friends.
  There are special circumstances here. I thought that the Minister had not grasped the point when he talked about these things being luxuries rather than necessities. They may be luxuries to the ultimate consumer, but to the people who are concerned with this Amendment they are vital to their livelihood. They are an important matter. When I heard the Minister say that it might be possible to look at this again in the spring, I thought that this was the sort of thing that would send any nurseryman "through the roof". All the items under Chapter 6 are seasonal items and the need is to buy them now. To change this provision in the spring would be useless. That would give an unfair advantage to those competitors in other countries with whom those of our nurserymen who are exporting are in direct competition.
  There are special features here which deserve further consideration. When the Minister said that these items are neither foodstuffs nor raw materials he was exemplifying in one phrase the difficulty which confronts the House of Commons whenever it considers matters relating to horticulture. Horticulture gets left out of many of the advantages which accrue to agriculture. There are so many occasions when horticulture deserves the same treatment as agriculture. Merely to say that these articles are not foodstuffs does not seem to be satisfactory. The point about saying that they are not raw materials was so adequately dealt with by my hon. Friend the Member for Cornwall, North that there is no need for me to reiterate it.
  Without wishing to labour the matter further, I can only hope that the Minister will consider the matter again. There is manifest injustice here.
  4.30 p.m.
  Mr. Raymond Gower: I shall not keep the Committee for more than a few moments, but I think that other points emerge from this discussion. The Minister seemed to imply that he could not treat this matter on its merits and that if he made a concession—for instance, for mushroom spawn, which would have no real effect on the main objective which the Chancellor has in mind—that might lead to other concessions. He therefore could not treat each

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  case on its real merits. I thought that that was not a valid point which he could sustain.
  On the question of what is a raw material the hon. Gentleman's objective judgment—he was posing this as a general treatment for all these matters—was whether it was a raw material, in the view of the Chancellor, or a raw material which could not be regarded as the supplying of one industry by another. Surely there is an objective test which could be applied. Surely it could be found and ascertained whether a particular industry depends on a particular product as a raw material. That should not be difficult.
  I reiterate with some force what was said by my right hon. Friend the Member for Grantham (Mr. Godber). The hardship in a particular industry is a material question. The Minister appeared to disregard this completely. He seemed to be concerned only about whether the article was an essential or a luxury. He should take account of the effect on the industry concerned, in this case the horticultural industry, and the real hardship if these tests are employed far too rigidly.
  Mr. van Straubenzee: I must add my voice in regret at what the Minister said to us in reply to the Amendment. Every Government, of every kind, is immensely strengthened when it is served by a solicitor. Therefore, I was more hopeful than some when the hon. Gentleman came to his office. I hoped that a commonsense approach would be applied to these matters.
  By incorporating in the Bill references to the tariff, I think that he was rightly incorporating a very exact method of identifying every kind of material. I freely confess that until I got my nose inside this problem I had not read through the fascinating document the hon. Gentleman now has before him. By the same token, he has to his hand a method of selecting very exactly. He is not being asked to exercise a massive piece of machinery. To give an example, we are discussing items under the heading 0602. I concede with absolute frankness that, taken by itself, 0602 does not provide a very suitable weapon, but will the
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  hon. Gentleman look at subheading (a) under 0602?
  It would be perfectly reasonable to accept that provision. Then there would be no problem or difficulty about drafting. Under that heading there are the words:
  "buds, eyes and stems for grafting and budding, cuttings and slips".
  They are raw materials of the horticultural industry. By his own argument because he is incorporating this document he has to his hand a weapon of precision. He need not be anxious that this would be something which would go over the whole range.
  I beg him to be most careful about using the word "luxury" in regard to this Amendment. These things are the livelihood, in some cases, of people in a small way of business. Of course, I accept that he did not mean to import "luxury" in that sense, but it is liable to be understood in that sense outside this Committee and that would be very unfortunate.
  Mr. John Page: When the question of luxuries was mentioned, I wondered whether the hon. Gentleman had noticed that on Second Reading the Chancellor said that there would be an exemption of
  "certain important items, namely, food, feedingstuffs, fuel, unmanufactured raw materials and unmanufactured tobacco."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1096.]
  I wonder whether these luxuries are more or less luxuries than unmanufactured tobacco.
  Mr. van Straubenzee: That is a matter of opinion. I recall that later we are to except pearls from the 15 per cent. surcharge. I hope that in the light of the consultations which, I dare say, have taken place, and the very cogent arguments put for this case, the hon. Gentleman will feel that, on consideration, he can look at the matter again.
  Sir Eric Fletcher: I have listened carefully to the speeches made by the hon. Member for Cornwall, North (Mr. Scott-Hopkins) and the second speech of the hon. Member for Wokingham (Mr. van Straubenzee) and I realise that very

  487
  sincere convictions are held by hon. Members who have spoken on this subject. My right hon. Friend the Minister of Agriculture has also received representations from horticultural interests and we are aware of the great concern felt by persons who will be affected by the surcharge in so far as it operates under Chapter 6.
  I do not want there to be any misunderstanding of what I said about luxuries. I was drawing a distinction between vegetable products mentioned in Chapter 6 and foodstuffs mentioned in the associated chapters. The hon. Member for Wokingham suggested that there was an instrument here which could enable my right hon. Friend to discriminate between different articles. I agree, but that would take time. One of the difficulties is that, for reasons with which the Committee is familiar, this surcharge has to be imposed as an immediate operation. It is, admittedly, a somewhat blunt instrument. Given no limit on the time, it would be possible for the Customs, which is a very expert Department, to analyse all these articles and to see to which of them—and which of them alone—the arguments which hon. Members have addressed apply.
  It is conceded that they apply to some and not to others. For instance, the case for mushroom spawn seems a much stronger one than that for trees, which are in the same category. It is well known that some of these products are imported for the purpose of retail trade and others for the purpose of the horticultural industry. Some can be identified as horticultural products. All that can be done precisely, but it cannot be done very quickly.
  I regret that it is impossible for me to give an assurance that between now and Report it would be possible for any Department to undertake the complicated task of saying whether—if, for example, mushroom spawn were exempted—that would involve repercussions, which would mean the exemption of other articles without which injustice would be caused to other persons.
  What I hope will satisfy hon. Members is that if this Amendment is withdrawn I can assure the Committee that
  488
  when my right hon. Friend reviews, as he has promised to do, the operation of the surcharge with a view to lifting it in respect of commodities where it would be reasonable and proper to reduce it, I feel sure that the case of mushroom spawn would have a high priority. It is not possible at this stage, or before the Bill is passed, with the greatest good will in the world, to undertake the Herculean task of dissecting every chapter and saying just where the dividing line should be drawn. The only proper course for the Committee to take is to allow the Schedule to pass in this form, without the Amendment, with the assurance that as soon as the surcharge is reviewed by my right hon. Friend sympathetic consideration will be given to the representations which have been made during the course of this debate.
  Mr. Scott-Hopkins: I find the argument of the hon. Gentleman quite extraordinary, and rather pathetic, too. He is saying, "Please, I cannot do this. You are right, but we have not got the time". This is a most astonishing thing for the hon. Gentleman to say.
  We have been through Chapter 6 with a fine toothcomb, and other chapters, too. The number of Amendments is indicative of what we have done. We are providing an instrument whereby this can be done. The hon. Gentleman confesses that he wants to help us, and to show fairness to the agricultural industry. We are showing him how this can be done, and it is no argument for him to say, "Please, we cannot do it because we have not got time to do it, and we might be unfair to somebody at a later date".
  Does not the hon. Gentleman realise that this is a seasonal question? If it is put off until some review, at some time in the future, by his right hon. Friend, this will be totally unacceptable not only to horticulturists but to my right hon. and hon. Friends. I must ask the hon. Gentleman to reconsider the matter in the short time that we have available, and to come to a decision so that these Amendments can be added to the list of exemptions. I hope that the hon. Gentleman will do this, and that we shall not hear any more of this pathetic business, "We have not got the time".
  Question put, That those words be there inserted:—

  Division No. 21.]

  AYES

  [4.42 p.m.

  Agnew, Commander Sir Peter

  Gammans, Lady

  Mills, Stratton (Belfast, N.)

  Alison, Michael (Barkston Ash)

  Gardner, Edward

  Miscampbell, Norman

  Allason, James (Hemel Hempstead)

  Gibson-Watt, David

  Mitchell, David

  Amery, Rt. Hn. Julian

  Giles, Rear-Admiral Morgan

  Monro, Hector

  Astor, John

  Glover, Sir Douglas

  More, Jasper

  Atkins, Humphrey

  Glyn, Sir Richard

  Morgan, W. G.

  Awdry, Daniel

  Goodhart, Philip

  Mott-Radclyffe, Sir Charles

  Baker, W. H. K.

  Goodhew, Victor

  Murton, Oscar

  Balniel, Lord

  Gower, Raymond

  Neave, Airey

  Barlow, Sir John

  Grant, Anthony

  Nicholls, Sir Harmar

  Batsford, Brian

  Griffiths, Eldon (Bury St. Edmunds)

  Noble, Rt. Hn. Michael

  Beamish, Col. Sir Tufton

  Griffiths, Peter (Smethwick)

  Nugent, Rt. Hn. Sir Richard

  Bennett, Sir Frederic (Torquay)

  Gurden, Harold

  Onslow, Cranley

  Bennett, Dr. Reginald (Gos & Fhm)

  Hall, John (Wycombe)

  Orr, Capt. L. P. S.

  Berry, Hn. Anthony

  Hall-Davis, A. G. F.

  Osborn, John (Hallam)

  Biffen, John

  Hamilton, Marquess of (Fermanagh)

  Osborne, Sir Cyril (Louth)

  Biggs-Davison, John

  Harris, Frederic (Croydon, N. W.)

  Page, John (Harrow, W.)

  Bingham, R. M.

  Harris, Reader (Heston)

  Page, R. Graham (Crosby)

  Black, Sir Cyril

  Harrison, Brian (Maldon)

  Pearson, Sir Frank (Clitheroe)

  Blaker, Peter

  Harrison, Col. Sir Harwood (Eye)

  Percival, Ian

  Bossom, Hn. Clive

  Harvey, John (Walthamstow, E.)

  Peyton, John

  Box, Donald

  Hastings, Stephen

  Pike, Miss Mervyn

  Boyd-Carpenter, Rt. Hn. J.

  Hawkins, Paul

  Pitt, Dame Edith

  Boyle, Rt. Hn. Sir Edward

  Hay, John

  Pounder, Rafton

  Braine, Bernard

  Heald, Rt. Hn. Sir Lionel

  Prior, J. M. L.

  Brewis, John

  Heath, Rt. Hn. Edward

  Quennell, Miss J. M.

  Brinton, Sir Tatton

  Hendry, Forbes

  Rawlinson, Rt. Hn. Sir Peter

  Bromley-Davenport,Lt.-Col.Sir Walter

  Higgins, Terence L.

  Redmayne, Rt. Hn. Sir Martin

  Brooke, Rt. Hn. Henry

  Hiley, Joseph

  Renton, Rt. Hn. Sir David

  Brown, Sir Edward (Bath)

  Hill, J. E. B. (S. Norfolk)

  Ridsdale, Julian

  Bruce-Gardyne, J.

  Hirst, Geoffrey

  Roots, William

  Bryan, Paul

  Hogg, Rt. Hn. Quintin

  Royle, Anthony

  Buchanan-Smith, Alick

  Hordern, Peter

  Russell, Sir Ronald

  Bullus, Wing Commander Sir Eric

  Hornby, Richard

  Scott-Hopkins, James

  Burden, F. A.

  Howard, Hn. G. R. (St. Ives)

  Sharples, Richard

  Butcher, Sir Herbert

  Howe, Geoffrey (Bebington)

  Shepherd, William

  Butler,Rt.Hn. R.A.(Saffron Walden)

  Hunt, John (Bromley)

  Sinclair, Sir George

  Campbell, Gordon

  Hutchison, Michael Clark

  Spearman, Sir Alexander

  Cary, Sir Robert

  Irvine, Bryant Godman (Rye)

  Stainton, Keith

  Channon, H. P. G.

  Jenkin, Patrick (Woodford)

  Summers, Sir Spencer

  Chataway, Christopher

  Jennings, J. C.

  Taylor, Edward M. (G'gow,Cathcart)

  Chichester-Clark, R.

  Jopling, Michael

  Taylor, Frank (Moss Side)

  Clark, Henry (Antrim, N.)

  Kerby, Capt. Henry

  Temple, John M.

  Clark, William (Nottingham, S.)

  Kershaw, Anthony

  Thatcher, Mrs. Margaret

  Cooke, Robert

  Kilfedder, James A.

  Thomas, Sir Leslie (Canterbury)

  Cooper, A. E.

  Kimball, Marcus

  Thompson, Sir Richard (Croydon,S.)

  Cooper-Key, Sir Neill

  King, Evelyn (Dorset, S.)

  Thorneycroft, Rt. Hn. Peter

  Cordle, John

  Kitson, Timothy

  Tiley, Arthur (Bradford, W.)

  Costain, A. P.

  Lagden, Godfrey

  Tilney, John (Wavertree)

  Courtney, Cdr. Anthony

  Lancaster, Col. C. G.

  Turton, Rt. Hn. R. H.

  Crawley, Aldan

  Langford-Holt, Sir John

  Tweedsmuir, Lady

  Crosthwaite-Eyre, Col. Sir Oliver

  Litchfield, Capt. John

  van Straubenzee, W. R.

  Cunningham, Sir Knox

  Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)

  Vaughan-Morgan, Rt. Hn. Sir John

  Dalkeith, Earl of

  Lloyd, Ian (P'tsm'th, Langstone)

  Vickers, Dame Joan

  Dance, James

  Lloyd, Rt. Hn. Selwyn (Wirral)

  Walder, David (High Peak)

  Davies, Dr. Wyndham (Perry Barr)

  Longbottom, Charles

  Walker, Peter (Worcester)

  d'Avigdor-Goldsmid, Sir Henry

  Longden, Gilbert

  Wall, Patrick

  Dean, Paul

  Loveys, Walter H.

  Walters, Dennis

  Dodds-Parker, Douglas

  Lucas, Sir Jocelyn

  Ward, Dame Irene

  Donaldson, Cmdr. C. E. M.

  Lucas-Tooth, Sir Hugh

  Weatherill, Bernard

  Doughty, Charles

  McAdden, Sir Stephen

  Whitelaw, William

  Douglas-Home, Rt. Hn. Sir Alec

  MacArthur, Ian

  Williams, Sir Rolf Dudley (Exeter)

  Drayson, G. B.

  MacIeod, Rt. Hn. Iain

  Wills, Sir Gerald (Bridgwater)

  du Cann, Rt. Hn. Edward

  McNair-Wilson, Patrick

  Wilson, Geoffrey (Truro)

  Eden, Sir John

  Maginnis, John E.

  Wise, A. R.

  Fell, Anthony

  Maitland, Sir John

  Wolrige-Gordon, Patrick

  Fisher, Nigel

  Marten, Neil

  Wood, Rt. Hn. Richard

  Fletcher-Cooke, Charles (Darwen)

  Mathew, Robert

  Woodhouse, Hn. Christopher

  Fletcher-Cooke, Sir John (S'pton)

  Maude, Angus E. U.

  Woodnutt, Mark

  Forrest, George

  Maxwell-Hyslop, R. J.

  Yates, William (The Wrekin)

  Foster, Sir John

  Maydon, Lt.-Cmdr. S. L. C.

  Younger, Hn. George

  Fraser, Ian (Plymouth, Sutton)

  Meyer, Sir Anthony

  Galbraith, T. G. D.

  Mills, Peter (Torrington)

  TELLERS FOR THE AYES:

  Mr. McLaren and Mr. Pym.

  The Committee divided: Ayes 217, Noes 264.

  NOES

  Abse, Leo

  Griffiths, David (Rother Valley)

  Milne, Edward (Blyth)

  Albu, Austen

  Griffiths, Rt. Hn. James (Llanelly)

  Molloy, William

  Allaun, Frank (Salford, E.)

  Grimond, Rt. Hn. J.

  Monslow, Walter

  Alldritt, W. H.

  Hale, Leslie

  Morris, Alfred (Wythenshawe)

  Allen, Scholefield (Crewe)

  Hamilton, James (Bothwell)

  Morris, Charles (Openshaw)

  Armstrong, Ernest

  Hamilton, William (West Fife)

  Morris, John (Aberavon)

  Atkinson, Norman

  Hamling, William (Woolwich, W.)

  Mulley, Rt. Hn. Frederick (SheffieldPk)

  Bacon, Miss Alice

  Harper, Joseph

  Murray, Albert

  Bagier, Cordon A. T.

  Harrison, Walter (Wakefleld)

  Neal, Harold

  Barnett, Joel

  Hart, Mrs. Judith

  Newens, Stan

  Baxter, William

  Hattersley, Ray

  Noel-Baker, Francis (Swindon)

  Beaney, Alan

  Hayman, F. H.

  Norwood, Christopher

  Bellenger, Rt. Hn. F. J.

  Hazell, Bert

  Oakes, Gordon

  Bence, Cyril

  Heffer, Eric S.

  Ogden, Eric

  Bennett, J. (Glasgow, Bridgeton)

  Henderson, Rt. Hn. Arthur

  O'Malley, Brian

  Bessell, Peter

  Herbison, Rt. Hn. Margaret

  Oram, Albert E. (E. Ham S.)

  Binns, John

  Hobden, Dennis (Brighton, K'town)

  Orbach, Maurice

  Blackburn, F.

  Holman, Percy

  Orme, Stanley

  Blenkinsop, Arthur

  Horner, John

  Oswald, Thomas

  Boardman, H.

  Houghton, Rt. Hn. Douglas

  Owen, Will

  Boston, T. G.

  Howarth, Harry (Wellingborough)

  Padley, Walter

  Bottomley, Rt. Hn. Arthur

  Howarth, Robert L. (Bolton, E.)

  Page, Derek (King's Lynn)

  Bowden, Rt. Hn. H. W. (Leics S.W.)

  Howell, Denis (Small Heath)

  Paget, R. T.

  Bowen, Roderic (Cardigan)

  Howie, W.

  Pannell, Rt. Hn. Charles

  Bowles, Frank

  Hoy, James

  Pargiter, G. A.

  Boyden, James

  Hughes, Cledwyn (Anglesey)

  Park, Trevor (Derbyshire, S.E.)

  Braddock, Mrs. E. M.

  Hughes, Emrys (S. Ayrshire)

  Pavitt, Laurence

  Bray, Dr. Jeremy

  Hughes, Hector (Aberdeen, N.)

  Pearson, Arthur (Pontypridd)

  Brown, Hugh D. (Glasgow, Provan)

  Hunter, Adam (Dunfermline)

  Pentland, Norman

  Brown, R. W. (Shoreditch & Fbury)

  Hunter, A. E. (Feltham)

  Perry, E. G.

  Buchan, Norman (Renfrewshire, W.)

  Irvine, A. J. (Edge Hill)

  Popplewell, Ernest

  Buchanan, Richard

  Irving, Sydney (Dartford)

  Prentice, R. E.

  Butler, Herbert (Hackney, C.)

  Jackson, Colin

  Probert, Arthur

  Butler, Mrs. Joyce (Wood Green)

  Janner, Sir Barnett

  Pursey, Cmdr. Harry

  Carmichael, Neil

  Jeger, George (Goole)

  Rankin, John

  Carter-Jones, Lewis

  Jeger, Mrs. Lena (H'b'n & St.P'cras, S.)

  Reynolds, G. W.

  Coleman, Donald

  Jenkins, Hugh (Putney)

  Rhodes, Geoffrey

  Corbet, Mrs. Freda

  Johnston, Russell (Inverness)

  Roberts, Albert (Normanton)

  Crawshaw, Richard

  Jones, Dan (Burnley)

  Roberts, Goronwy (Caernarvon)

  Cronin, John

  Jones, J. Idwal (Wrexham)

  Robertson, John (Paisley)

  Crossman, Rt. Hn. R. H. S.

  Jones, T. W. (Merioneth)

  Robinson, Rt. Hn. K. (St. Pancras, N.)

  Cullen, Mrs. Alice

  Kelley, Richard

  Rogers, George (Kensington, N.)

  Dalyell, Tam

  Kenyon, Clifford

  Ross, Rt. Hn. William

  Darling, George

  Kerr, Mrs. Anne (R'ter & Chatham)

  Rowland, Christopher

  Davies, G. Elfed (Rhondda, E.)

  Kerr, Dr. David (W'worth, Central)

  Sheldon, Robert

  Davies, Harold (Leek)

  Lawson, George

  Shinwell, Rt. Hn. E.

  Davies, Ifor (Gower)

  Leadbitter, Ted

  Shore, Peter (Stepney)

  Davies, S. O. (Merthyr)

  Ledger, Ron

  Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

  de Freitas, Sir Geoffrey

  Lee, Rt. Hn. Frederick (Newton)

  Short, Mrs. Renée (W'hampton, N.E.)

  Delargy, Hugh

  Lever, Harold (Cheetham)

  Silkin, John (Deptford)

  Dempsey, James

  Lever, L. M. (Ardwick)

  Silverman, Julius (Aston)

  Diamond, John

  Lewis, Ron (Carlisle)

  Silverman, Sydney (Nelson)

  Dodds, Norman

  Lipton, Marcus

  Skeffington, Arthur

  Doig, Peter

  Lomas, Kenneth

  Slater, Joseph (Sedgefield)

  Donnelly, Desmond

  Loughlin, Charles

  Small, William

  Driberg, Tom

  Lubbock, Eric

  Smith, Ellis (Stoke, S.)

  Duffy, Dr. A. E. P.

  McBride, Neil

  Snow, Julian

  Dunn, James A.

  McCann, J.

  Solomons, Henry

  Dunnett, Jack

  MacColl, James

  Sorensen, R. W.

  Edwards, Rt. Hn. Ness (Caerphilly)

  MacDermot, Niall

  Spriggs, Leslie

  English, Michael

  McGuire, Michael

  Stewart, Rt. Hn. Michael

  Ennals, David

  McInnes, James

  Stonehouse, John

  Ensor, David

  McKay, Mrs. Margaret

  Stones, William

  Evans, Albert (Islington, S.W.)

  Mackenzie, Alasdair (Ross&Crom'ty)

  Strauss, Rt. Hn. G. R. (Vauxhall)

  Evans, Ioan (Birmingham, Yardley)

  Mackie, John (Enfield, E.)

  Stross, Sir Barnett (Stoke-on-Trent, C.)

  Fernyhough, E.

  McLeavy, Frank

  Summerskill, Dr. Shirley

  Finch, Harold (Bedwellty)

  MacMillan, Malcolm

  Swain, Thomas

  Fitch, Alan (Wigan)

  MacPherson, Malcolm

  Symonde, J. B.

  Fletcher, Sir Eric (Islington, E.)

  Mahon, Peter (Preston, S.)

  Taverne, Dick

  Fletcher, Ted (Darlington)

  Mahon, Simon (Bootle)

  Taylor, Bernard (Mansfield)

  Floud, Bernard

  Mallalieu, E. L. (Brigg)

  Thomas, George (Cardiff, W.)

  Foley, Maurice

  Mallalieu, J.P.W.(Huddersfield, E.)

  Thomas, Iorwerth (Rhondda, W.)

  Foot, Sir Dingle (Ipswich)

  Manuel, Archie

  Thomson, George (Dundee, E.)

  Foot, Michael (Ebbw Vale)

  Mapp, Charles

  Thornton, Ernest

  Ford, Ben

  Marsh, Richard

  Thorpe, Jeremy

  Freeson, Reginald

  Mason, Roy

  Tinn, James

  Galpern, Sir Myer

  Mavhew, Christopher

  Tuck, Raphael

  Garrett, W. E.

  Mellish, Robert

  Urwin, T. W.

  Garrow, A.

  Mendelson, J. J.

  Varley, Eric C.

  Ginsburg, David

  Mikardo, Ian

  Wainwright, Edwin

  Gourlay, Harry

  Millan, Bruce

  Walden, Brian (All Saints)

  Gregory, Arnold

  Miller, Dr. M. S.

  Walker, Harold (Doncaster)

  492

  493

  Wallace, George

  Willey, Rt. Hn. Frederick

  Woodburn, Rt. Hn. A.

  Warbey, William

  Williams, Alan (Swansea, W.)

  Woof, Robert

  Watkins, Tudor

  Williams, Mrs. Shirley (Hitchin)

  Wyatt, Woodrow

  Weitzman, David

  Willis, George (Edinburgh, E.)

  Zilliacus, K.

  White, Mrs. Eirene

  Wilson, Rt. Hn. Harold (Huyton)

  Whitlock, William

  Wilson, William (Coventry, S.)

  TELLERS FOR THE NOES:

  Wilkins, W. A.

  Winterbottom, R. E.

  Mr. Grey and Mrs. Slater.

  Dr. Reginald Bennett: I beg to move, Amendment No. 25, in page 13, line 45, at end to insert:

  22.05

  …

  Wine of fresh grapes (including grape must with fermentation arrested by the addition of alcohol).

  22.06

  …

  Vermouths and other wines of fresh grapes flavoured with aromatic extracts.

  22.07

  …

  Other fermented beverages (for example cider, perry and mead).

  22.09

  …

  Spirits (other than those of heading No. 22.08); liqueurs and other spirituous beverages; compound alcoholic preparations (known as "concentrated extracts") for the manufacture of beverages.

  I am seeking to exempt from the provisions of this deplorable surcharge the items mentioned in the Amendment. In this field the surcharge has perhaps been more unfortunate and ill-judged than in any other field to which it applies. At the outset, I ought to declare by interest, as a member of the management committee of a co-operative dealing in these matters. From what I have been able to discover from the people working in the trade, the application of this surcharge is one of the most ill-thought-out, hasty—as has already been admitted by the Minister without Portfolio—and regrettable pieces of legislation that has ever been inflicted upon this country.
  It was a panic move, and it hit this trade with such suddenness that for 10 days after the infliction of the surcharge it was impossible to obtain from any Customs officer any explanation of what it meant. For a fortnight after the surcharge was imposed it was quite impossible—and I believe that it still is—to find out on what basis this surcharge is to be levied on these products, because it is so difficult—as can be understood, if I go into a little detail—to discover whether the 15 per cent. increase in duty, ad valorem, is to apply to the original value and the original purchase price of the wine, or the wine plus keeping costs, or the wine plus freight, or the wine plus freight and insurance which has been paid by the time it comes to this country.
  494
  It is almost impossible to disentangle the insurance element when wine merchants and co-operatives such as the one of which I am a member have a general, broad insurance policy covering the whole of the trading which they do. I see sympathetic expressions from some hon. Members on the Front Bench opposite. I hope that they will be shared by their colleagues in that quarter from which benefit may come. I gather from our managers and others in the trade that in some cases it may be five years or more before the argument can be settled, one way or the other, at what point value is taken on wines and spirits which are to be subject to this ad valorem surcharge. We have been accustomed to duties increases, but this is the one type of impost that is proving disastrous to administer.
  Over the last few years, unfortunately, we have had 10 per cent. increases in the duty on two occasions, according to the regulator. Now we are to have a 15 per cent. increase, although if we use our slide rules a little more carefully than the Prime Minister does we find that two tens and a fifteen do not add up precisely to 35, because one is an ad valorem surcharge on the original cost. Nevertheless, we have to pay approximately one-third more on landing wine in this country over what we paid a few years ago. This is a tremendous punishment to inflict upon a trade which has done nobody very much harm.
  The effect of this imposition has been that cargoes are jammed in the docks, and agents are begging those who deal with them not to go on ringing up and asking what the surcharges are to be before they take the goods out, because the agents do not know the answers and cannot get them. The trade is now at a standstill, and there is not one firm in London which has not been seriously dis-organised by the imposition of this surcharge. Those are strong reasons why this trade should be exempted.
  Furthermore, it is common ground among all of us of whatever party, that if this surcharge—put on suddenly in the way it has been put on—is allowed to

  495
  continue we shall lay ourselves open to retaliation, without apology, by any country which feels that it wants to do something to score off us. I am afraid that this will very badly hit our whisky business, on which the country's economy largely depends. We are very vulnerable if we insist on maintaining the surcharge.
  Questions have been asked whether goods are luxuries or necessities. If the Prime Minister's tobacco can be exempted from the surcharge, surely the beverages enjoyed by some of his supporters may equally qualify for exemption.
  5.0 p.m.
  Lieut.-Colonel Sir Walter Bromley-Davenport: It is not often that I speak on non-controversial matters, but I feel that the Amendment put orward by my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) will find universal agreement. Although it can be argued that people can do without wines and spirits, the answer to that argument is comparatively simple. Wine in moderation is recommended by the medical profession and the same may be said for spirits. The same cannot be said for tobacco. We have all been warned of the dangers of smoking, but tobacco is exempted from the surcharge. We feel it is unfair that wines and spirits should be singled out for this extra taxation.
  The duties on imported wines are already far higher than on practically any other commodity. For instance, the duty on the imports of a large range of spirits and liqueurs are already 400 per cent., and on wines the average is about 70 per cent. Surely the wine trade pays enough already. Indeed, it seems to pay more than its fair share of the increases in taxation. As was said by my hon. Friend, in 1961 the duties were increased by 10 per cent. This was consolidated in April, 1962, although other trades were then exempted from the effect of the regulator. In April, 1964, there was a further increase of 10 per cent., and on top of that now comes this 15 per cent. surcharge. In many cases this works out at more per bottle than the two previous increases.
  The amount of foreign currency spent on wines is not excessive. The larger part of the retail price is made up of duty and other charges. Most of the wine
  496
  comes either from Commonwealth countries or from countries which have a good trade balance with this country. The imposition of this duty is bound to have a most unfortunate repercussion in the exporting countries. They may well find themselves forced into retaliatory action of some kind against British whisky exports, and so on.
  The effect of the surcharge is particularly unfortunate on trades such as the port wine trade which has already found it particularly difficult, because of the high duty, to retain its pre-war import level. The trade began to look up after the reduction of the duty from 50s. to 25s. a gallon in 1958 and 1960. But the two additional 10 per cent. increases and the new 15 per cent. surcharge will mean a serious setback. It is hoped that if one day there are reductions, wines and spirits will be regarded as a priority case for exemption from the duty and that this will be done at the earliest possible opportunity.
  We have attended deputations to Chancellors of the Exchequer in past years asking for this duty to be reduced and we have always found that one argument which bears the greatest force with Chancellors is the law of diminishing returns. This may well operate again. People who will suffer are the customers as well as the trade. My final point is even more uncontroversial than anything I have said already. I seriously submit to the Committee that everyone in this country wants as much wine and spirits as they can possibly drink in order to survive the reign of hate and incompetence of Her Majesty's Government.
  Mr. John Biggs-Davison: My hon. and gallant Friend the Member for Knutsford (Sir W. Bromley-Davenport) has made a felicitously non-controversial speech. I believe that this Amendment, which I am happy to support, is non-controversial in the sense that it carries the sympathy of nearly every hon. Member in the Committee. I hope that we shall find that the Treasury Bench is also sympathetic and accommodating and will accede at least in some measure to what we desire. After all, they may make some friends that way, and, goodness knows, the Government need some friends.

  497
  I regret very much that I have no interest to declare in the trade affected by this Amendment, unless it is the interest of being a modest consumer. My hon. and gallant Friend the Member for Knutsford gave high literary and other authority for the consumption of wine in moderation. I would add that there is high scriptural authority for this. There may be some hon. Members who think, "Well, what does this matter? Why should not this impost be imposed on wine and spirits because, after all, they are inessentials and luxuries"?
  I would say that wines and spirits today, whatever may have been the case a generation or so ago, are no longer luxuries of the rich. Wines and spirits, with beer, enter into the retail price index. This was said by the present Chancellor of the Exchequer during a Committee stage debate on the Finance Bill in June of this year in the last Parliament.
  I think that we should have a very clear answer from the Treasury Bench, why wines and spirits should be treated differently so far as surcharge is concerned from, say, tea, cocoa, coffee or tobacco, which is certainly far more injurious than any wines or spirits. As my hon. Friends have pointed out, the duties on imported wines and spirits are already out of proportion. On a large range of imported spirits and liquors the duty is already 400 per cent. or more c.i.f. landed costs.
  I wish to take the question a little wider than the narrow implications. I wish to consider the effect of the surcharge on sherry and port as it will affect our trading relations with Spain and Portugal. It may make sense to impose a surcharge in order to reduce imports of these wines from these countries, were they bad trading partners and not willing to buy our goods. Surely the object of the surcharge is to bring our exports and imports into better balance. After all, as my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) has suggested, the result of levying a surcharge on these imported wines and spirits from Commonwealth, European and friendly countries may be that whisky, for example, will be discriminated against. Surely the whole object of the surcharge will be vitiated.
  What is the good of restricting imports if we make it impossible for our trading partners to buy our goods? Spain and
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  Portugal are exceedingly good trading partners and theirs are expanding markets. I think that I am right in saying that we have a favourable balance of trade with both these countries. In 1963, our exports to Spain amounted to £60·3 million and exceeded our imports from Spain by nearly £7 million. Similarly, we have a favourable balance of trade with Portugal. Her Majesty's Government have done a great deal of damage to our trade with those two countries, largely to gratify Left-wing, antediluvian, self-righteous and ideological prejudices.
  The Chairman: The hon. Member must confine himself to the Amendment, which is about wines and liqueurs.
  Mr. Biggs-Davison: I wish to point out to the Committee that to levy this 15 per cent. surcharge on sherry and port, imported respectively from Spain and Portugal, is likely further to damage our trade with these countries to which the Government, by their policies, have already done great damage.
  Therefore, I appeal to the Government, as an effort to undo some of the harm which they have done in this respect, to accept the Amendment so ably moved by my hon. Friend the Member for Gosport and Fareham.
  Sir H. d'Avigdor-Goldsmid: I do not think that we could have had a better example of the muddleheaded thinking which underlies the whole of this 15 per cent. surcharge than by reference to the matters dealt with in the Amendment. The object of the surcharge is both to discourage imports and to levy duty. What will be the effect of this? As my hon. Friend has said, there is not the slightest doubt that this extra imposition will serve exactly the law of diminishing returns and that there will be a considerable reduction in sales.
  This is a serious matter for the Chancellor of the Exchequer. It may not be at the moment, but it will be in due course, because he depends for a substantial amount of revenue from the wine and spirit duties. It will do that part of his revenue harm. If, to some extent, the right hon. Gentleman wants to replace imported wines with the homegrown varieties, he is, however, as I see in the fourth line of the Schedule, also levying the tax on the concentrated extracts from which home-produced wines

  499
  are made. Therefore, it is also the raw material of the home-grown produced wine which is going to suffer. That being so, it will not be a question of replacing an imported wine with a domestic product. It is simply going to be a question of reducing consumption all round. That is one side of the matter.
  Mr. Julian Snow: In support of his argument, can the hon. Gentleman cite a previous reduction in consumption when there has been an increase in duty, and, if so, in what years?
  Sir H. d'Avigdor-Goldsmid: That will not help imports. There comes a time, as the hon. Member will know, when every camel's back breaks. This is not a straw which is being put on the back of the camel, but a hefty beam of timber.
  We want seriously to call the attention of the Government Front Bench to this inescapable dilemma, that they will make the task of the Chancellor next April just that much harder than it would otherwise be. If the Royal Navy has enjoyed the rum ration all these years, it is perfectly clear that the rum ration which the Chancellor has indulged in, and which successive Chancellors have indulged in, will be poisoned from the source, because he will not obtain from the wine and spirit taxes that same share of the revenue which has been available in the past. This will certainly be a major element in a future Budget.
  5.15 p.m.
  Sir Eric Fletcher: We have heard some rather contradictory arguments in support of this Amendment, and I cannot help feeling that if the Committee reflects seriously on the matter it will not have any real hesitation in rejecting it. We have heard something about the law of diminishing returns, but I would remind the Committee that the whole object of this surcharge is to try to reduce our import bill. There is no doubt that in recent years the wine and spirit trade, with the increased consumption year by year, has made a notable addition to our import bill. It is our object to try to reduce it.
  The figures are these. The value of imported wines and spirits in 1963 was £41 million. In the current year it is running at an annual rate of £48·3 million. Although it is true, as the hon.
  500
  Member for Gosport and Fareham (Dr. Bennett) pointed out, that the wine trade has suffered various imposts of duty under successive Chancellors, experience shows that notwithstanding that fact the consumption of wine and spirits in the country has increased. I doubt very much whether it is likely to go down as a result of this surcharge.
  The net effect of the surcharge, I am told, will be the equivalent of about 3d. to 6d. per bottle on light table wines. 6d. to ls. on a bottle of sherry or port and 2s. on a bottle of brandy. Incidentally, I think that I ought to correct the impression under which the hon. and gallant Member for Knutsford (Sir W. Bromley-Davenport) was suffering. He seemed to think that the surcharge was to be imposed on top of the existing duty. Of course it is not. It is a parallel impost levied on the import value of the wines and spirits when they come into the country.
  Therefore, while I do not think that the experience of the wine and spirit trade justifies any arguments based upon the alleged law of diminishing returns, and while it may well be that this surcharge on wines and spirits will not make very much of a contribution to our attempt to reduce our total imports, yet, at the same time, those facts themselves are, of course, sufficient to justify the Government's decision to resist this Amendment. If they do succeed in their object, well and good, but there cannot on any basis be a case for exempting wines and spirits from the surcharge. We only hope that it will have the desired effect of making some useful contribution which my right hon. Friend the Chancellor has in mind.
  For these reasons, I hope that the Committee will agree with me and will reject the Amendment.
  Mr. John Hall: I must, first, declare an interest to the Committee. For many years I have had an interest in the wine and spirit industry. This is the first time in the 12 years that I have been a Member of Parliament that I have been drawn to my feet to speak in any way on behalf of that industry, but, really, the imposition now being placed on the wine and spirit trade is too much. It has stung me to my feet.
  I wish, in a way, that it was the right hon. Gentleman the Chancellor of the

  501
  Exchequer who was facing me at this moment. This is no reflection on the Minister without Portfolio. I wish that it was the Chancellor because I think that he might, perhaps, show rather more sympathy with the case so eloquently deployed by my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) and supported so cogently by some of my other hon. Friends.
  On 2nd June this year the present Chancellor, speaking from this Box at the time, said:
  "I noticed that the Prime Minister"—
  now, of course, my right hon. Friend the Leader of the Opposition—
  "yesterday, discussing taxation, which is the purpose of this Clause, said that the Socialists will bring in higher taxation. Well, it was Aneurin Bevan who said, 'why peer into a crystal when you can read the book?'".
  We have read the book, and it is true what my right hon. Friend said at the time, that it was the Socialists' intention to increase taxation.
  The right hon. Gentleman went on to say:
  "The plain truth is that the duty on spirits is higher today than it has ever been in the whole history of these duties. It is a record which I am sure the Government will be proud to publicise among their records—that they have raised the taxation on spirits to the highest level ever."
  That record did not stand long. It has been raised to a new record level by the new Government, and I find myself agreeing with the present Chancellor when he went on:
  "… although I know that the Government are acting purely in the knowledge that there is nobody left who wants to drink their health they are now making it more expensive for us to drown our sorrows."
  How right he was. How right he is. Were the Chancellor here he might listen with the same sympathy which has been displayed by hon. Members, except those on the Front Bench opposite.
  Possible retaliatory steps affecting our exports have been mentioned. Does the Minister know that already, since the imposition of the surcharge, six countries have considerably increased their tariffs on whisky exports from this country? How many other countries are likely to follow suit? That is an unfortunate result of a surcharge of this kind and I find it difficult to understand some of the arguments being deployed by the Government.
  502
  Why is it, for normal purposes, that wines and spirits are included in the food regulations and are regarded as foodstuffs in precisely the same way as tea and coffee? Why is a distinction now made between the two? Why allow tea and coffee to remain in the list of exemptions and not wines and spirits? Why do we allow tobacco to come in. a commodity which, we are told on the highest authority, is harmful to health? It is understood that consideration is being given to legislation to restrict the advertising of cigarettes and tobacco generally—yet the Government exempt tobacco from the surcharge and place it on wines and spirits. I find this hard to understand.
  In attempting to show the small effect the surcharge will have the Minister quoted certain figures. He did not point out, however, that its effect on wines of some classes—I am thinking particularly in this context of table wines of good quality—will mean a doubling of the tax paid on those classes of wine. The duties on a large range of imported spirits and liqueurs already stand at 400 per cent. or more of the c.i.f. landed cost, before the surcharge is imposed. There is little doubt that wines and spirits are among the highest taxed commodities in the country. The trade has gone on bearing these increased costs—which, I admit, all Governments have placed on it from time to time—without much complaint, but it considers that the time has come when it must protest.
  I realise that it was Napoleon who said that he made more out of the vices than the virtues of his citizens. Apparently every Government act, rather cynically, on that assumption. They go on taxing wines and spirits, considering that it will make little difference to the consumption of those goods because people apparently must have some kind of stimulant. I agree with my hon. and gallant Friend the Member for Knutsford (Sir W. Bromley-Davenport) that we may be in desperate need of a stimulant for the next few months.
  This thought obviously crossed the mind of the present Chancellor, when speaking in the debate from which I have quoted, for he said:
  "… this extremely high level of duty is having an effect on making other stimulants more accessible and cheaper. We have had a lot of discussion recently about drugs".

  503
  He went on to quote a professor as saying that
  "… as many people take drugs in this country today as drink."—[OFFICIAL REPORT, 2nd June, 1964; Vol. 695, c. 944–5–6.]
  The present Chancellor inferred that the time would come when the level of taxation on wines and spirits would be so high that people would be driven more and more to the cheap and readily available drugs which act as stimulants. I am sure that the Minister does not want that to happen and will adopt a more sympathetic attitude to the Amendment. I hope that he will consider the case made out by my hon. Friends and will table a suitable Amendment on Report.
  Amendment negatived.
  The Temporary Chairman (Dr. A. D. D. Broughton): In calling the Minister without Portfolio to move Amendment No. 26, I think that it will be convenient for the Committee to discuss, at the same time, Amendment No. 28, in page 14, line 6, at end insert:

  28.01

  (B)

  …

  Bromide.

  Amendment No. 29, in line 6, at end insert:

  28.01

  (C)

  …

  Iodine.

  Amendment No. 30, in line 6, at end insert:

  28.04

  …

  …

  Helium.

  Amendment No. 31, in line 6, at end insert:

  28.04

  …

  …

  Tellurium.

  Amendment No. 32, in line 6, at end insert:

  28.04

  (A)

  …

  Selenium.

  Amendment No. 33, in line 6, at end insert:

  28.05

  (A)

  …

  Mercury.

  Amendment No. 34, in line 6, at end insert:

  28.11

  (A)

  …

  Arsenic trioxide.

  Amendment No. 35, in line 6, at end insert:

  28.46

  (G) (2) (a)

  Borax, anhydrous.

  Amendment No. 36, in line 6, at end insert:

  ex 28.52

  …

  Thorium and rare earth metal concentrates.

  Amendment No. 53, in line 7, at end insert:

  29.35

  …

  …

  Furfural.

  Amendment No.66, in line 21, at end insert:

  38.19

  (IJ)

  …

  Naphthenic acids.

  Amendment No. 67, in line 21, at end insert:

  38.15

  …

  …

  Prepared rubber accelerators.

  Amendment No. 75, in line 22, at end insert:

  40.02

  …

  …

  Synthetic rubber.

  Amendment No. 127, in line 10, at end insert:

  Ammonium Meta Vanadate.

  Armac 'C'.

  Burnishing Sand.

  Cerium Oxide.

  Chrome Oxide (German).

  Sodium Chlorate.

  Sodium Nitrate.

  Stockholm Tar.

  Vanadium Pentoxide.

  Waxes.

  Zircons.

  Manganese Blue.

  Manganese Carbonate.

  Mineral Violet.

  Potassium Chloride.

  Potassium Hydroxide A.R.

  Copper Sulphide.

  Cryolite.

  Ethyl Cellulose.

  Felspars.

  Guignets Green, American.

  Magnesium Sulphate.

  Mangalox.

  Mr. John Page: On a point of order. Although it may be convenient that these Amendments should be discussed together, I wonder whether you would consider, Dr. Broughton, taking Amendment No. 75, which stands in the name of my hon. Friend the Member for Wycombe (Mr. John Hall) and myself, separately so that, at a later stage, the Committee could, if it wished, divide on it.
  The Temporary Chairman: I understand that the Chairman has considered that matter and that he would permit a Division on it if the Committee so desired.
  Mr. Norman Cole: Further to that point of order. Did you mention Amendment No. 125, standing in my name?
  The Temporary Chairman: I did not.
  Mr. Edward du Cann: I observe that Amendment No. 125 is down to be discussed with the next series of Amendments, Dr. Broughton.
  The Temporary Chairman: Yes, that is so.
  Mr. Snow: Do I understand, further to the points of order which have been raised, that you do not propose to call Amendment Nos. 92 and 93?
  The Temporary Chairman: They are not being called with this Amendment.
  Sir Eric Fletcher: I beg to move Amendment No. 26, in page 14, line 6, column 1, at the end to insert:

  Bromine and iodine within 28.01.

  Silicon, selenium and tellurium within 28.04.

  Mercury within 28.05.

  Arsenic trioxide within 28.11.

  I understand that the effect of moving this Amendment is that if it is accepted by the Committee it would be unnecessary for the Committee to consider Amendment Nos. 28, 29, 31, 32, 33 and 34.
  Since Second Reading of the Bill my right hon. Friend the Chancellor of the Exchequer has listened to the many representations he has received in regard to what should be included in and what should be excluded from Chapter 28 of the Customs tariff. In his Second Reading speech my right hon. Friend explained the principles on which the Schedule of exemptions had been based. He emphasised that there were no generally accepted rules which could be applied precisely and consistently over the whole field. He went on to say that he would consider a small group of items which, on strict application of the general principle, could be added to the First Schedule.
  I think that the Committee will agree that the Chancellor has indicated his readiness to be as flexible and helpful as possible by giving the most sympathetic consideration to chemical items that should be added to the Schedule. It may be for the convenience of the Committee, Dr. Broughton, if, having moved the Amendment, I postponed any further observations I might have to make on the other Amendments until I have heard the arguments in support of them deployed by those hon. Members who will doubtless address you on them.
  5.30 p.m.
  Mr. A. E. Cooper: I would, first, thank the Chancellor for the concession on the Amendments that have been moved, but his action rather
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  turns on their head the arguments he used earlier this afternoon, when he said that he did not have the time to look into some of these matters. I mentioned some of these to the right hon. Gentleman during Second Reading, and subsequently, and it has taken only two weeks to get these Amendments on the Notice Paper. If it was possible to do it in those cases, it must have been possible to do it for other items. All this shows, as we have said over and over again, that this whole Bill and all the proposals to deal with this alleged crisis have been the result of hasty and ill-considered action, and that the Government are now having to back-pedal as quickly as they can on almost everything they have done.
  I was rather disturbed by what the Minister without Portfolio said to my hon. Friend the Member for Wycombe (Mr. John Hall) about the concessions, if any, that he will be able to make today. Are we to understand that we are to go through a complete charade today on all of these things, and that, no matter how strong the argument may be in favour of exempting a product, the Minister does not intend to give way one jot? If that is so, why are we wasting our time?
  The Amendments that have been tabled by the chemical industry have been put down having in mind the Government's idea and ideal that we should consider basic raw materials only in this context. When one looks at the Amendments that the Minister has accepted, one is tempted to ask why many others have not also been accepted, as they fall into precisely the same category. Some of the products mentioned in the Chancellor's Amendments are semi-processed materials which fall outside the rules that the right hon. Gentleman indicated earlier in our discussions.
  We should, in this context, consider those materials that our industry must have, and which are not capable of production in this country. If we can accept that as a starting point we have a genuine basis for discussion, but if it is to be said that industry must have these raw materials, which cannot be produced here but will be subject to the 15 per cent. surcharge, all that the Government are doing is what we have said for weeks past they were doing, and that is to put up the costs of production.

  507
  I do not want the Minister without Portfolio to pontificate, as did his hon. Friend the Chief Secretary when he said that any self-respecting board of directors would see how it could absorb the costs of this impost. There is a limit to what one can absorb. First, we are told to absorb 6d. a gallon on petrol, then 3s. 3d. per employee on the stamp, and now a 15 per cent. surcharge on our goods. With this sort of thing going on, how do the Government think that British industry will be able to compete in the world's markets?
  The Government say, "This is all very fine and large, but under one of the Clauses you can get all this sort of thing rebated." We shall later see that the question of rebate is not quite as simple as the Government make out; and that very stringent regulations have to be met before one can get the money back. British industry is buying a pig in a poke. The Government know it, and have not a case to argue.
  I invite the Minister to tell the Committee and the chemical industry how the argument in favour of some products which I shall mention differs from that in favour of the products in the Amendments which the Chancellor is now asking the Committee to accept. I defy him to find any difference. Let us start with helium. Helium occurs in various natural gases. There are no sources of commercial importance in this country, and the world's major suppliers are the United States. Such helium as this country requires must, therefore, be imported.
  We might find a case for calling borax a semi-manufactured product. Borax is produced with a very high water content. To ship it in that form would be very costly in terms of freight, so the water is extracted at the source of winning the borax, and anhydrous borax is shipped to this country, resulting in a considerable saving in freight costs and considerable benefit to our glass manufacturing industry. We have no natural sources of borax in Britain. It would be very difficult, however we worked out the rebate system, to rebate the duty that will be paid on borax used in the manufacture of glass, yet one only has to use one's imagination to know the wide areas in our export
  508
  markets in which glass plays a very important part.
  Another instance is thorium, and rare earth metal concentrates. We have no natural supplies here. In fact, the Amendments relating to all these things show just the paucity of raw materials we have, and the extent to which we are dependent on imports from other countries. Thorium and other rare earth metal concentrates are essential for various of our industries. Again, we must handicap industry when we impose a surcharge on that type of material.
  Finally, I would mention the naph-thenicacids—complex acids that arise from the refining of certain petroleum products. We do not get these crudes in this country—the principal source of supply is the Caribbean, and has been for all the years that we have used these acids. We cannot produce them here. Many thousands of tons are imported annually from the Caribbean. They are used in the chemical industry not only for the manufacture of what we call paint dryers, but in the manufacture of all sorts of wood preservatives—a very important part of our construction industry. The 15 per cent. surcharge is an impost that we should not have to bear now. Bearing in mind that we are trying to develop quite a substantial export business in materials made from these acids, naphthenic acids, the Government, once again, are imposing a liability.
  These are simply products which I have mentioned—I could mention many more —which, by the method of their production, fall into line very roughly with the type of materials which are mentioned in the Chancellor's Amendments. I therefore hope that before the Report stage the Chancellor will see his way to include some of the very vital materials which we must have and which cannot be obtained in this country.
  Mr. Geoffrey Hirst: This, of course, is a Treasury Measure and we are very grateful on this side of the Committee to see a Minister of the Board of Trade present today to listen to these discussions, in considerable contradistinction to yesterday. One realises that the mechanics of a Finance Bill must be handled technically by the Treasury, but this is a very serious matter indeed for the industry of our country, as my hon.

  509
  Friend the Member for Ilford, South (Mr. Cooper) has illustrated already, and I think that it is very right that a Board of Trade Minister should be here.
  I am a little puzzled about the strict application of principles in this matter, to which the Minister without Portfolio referred, quoting from the Chancellor, because I cannot find the strict application of principle anywhere at all. I have here dozens of copies of letters and memoranda, the majority of which are copy letters sent in by industry to the Board of Trade. So the Board of Trade has had quite detailed arguments and, as I see from these letters, subsequent interviews in some cases, and I would not state that they have not listened to industry. This is at least something and I am always grateful for something. But I cannot see that very much use has been made of them or intelligence applied to them. I cannot see that the strict application of principle has come up anywhere, except in one or two quite obvious instances in Amendment No. 36 which the right hon. Gentleman has mentioned, which is no excuse whatsoever for not putting these in the residual list. We must have this question of the strict application of principle cleared up, because there is none at the present moment.
  Surely the fundamental one must be whether a material is of real importance to industry and cannot be obtained in reasonable quantities on the home market. That is surely the principle to apply here. That is where we are in great difficulty, because the items which have been mentioned by my hon. Friend come within that category in every single instance. And surely this applies to the Amendment in my name, Amendment No. 53, which I think has the support of my hon. Friends, and which includes a somewhat less known material to most people, furfural, which is the basis of furan chemicals, furfural alcohol, tetrahydro-furinal alcohol and an even newer one, tetrahydro-furan, which are extracted from vegetable materials, corn cobs, etc., and manufactured, as far as I know, entirely in the United States and nowhere else, and which cannot be obtained in this country.
  They are very specially used and, so far as I am aware, there is no satisfactory substitute for furfural in lubrication oil refining or as an intermediate
  510
  in the manufacture of furfural alcohol as a resin former. I do not know what representations have been made—because I have not a copy of the letter to the Board of Trade on this one—but I understand that representation has been made by companies interested in this matter to the Board of Trade. But surely this is, on that evidence alone—and a lot more could be quoted—well within the definition, if it means anything at all, of strict application of principle, the strict application actually being that it is entirely manufactured outside this country and is performing a thoroughly essential purpose. It is not something that might be, say, an alternative face cream—there are alternatives but some lady Members do not think so. This is not an occasion where there is any alternative at all, and I would have said that it was a clear instance of something which should be considered within the bracket.
  5.45 p.m.
  If this debate is not to be strung out for an appalling time, we must have something more forthcoming than we have had so far from the Minister without Portfolio. He has had plenty of time overnight to take counsel with the Board of Trade to improve the quality of the brief which unhappily he was provided with yesterday and, although I think he probably did his best, one cannot make bricks without straw. But he has had time in the intervening period and hope that he has profited himself a little. I shall not be too difficult about this because he has said that he is prepared to listen to what we have to say. That is a natural courtesy which one would expect from the hon. Gentleman, because one cannot be extraordinarily well informed on these matters, and, after all, there is collective intelligence and knowledge on these benches over a wide range of chemical matters. I hope that this will lead to some approach to trade and industry to make quite sure that his list of exemptions is a really sensible and proper one and not something which Customs and Excise to the best of its ability got up overnight to bail the Cabinet out of an unfortunate position.
  Mr. Hugh Fraser: I wish to intervene for only a few minutes to appeal to the Minister without Portfolio to make some clarification not merely to this Committee but to industry

  511
  as a whole on precisely what the Government mean. There are only two points that I should like to stress now.
  As regards the ceramics colouring industry, which many hon. Members now in the Government from the Stoke-on-Trent area will know is of immense importance to exports directly and indirectly, there is at the moment total confusion as to what Government policy is on the restrictions on the various chemicals involved. We are all pleased to see that the various forms of arsenic trioxide have now been exempted and that selenium has been taken out.
  If the right hon. Gentleman would study my Amendment No. 127 he will see that a vast range of other chemicals are equally of great importance to this industry, both in direct exports and in indirect exports, through the production of ceramics in the British pottery industry. Why one or two of the chemicals should be exempted and the rest remain in baffles both me and those engaged in the industry.
  When we come to later discussions, doubtless the right hon. Gentleman will explain how all this is to apply. Let me stress the immense confusion which will come to an industry, such as the pottery industry, where it is very difficult to identify what is for export and what is not, and certainly, so far as they concern the use of colouring matters, they are of a most complicated, unique and difficult composition. I hope, therefore, that the Minister will explain to the Committee what differentiation there is and how this differentiation has been arrived at between individual raw materials in the same type of chemical group. Secondly, at a later stage in the debate I hope that he will make perfectly clear to the Committee how an industry such as the ceramics colouring industry will be able to receive the rebate that has been promised. I believe that on neither of those two points have the Government given full consideration and if they cannot satisfy the Committee, I think that they are properly beholden to the country to make different decisions when we come to the Report stage.
  Mr. Charles Longbottom: I wish to support what my hon. Friend the Member for Shipley (Mr. Hirst) said
  512
  about furfural. My hon. Friend explained what furfural is. It is made from corn cobs and oat hulls. Therefore, it can be made economically only where plenty of that vegetable material is available near the coast and close to the factory site. It is impossible to have this raw material in this country. It is found only in large countries such as the United States and the Soviet Union, which are both big producers of furfural. It has never been produced here. There is no likelihood that it ever will be, because it could not be produced economically. The United Kingdom offers no criteria for its production.
  My hon. Friend the Member for Shipley mentioned one or two uses for furfural. I want to emphasise another use. Its use in core making, in binding sand together in foundaries, has revolutionised the making of castings in the foundry industry. It has enabled castings for the motor car industry, the agricultural industry and the machine tool industry to be made much more economically and efficiently than they were before furfural alcohol was used to help to bind castings together. By increasing the cost of furfural alcohol the Government are deliberately increasing the cost of manufacture of many component parts in the motor car industry and the agricultural industry. Surely right hon. and hon. Members opposite realise that the country relies on both industries for its export trade.
  I ask the Minister without Portfolio to consider this point carefully. This is an example of a product which cannot be produced here. It never has been, and it never will be. It is an important item in the costs of many of our industries. It surely must fall within the Chancellor's definition of the type of material which he would consider sympathetically for exemption. I therefore hope that, in winding up, the right hon. Gentleman will deal with this point or will bring the matter up again on Report.
  Mr. Cole: The Government's intention to try to clear up some of the anachronisms in Schedule I only makes confusion worse confounded. I have been puzzling my brains trying to discover what yardstick, if there was one, originally actuated the Government in fixing the list of goods which would be

  513
  exempted and, therefore, by implication, those not to be exempted. I have thought up three different possibilities ranging over all these Amendments. Each possibility is destroyed, however, when one applies to it the test mentioned by the Minister without Portfolio to be employed by the Chancellor of the Exchequer in deciding which items to exempt. I was reinforced by what my hon. Friend the Member for Ilford, South (Mr. Cooper) said about the differentiation between certain chemicals, some of which have been excepted by the Government and some of which I presume will not be excepted.
  It might be useful on this group of Amendments to try to ascertain the Government's mind. One can suggest some things to which the Minister without Portfolio might address his mind. What is the definition underlying the list of goods which will eventually be exempted? The Committee should remember that, except for what is allowed for in Clause 3, namely, the Treasury coming to the House of Commons and allowing a reduction or further reduction, all items not mentioned in the Bill when enacted will carry the extra 15 per cent.
  What are the variations on the possible yardstick which the Government adopted? Was a raw material meant to be something which was an element—something in other words which could not be manufactured of itself but which was perhaps found in a compound form in some places? That might have been some definition, though it would be a very limited one. My hon. Friend the Member for Ilford, South was careful to point out that the Minister without Portfolio has moved an Amendment one effect of which would be to exempt bromine and iodine under the Schedule. However, the right hon. Gentleman left out helium, which is also an element. He left out a number of other items which are elements. So what is the criterion? We can only assume that, chemically speaking, the yardstick is not those things which are elements and which up to now have not been further broken down.
  I am trying to find a golden path through the list of concessions which the Government will allow. This might be some guidance to us on Report, not
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  to mention the fact that it would afford great guidance to manufacturers, who should know where they are. This is a very important aspect. At present it is an understatement that they do not know where they are. The second definition is this. Was it those articles which it was intended should be more intensively produced by industry here rather than the assumed somewhat easier and possibly cheaper course of importing them?
  This definition, again, falls down, because there are a number of items which we are now considering on this group of Amendments which are not produced in this country, never have been produced in this country and never could be produced in this country economically. This applies to those things which the Minister without Portfolio suggested today. I have some small personal knowledge of chemistry. I suppose the Minister knows that some items like arsenic peroxide, which is probably produced from something in its natural state—one of the higher oxides of arsenic—cannot be made in this country. That is all right, but the Minister has by implication refused to accept other Amendments which apply to things which cannot be made in this country.
  I want to discover what the Government's approach is. Do they want to set up a whole range of specialised manufacturing industries of certain articles which we must have for our industry? Or what do they suppose will happen? Or do they deliberately wish 15 per cent. to go on those composite parts used in our industries? I do not know the answer to these questions, but they are certainly posed by the Government's attitude on the variation.
  I come to the third definition. When the Schedule was published and before the Government brought forward their Amendments, did they consider that all the articles they included comprehensively took care of all those which could not be and were not produced in this country? If so, in all kindness I can only say that there could not have been a greater error. The Government have realised that many substances could not be so produced and they have had to introduce concessions. I predict

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  that when the dust has settled and the Bill has become law, industry will find, especially when some stocks have been used up, that many more substances will be added. I do not think that the average person realises the truth of the statement by my hon. Friend the Member for Ilford, South that there is a tremendous paucity of raw materials in this country. I think it has been rightly said that we have no great quantities, except coal and a little inferior iron. All the rest have to be manufactured or imported.
  6.0 p.m.
  Mr. Geoffrey Wilson: China clay.
  Mr. Cole: My hon. Friend the Member for Truro (Mr. G. Wilson) mentions china clay, but that does not figure in every industry.
  In supporting this range of Amendments, I ask the Government on Report, or in any way possible, if necessary by Treasury action, to do two things: first, to try to arrive at some kind of guiding principle. I know that when the Minister winds up I shall be told that there is a guiding principle. If there is, I can only say that I, and I suspect other hon. Friends of mine, have not spotted it. Secondly, I ask the Government, who in the main have our support in doing all they can about the export-import position, if they will, for their own benefit as well as ours and the manufacturers, lay down some kind of principle so that when we go to our constituents we can say, "Yours is so and so under paragraph (a)." I think this is the approach of a sensible man, and I hope that the Government will react to it.
  Sir Eric Fletcher: I have listened carefully to the speech of the hon. Member for Bedfordshire, South (Mr. Cole) and the other speeches in support of this series of Amendments. Although the subject with which we are dealing is inherently complex and technical, I shall do my best to answer the questions.
  First, may I once again try to disabuse the thought in the hon. Member's mind on this question of availability or non-availability of any particular chemical or any other matter in this country. It is irrelevant. I thought I had made it plain
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  and that some of my hon. Friends have made it plain in earlier debates that the availability or non-availability of any particular chemical, metal, foodstuff or anything else is completely irrelevant to where the dividing line should be drawn between what is subject to the surcharge and what is not.
  If we once sought to introduce the test of something being available in this country or something not being available and therefore eligible for exemption, we should be introducing duties that were protective in character and we should be falling foul of international obligations. The Chancellor made it clear in his Second Reading speech—it has been made clear before and since—that the object of this surcharge is to reduce our adverse balance of payments. To do that we have made exemptions on a certain basis which I have tried to explain and will repeat. But in no case is the non-availability of any particular article in this country a ground for granting exemption.
  Then the hon. Member asked what are the grounds, what is the dividing line—
  Mr. Cole: The yardstick.
  Sir E. Fletcher: —the yardstick, the dividing line between those chemicals which are the subject matter of the Amendment in the name of my right hon. Friend the Chancellor of the Exchequer which I have moved, and, on the other hand, those chemicals which are the subject of other Amendments which the Government feel obliged to resist.
  The basic dividing line is this. In so far as some of these chemicals are manufactured chemicals, they are not eligible for exemption. In so far as they are chemicals in their natural state or only slightly processed, they are eligible for exemption. That basic distinction is subject to one qualification. The hon. Member pointed out correctly that that basic distinction would not cover the case of helium. I agree. I shall deal with helium separately. The reason why helium is to be dealt with separately is this. Those hon. Members who have taken the trouble or have had the misfortune to have to study this Customs tariff may have recognised that, for some curious reason, the classification of chemicals under Chapter 28 is arranged on a totally different basis from the other

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  chapters. It is not arranged and classified in accordance with processes of manufacture or processes of development and so forth. Each particular chemical is taken, and its derivatives, compounds and associates are dealt with, with the result that some of them are natural and some are processed, and it is, therefore, difficult to apply the same tests to some of the articles in Chapter 28.
  The Committee will forgive me, I hope, for being a little technical for the moment. With that exception, these are the reasons why the Chancellor of the Exchequer has decided, following representations made to him, to grant exemption to bromine and iodine. They are both obtained by the simple processing of natural materials at source. Silicon is a non-metal whose main use is in the production of alloys which are already exempt. Selenium and tellurium are the inevitable by-products in the production of copper which is itself exempt and, therefore, logically and rationally should also be exempt.
  Mercury, I need hardly remind the Committee, is a natural material processed at source. Arsenic trioxide is an inevitable by-product of the production of nickel, and since nickel is exempt the case for exempting arsenic trioxide, I would have thought, was fairly clear.
  Those arguments do not apply to some of the other chemicals in other Amendments which I feel obliged to advise the Committee to resist. For example, take the case of borax, anhydrous, which was referred to by the hon. Member for Shipley (Mr. Hirst). This is a chemical obtained by refining natural borates or by the chemical treatment of other borates. Other chemicals subject to the charge are made in similar ways. Therefore, that commodity has undergone a certain amount of processing before it comes into this country.
  Mr. Cooper: Will the hon. Gentleman say where he got that definition? Borates is simply borax in a very dilute form. The refining that he refers to is simply a process to get rid of the water so that the material can be shipped here in concentrated form. No chemical refining takes place at all.
  Sir E. Fletcher: I am obliged to the hon. Gentleman. I have no doubt that he has much greater technical knowledge of the subject than I have. But, of course, there is a further difficulty about borax. Borax, like helium, comes into the difficulty in which we are situated with regard to the classification in Chapter 28.
  May I take helium as an example. Helium falls into Chapter 28.04, the main heading of which is "Hydrogen, rare gases and other non-metals." Then in the statistical key among the subheadings there are listed oxygen, nitrogen, hydrogen and rare gases, and then finally others. Helium is not specifically mentioned. Therefore, as the hon. Gentleman will realise, helium would appear to have no better claim to exemption than other gaseous elements such as oxygen, hydrogen, nitrogen and rare gases.
  Helium is not listed in this Customs tariff except as a rare gas. The difficulty is that if one tries to make an exception for helium on the grounds put forward one inevitably gets a chain reaction in which other people who are interested in other rare gases ask why similar exceptions should not be made in respect of those elements for which, quite clearly, there would be no justification.
  Mr. Cole: I appreciate the hon. Gentleman's giving way and also that he is doing his best to find his way through the labyrinth of the Customs list which, in passing, I would suggest might well be brought up-to-date because then we should not find these complications. I do not want to swop chemical formulae across the Floor, but does the hon. Gentleman think that the extraction of iodine, which is not found free anywhere in the world, from its various vegetable origins is any less a process than the dehydration of borax? Yet borax is outside the list and iodine is inside.
  Sir E. Fletcher: I would not quarrel about the degree of processing in those two examples. We are in this further difficulty that owing to this classification if one attempts to make exemptions in respect of helium or something not listed in the catalogues one inevitably covers other elements or perhaps other processed chemicals, for which there would be no justification.

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  This is an inherently difficult task. The Board of Trade and my right hon. Friend the Chancellor of the Exchequer are quite sympathetic. They understand these problems of the industry. They have an obligation to secure the maximum justice and equity that can be obtained in a very difficult field. This is sufficiently indicated by the exemptions already made. This process will continue. The Chancellor has undertaken to review this, and when the time comes for lifting the surcharge there obviously will be a much greater claim in respect of some of the commodities and processed chemicals which we have been talking about today than for a totally different range of goods.
  Mr. John Hall: I know that this is a very complicated subject to discuss. Can the hon. Gentleman tell the Committee what is the difficulty which prevents him or the Chancellor from introducing new headings into the Customs and Excise list? What is the procedure that must be followed which makes this so difficult?
  Sir E. Fletcher: I am not sure whether the hon. Gentleman was present at the beginning when I thought that I explained that, for better for worse, and I think for better, in all this Customs legislation we are now parties to an international convention called the Brussels Tariff, with which the right hon. Member for Bexley (Mr. Heath) will be familiar. As a result of an Order made by the Treasury under the 1958 Act, the Government for the first time have adopted for all Customs purposes in this country the Customs tariff based on the Convention of Brussels which is brought up to date from year to year. By reason of this tariff, all commodities or articles are classified in a uniform way for international purposes. This is very convenient. It would be unfortunate, therefore, if we were driven to depart in out domestic legislation from the guiding lines and detailed specifications laid down in that Tariff.
  But in this field, I admit, it has introduced complications, because there are some items for which there is good claim for concessions. I am advised, however, that if that claim was accepted it would lead to an inevitable chain reaction leading to others interested in
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  other articles in the same sub-division equally asking for exemptions. Then we should be on a slippery slope and we would not achieve the objects which we have in mind.
  6.15 p.m.
  I turn now, as I promised to do, to the rather different questions addressed to me by the right hon. Member for Stafford and Stone (Mr. Hugh Fraser). As the Committee will appreciate, he has on the Order Paper Amendment No. 127 which comes a long way after the Amendments which we are now discussing. It deals with a large variety of substances, including ammonium meta vanadate, Armac 'C', burnishing sand, cerium oxide, sodium chlorate, sodium nitrate, Stockholm tar and vanadium pentoxide. I think that I have named enough to indicate that I am familiar with them and have studied them. They all have some relation to the ceramic industry which flourishes so greatly in the right hon. Gentleman's constituency. We all endorse what he says about the value to the community of that industry.
  One answer to the right hon. Gentleman is that some of the articles for which he seeks exemption are already exempt. For example, he will find that vegetable waxes are exempt under heading 15.16 and mineral waxes under Chapter 27. On the other hand, artificial waxes are chargeable under heading 34.04. I do not think that the right hon. Gentleman addressed any particular case for exempting artificial waxes. I am advised that potassium chlorate is already exempt from the charge under heading 31.04, unless it is of analytical reagent quality, that is, highly purified for laboratory use.
  I am told that cryolite in its natural form is exempt from the charge under heading 25.28. On the other hand, the synthetic form of cryolite is chargeable under heading 28.29 as aluminium sodium fluoride. It is used as a substitute for the natural material in metallurgy, enamel manufacture, glass-making and some insecticides. I think that the Committee would find it frightfully tedious if I attempted to give a detailed explanation in highly technical language of each of this list of about 30 items to which the right hon. Gentleman's Amendment refers. I hope

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  that the Committee will bear with me, however, if I make one general composite comment on this list.
  I have done my best to analyse the items in the list. I have not been able to discern a consistent pattern in it apart from the fact that all the items have a bearing on the ceramic industry in Staffordshire—and they are none the worse for that. It is perfectly true that some of them are not available in this country, but, as I have said, non-availability is not an argument which the Government can accept as a reason for adding anything to the Schedule. The articles for which exemption has not been granted are not regarded as eligible because they are more fully processed than others.
  My right hon. Friend has a good deal of sympathy for one item, Stockholm tar. [HON. MEMBERS: "Hear, hear."] I hope that the right hon. Gentleman will accept my assurance that my right hon. Friend will give sympathetic consideration to remitting the duty in respect of Stockholm tar and some of these other articles when he comes to make his review.
  Mr. Hirst: Once or twice, with reference to the principle which we are discussing, the hon. Gentleman has said that non-availability is not in itself an argument for exemption because the purpose is to curtain imports. If, as we have shown several times, non-availability means that a particular essential product must be obtained for use in increasing our export trade, there will be not the slightest curtailment of imports. All the Government are doing is adding to the costs of industry and reducing the chance of exports.
  Sir E. Fletcher: There are two answers to that. In so far as exports are involved, they are not affected because they will be subject to the rebate. As regards goods imported which are not available here, some are more necessary than others, some which are necessary are necessary in greater quantities than others, and some are necessary at earlier times than others. One cannot say, merely because something is not available here, that it should escape duty. There are plenty of articles which should be charged to duty even though they are not available here.
  Sir Knox Cunningham: At an earlier point, the hon. Gentleman said that his right hon. Friend would view with sympathy the various qualities of certain articles when the time came to remove this impost. Does this mean that, when the impost is to be taken off, there will be a sort of creeping relief over a period of, perhaps, months, and that certain items will come off earlier than others? If so, shall we be able to make representations on these questions?
  Sir E. Fletcher: My right hon. Friend will listen to all representations made to him and will do his best to give the greatest possible help to industry consistent with the overriding reasons for which the surcharge is being imposed.
  Mr. John Page: I am very grateful that the Chair has agreed that a Division may be called later on Amendment No. 75, to include synthetic rubber within the exemptions. At the outset, I must declare a personal interest. I work in the rubber moulding industry, and I wish this evening to speak on behalf of the other 126,000 people who work in that great industry, many of whom live in my constituency. I shall concentrate my argument on Amendment No. 75, and I hope to persuade the Government that synthetic rubber exactly fulfils all three of the requirements laid down by the Chancellor in his speech of 24th November.
  First, synthetic rubber is a "basic raw material"Second, its exclusion from the Schedule would be a "glaring anomaly" and constitute a "most major and important inperfection" in the Bill. Third, its exclusion would have an
  "adverse effect on our exports of products which are made from or incorporate goods which bear the charge."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1097.]
  Undoubtedly, synthetic rubber is a basic raw material. At present, about 55 per cent. of rubber used in this country is natural and 45 per cent. is synthetic, and of this amount of synthetic rubber 170 million tons are manufactured in the United Kingdom. Nearly 50 million tons of this will be exported during the present period of 12 months. On the import side, about 60 million tons of synthetic rubber are imported.
  Sir John Barlow:Is my hon. Friend

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  right in giving those figures in millions of tons? I think that the total usage of rubber in the world is about 4 million tons, so I cannot believe that his figures are correct.
  Mr. Page: I have an "m" down here which I had assumed to mean millions, but, drawing on a classical education, I now take it to mean thousands. The first figure should have been 170,000 tons, 50,000 tons being exported and 60,000 being imported. I am grateful to my hon. Friend.
  Sir Douglas Glover: Very elastic rubber.
  Mr. Page: The industry which manufactures synthetic rubber is expanding, but it cannot expand to the extent of taking up the whole tonnage of synthetic rubber which is now imported.
  The Minister without Portfolio has said that availability or non-availability of products in this country does not affect whether or not they should be subject to the surcharge. It might be said also that the rubber industry could buy more natural rubbber from overseas.
  Sir J. Barlow: Hear, hear.
  Mr. Page: I think that we have an expert on natural rubber here. There is no great availability of surplus natural rubber in the world, but, even if there were, all this would mean would be more foreign exchange used for the purchase of natural rubber rather than the purchase of synthetic rubber. In the result, the price of natural rubber might go up, which could mean that the whole amount of natural or synthetic rubber imported cost more foreign exchange.
  I have already stated that synthetic rubber is a basic raw material. On this question, the Chancellor gave an example, saying that raw hides are exempt but dressed leather is not. The importation of dressed leather means that less work is required on it in this country than would be necessary to process imported raw hides. In confirmation of my point that synthetic rubber is a true basic raw material, I can tell the Committee that, except as regards small technicalities, the preparation of synthetic rubber for use in the rubber industry is no different from the manufacture and preparation of natural rubber. The processes
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  are the same. I hope that that will make clear to the Committee how basic a raw material for the industry synthetic rubber is.
  6.30 p.m.
  Next, I take the point that the exclusion of any material from the Schedule would be a "glaring anomaly" and constitute a "most major and important imperfection". Hon. Members will see in the Schedule that natural rubber is excluded under chapter heading 40.01 and reclaimed and waste rubber are excluded from the surcharge under headings 40.03 and 40.04. Synthetic rubber under heading 40.02 is left out. As a rough indication of the existence of the anomaly, I point out that this is, as far as I know, the only tariff heading where more than one item is mentioned consecutively and where there is a break omitting one item from the list.
  Reclaimed rubber and waste rubber do not have to bear the surcharge, but reclaimed rubber is between 50 per cent. and 100 per cent. synthetic rubber, and it seems quite extraordinary that one may freely and without surcharge import synthetic rubber if it has been reclaimed but one may not so import synthetic rubber in its original state. This is a glaring anomaly. In order to reclaim synthetic rubber, one has to go through a vast and complicated chemical process, yet reclaimed synthetic rubber is exempt from the surcharge.
  Taking up a point made a short time ago by the Minister without Portfolio, I remind the Committee that synthetic rubber is the inevitable by-product of the reclaiming of waste rubber. The hon. Gentleman made the point that, if something was an inevitable by-product of another, it ought not to be excluded from the general list in the Schedule.
  Third, I take the question whether or not export prices would be affected by the surcharge. The Chancellor said that
  "any adverse effect on our export of products which are made from or incorporate imported goods which bear the charge"
  should be avoided.
  There are very few rubber products, except, possibly, rubber tyres, which are exported in a finished state. Most rubber mouldings are incorporated as components of other manufactures, motor cars, aeroplanes, pharmaceutical products, and so on.

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  It might be said that the surcharge on synthetic rubber could be subject to drawback when exported. I ask the Committee to consider how it would be possible for drawback to be claimed on a rubber product such as a door seal in a motor car. This might have a synthetic skin which could be made from either surcharged or non-surcharged synthetic rubber, and it might have a natural rubber sponge inside. Even if this separation were possible, these components would have to be sent to the motor company to be incorporated in a motor car. These components which included an element of surcharged synthetic rubber would have to be marked in some way so that on export of the finished car it could be seen whether one or possibly two of these door seals had borne surcharge at some time.
  Mr. F. A. Burden: This is very important. This problem is at the back of these arrangements. The surcharge would be paid back to a company as drawback on exports. But it would not be paid to the company which had imported the rubber. There would be difficulty in tracing it back through the article which was eventually to be exported, and there would be great problems for the Customs officials.
  Mr. Page: May I inform my hon. Friend that I believe that many highly skilled economists and mathematicians, with red-hot slide rules, are trying to work out this kind of problem but that, according to those in industry to whom I have spoken, no positive answer has been found.
  The surcharge on imported synthetic rubber would be about £1 million a year, which is a substantial sum of money. It is impossible to believe that this surcharge of £1 million will not be passed on by rubber manufacturers to those people who buy their components. It must therefore both increase the cost of goods in this country and increase the cost of goods which are exported from this country.
  Secondly, the surcharge on synthetic rubber would adversely affect our exports. The 50,000 tons which are exported would be jeopardised because great pressure would be put on British manufacturers of synthetic rubber by British users of synthetic rubber to be supplied with
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  more of the home-produced synthetic rubber. We might well find that the efforts of the industry to expand its exports, which increased over the past year by 9½ per cent. would be jeopardised. It is for these, I believe logical and important, reasons, that I hope that the Financial Secretary will ask his right hon. Friend the Chancellor to exclude imported synthetic rubber from the import surcharge. I feel that it would be grossly unfair and quite illogical if this were not done.
  6.45 p.m.
  The Financial Secretary to the Treasury (Mr. Niall MacDermot): The hon. Member for Harrow, West (Mr. John Page) has developed very fully the arguments in support of the Amendment No. 75 standing in his name and that of his hon. Friend the Member for Wycombe (Mr. John Hall). I hope that he will not think me guilty of any discourtesy or disrespect for his argument if I seek to answer it briefly. I am conscious that there are many hon. Members who have on the Order Paper other Amendments to the Schedule which I am sure they will wish to have time to consider.
  I am afraid that I must advise the Committee to reject the Amendment for reasons which I shall give. First, I am afraid that synthetic rubber does not pass the tests which were outlined earlier this afternoon by my hon. Friend the Minister without Portfolio when he explained the principles upon which we could consider accepting Amendments of this kind. First, it must be shown that there is a glaring anomally in the sense that the goods are either materials which have undergone only elementary processing or are foodstuffs which should have been included originally in the list of exemptions. Secondly, it must be shown that it is causing real hardship. Thirdly, it must be shown that the items for which exemption is sought would not, if exempted, endanger the whole fabric of the scheme by starting a chain reaction and a series of other anomalies.
  I do not wish to comment at all on the hardship aspect, but I must point out from the beginning that this item of synthetic rubber fails to pass the first and third of those tests. It is a fully manufactured product. Not only that, but it is made from chemicals which themselves are liable to the charge.

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  It obviously would be quite indefensible to exempt a manufactured product which was produced from other chemicals which are subject to charge, and two of which are Butadiene and Acrylonitrile. The other consequence is that if we were to grant this exemption it would immediately set off a whole chain reaction of demands for other goods to be exempted for which it would be claimed that there was an equal right.
  The hon. Member rightly pointed out the anomaly that reclaimed rubber is exempted. This is precisely an example of the kind of anomaly which is bound to arise when we base these inclusions and exemptions, as we have had to do, on the agreed Brussels Nomenclature. This difficulty arises particularly in relation to chemicals. Generally speaking, in the Brussels Nomenclature goods are grouped according to the degree of processing which they have undergone. That was not done for chemicals. They were grouped according to the chemical constituents. The result is that within one heading we find articles some of which are virtually raw materials and others of which have undergone a great deal of processing.
  We therefore have to look at the consideration which applies to the bulk of the articles under that heading. If we can regard the bulk as raw materials, we think that it is defensible to exempt them. If the bulk are not raw materials, then it is not defensible to exempt them. Of course, in each case there are some items falling on one side of the line or the other which do not correspond to the bulk and therefore cause anomalies.
  The hon. Member gave the example of reclaimed rubber. The point is that generally throughout the Schedule it will be found that what may be called waste products are exempted. I do not think that hon. Members will quarrel with that. Thus, reclaimed rubber finds itself in the nomenclature in the category of waste products although, as the hon. Member pointed out, it had undergone quite a degree of processing and manufacture in order to be reclaimed. It is therefore an item which, perhaps wrongly, has the benefit of exemption. I hope that the hon. Member will not press that point too much or we may find
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  ourselves compelled to use the power which exists in the Bill to delete an exemption because it is anomalous.
  This is a good illustration of how we could go on arguing until midnight and long beyond that on particular items and could show that there are these anomalies. This is bound to happen. We have to take a broad look at each heading. Having done that, I am afraid that I must advise the Committee that it would not be right to exempt synthetic rubber and that reclaimed rubber is very lucky to find itself exempted.
  The hon. Member's final argument was about the effect on the export trade. I am advised that synthetic rubber can qualify for drawback. The hon. Member gave one example of rubber used in door seals and pointed out what might be the difficulties of making a successful application there for drawback. But the great majority of this material in the motor industry is used for tyres, and drawback can be claimed, and is claimed, from protective duties, and can also be claimed in respect of this duty, for tyres. I see the hon. Member shaking his head, but I assure him that where there is an existing drawback we propose to frame the procedure for drawback under these provisions on exactly the same lines.
  Mr. John Page: I said that tyres were obviously and clearly a separate item. But it would be impossible to separate very many other products between those on which drawback can be claimed and those on which it cannot be claimed, especially as many of them are made of materials which are mixed—some materials being liable to surcharge and some not being liable to surcharge. It would require the most remarkable piece of accounting to make this arrangement.
  Mr. Graham Page: On a point of order. I hope to deploy the argument, on the Question, "That this be Schedule 1 to the Bill", that reclaimed rubber should be omitted from the Schedule and made subject to the charge. The question of reclaimed rubber, however, has been raised as a side issue in this debate. Would it be convenient, if I caught your eye, Sir Samuel, for me to address my remarks to you on that subject now or should I wait until we reach the later Question?
  The Deputy-Chairman (Sir Samuel Storey): I do not think that the hon. Member is right in saying that this is a side issue. It is one of the matters being discussed on the Amendment. As to what happens when we reach the Question, "That this be Schedule 1 to the Bill", we must consider that when we get there.
  Mr. Hirst: I am sure that the Minister without Portfolio did not mean any discourtesy to the Committee, but we have had a wide-ranging discussion on the Amendments and there has been no comment whatever on Amendment No. 53 which stands in my name and to which my hon. Friend the Member for York (Mr. Longbottom) spoke. It is an important Amendment, and it is also important that we should clear this point up. I do not think that we shall have plain sailing for the remainder of the Amendments unless we do.
  It is not good enough and it is not treating the Committee, or indeed the industry and trade of the country, with the natural and normal courtesy which any Government should show for Ministers to admit that something is anomalous but to add that it cannot be considered. It is not right for them to turn arguments down flat just like that. We are dealing with the trade and industry of the country. When it is stated that there is a product which is not available in this country but which is essential to industry—and when there is no argument about that from either side of the Committee—it is wrong that this point should not be considered. Such a product cannot affect the Government's economic purpose because the material will still have to be imported.
  We are dealing here with something far more important than the Government's face in this matter; we are dealing with the health and strength of the British economy in trade and industry. We are not dealing with academic arguments. That is not what we have been hearing this afternoon—this is something far more fundamental. We shall not get very far in these debates unless a more practical and more businesslike and more respectful attitude towards trade and industry is adopted.
  We may be arguing about strange names and strange chemicals, but these are raw materials or extremely valuable
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  products in the production of goods for large companies dealing with a large employment and a large degree of trade. Nor is it good enough to argue on many of the aspects of the so-called drawback on the export rebate that the ultimate exporter will reap some advantage. It is useless to say, "One need not worry about the exports; one can get all that on rebate". It will not work out that way at all; that is not a practical approach.
  It shows that the Government rushed into this decision without thinking of the consequences of the action they were taking. Having done that, it is perfectly clear to this Committee and to the country that they should listen to arguments much less rigidly and with greater regard for the consequences than has been the case this afternoon. I do not think that any Amendment which has been called and which is under discussion and about which speeches have been made should be ignored.
  Sir D. Glover: This is a vital arid a tragic debate. Throughout the afternoon cogent speeches from this side of the Committee have pressed for retention of the equilibrium and the fine balance in vital and important industries. Yet not a single speech has been made from back-benchers opposite, from any trade unionist, or anybody speaking for the interests of his own industry. That is one of the most tragic experiences we can have in a discussion on the Finance Bill.
  I am not saying that I do not admire the way the Financial Secretary to the Treasury and his hon. Friend have this afternoon tried to deal with these problems, but, with greatest respect, lawyers, while they have great virtues attributable to them, are not expert to deal with trade and industry. It has been quite obvious for the last two hours that what the two hon. Gentleman needed was a guide dog. They are the blind leading the blind.
  Mr. Archie Manuel: We had plenty of that in the last Government.
  Sir D. Glover: We are dealing here with the delicate mechanism of large industries. Hon. Members on this side of the Committee have made very reasoned speeches and have made their case an immensely strong one. Yet throughout the whole of this debate there has not been a single representative of

  531
  the Board of Trade present to intervene. [An HON. MEMBER:" There is one."] Is the hon. Lady the Member for Stoke on Trent, North (Mrs. Harriet Slater) a representative of the Board of Trade?
  Mr. MacDermot Mr. MacDermot indicated dissent.
  Sir D. Glover: If the hon. Member for Walthamstow, West (Mr. Redhead) has been here it is a pity that he has not joined in our discussions, because the picture has been that all the problems have been settled purely on a legalistic basis, and not on a practical basis of British industry. I hope that the right hon. and hon. Members opposite will bring forward somebody who will talk to us on this side of the House and explain the difficulties—when we come to further Amendments or even at this late stage. We realise that these difficulties confront British industry over the Amendments with which we are dealing.
  Mr. MacDermot: Before the hon. Member for Taunton (Mr. du Cann), I hope, winds up this debate, may I answer the last two hon. Members? Neither of them has brought forward any further arguments in support of the Amendments. Both have expressed the irritation which I know all hon. Members feel when they have to listen to a couple of lawyers for several hours from time to time.
  I apologise to the hon. Member for Shipley (Mr. Hirst) for not having commented upon the particular Amendment which stood in his name. I think that the reason was that we had overlooked the fact that it was covered by the remarks of other of his hon. Friends. We were looking forward to his own deployment of the argument.
  Mr. Hirst: I deployed the arguments in the first place. The Financial Secretary was perhaps talking and not listening.
  Mr. MacDermot: It sometimes happens that one misses even pearls of wisdom when talking of another point. I shall try to give a full answer on the item he mentioned. Furfural is prepared by distilling cereal bran with sulphuric acid. It is, therefore, itself a processed product and we come up against the difficulty about the heading under which it falls. The other products of heading 29.35 are also derived from vegetable materials and it means that if this Amend-
  532
  ment were accepted it would be difficult not to concede the whole heading.
  If we did that it would lead to further pressure on the charge on other organic chemicals. It is another instance of the difficulty we have, and I must assure the Committee that our rejection is not due to any pig-headed obstinacy. I assure hon. Members that as we continue to advance through the Amendments on the Notice Paper we shall certainly listen sympathetically to the arguments. I hope that there may be some at least where hon. Members will find that we can meet them.
  Mr. du Cann: My hon. and right hon. Friends the Members for Ilford, South (Mr. Cooper), Shipley (Mr. Hirst), Stafford and Stone (Mr. Hugh Fraser), York (Mr. Longbottom), Bedfordshire, South (Mr. Cole), Harrow, West (Mr. John Page) and, last but by no means least, my hon. Friend the Member for Ormskirk (Sir D. Glover) have directed their speeches to the Amendments which we are discussing. I am bound to say, after listening to them, that they have made a positive case. They have also spoken about the principles on which the Government have devised the First Schedule. The more I have listened to the speeches of the Minister without Portfolio and the hon. and learned Gentleman the Financial Secretary to the Treasury, the more convinced I am that this Schedule has been extraordinarily badly drafted and that it is hasty and ill-conceived in the extreme.
  Before I deal with these matters of principle I will say a little on the rebate, which we are going to discuss later and upon which I will not linger for fear, Sir Samuel, of making you cross. It is perfectly plain that all that the Financial Secretary has said about the rebate—and the Minister without Portfolio before him—will not in any way necessarily make all exports cheaper. There will be cases where it is not reclaimable. Even if it were reclaimable in every case, the effect of the imposition of the surcharge on basic raw materials for British industry will certainly put up their costs. It must inevitably affect export costs. If the Government have not understood that, they understand nothing about exports.
  We are grateful to the hon. and learned Gentleman and to the Minister

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  without Portfolio, who have been helpful and courteous, and patient with all the arguments. I hope that it will be appreciated that we on this side of the Committee regard the whole of this subject as a very serious matter from the point of view of industry. I think the Committee will understand from the number of well-informed speeches by my hon. Friends on these technical matters and from the number of practical and important Amendments which are on the Order Paper how strongly we feel about these things and how anxious we are, for the sake of the British economy, to endeavour to improve this ragbag Measure and make sense out of it. My hon. Friend the Member for Ormskirk pointed out that there has not been a single speech from the other side of the Committee during the three and a half hours of this debate dealing with three separate Amendments. That must give the Government cause for concern also, I think.
  I am sure that Ministers have looked at this for days and have endeavoured to perfect it. The lack of a practical approach is, however, evident and I hope that they will be ready to give further consideration to this Schedule. About the principles by which the Government have defined the exemptions to the Schedule, the White Paper made it plain in more than one case that basic raw materials were to be excluded. Paragraph (6) of the White Paper says:
  "So far as imports are concerned a sharp distinction must he drawn between the increase in raw material imports required to service an expansion in production and the disturbing increase in manufactured goods most of which this country should be perfectly capable of producing on a competitive basis."
  We suggest that that is precisely the distinction which the Government have not made in this Schedule, and here lies the tragedy. We would not be having these discussions, nor have this great list of Amendments before us if the Schedule were broadly right in principle.
  7.0 p.m.
  The Government have said that they are willing to be helpful and reasonable in these matters. We are grateful for that. We are also grateful for the reassurance about Stockholm tar and for what the Financial Secretary and the Minister without Portfolio said about
  534
  their readiness to consider matters, but I beg them when giving assurances to make sure that they are put into effect. We are very bothered about the way in which Amendments are being turned down on grounds which seem to us not necessarily appropriate or wise.
  What I find difficult to understand is the criteria which Ministers themselves advance by which exemptions included in the Schedule are judged. The Financial Secretary has stated, as did the Minister, that they will be judged on such questions as whether the articles are food or feeding-stuffs, are likely to cause hardship if they are not included, or would upset the whole fabric of the scheme by creating anomalies. I thought those were alternatives, but I gather that they are complementary and that all three conditions must be satisfied. If the Financial Secretary looks again at the arguments brought forward by my hon. Friends on these individual matters I think he will find that many satisfy these criteria. If so, I hope that he will agree to exempt them.
  The Minister without Portfolio and the Financial Secretary, in an attempt to be helpful to the Committee, for which we are grateful, have said—no doubt in order to appease the strong feeling understandably experienced on this side of the Committee—that the Chancellor will look again at these matters to see if some change might be made in the spring, but why not now? They have all the experience which is deposited in the Board of Trade, although the Board of Trade appears to play a minor part in this matter. If we can find all these details, why cannot the Government supply them? The suggestion was made earlier in reply to one of my hon. Friends that we were in favour of importing luxuries. What nonsense that is in regard to these Amendments. These are the raw materials of British industry, without which it cannot live. How does the refusal of the majority of these Amendments square with the declaration made in the White Paper, which the House thought was, as it were, the skeleton of the scheme which we are considering?
  There are many further arguments which have been well put forward by my hon. Friends in support of their Amendments. Possibly the Committee

  535
  wishes to come to a conclusion on one or more of them, so I do not wish to delay the process for we have a great deal to do. I hope that if there is one matter on which I have been able to impress the Financial Secretary, it is that we are immensely concerned on behalf of British industry about the way in which the Schedule has been prepared. We listened to the technical discussion about iodine, but we cannot see why borax is not included.
  We appreciate the difficulties of the Financial Secretary, because the Chancellor of the Exchequer is out of the country having to explain himself away in O.E.C.D. We understand that this puts Ministers in a difficulty at this time, but, even if the hon. and learned Gentleman cannot concede the principle of these Amendments, I hope that he at any rate will decide, in consultation with Ministers of the Board of Trade who have practical experience and must know the situation very clearly, that these matters should be examined and that the Government should bring forward Amendments to deal with the position on Report.
  We welcome the fact that six at least of the Amendments put forward by my hon. Friends have now apparently been accepted by the Government, but these improvements should have been made in the first place. We ask the Government to continue that process and to select from the additional Amendments. Our only purpose is to make sense of the Bill. We are only trying to be constructive and helpful. We are grateful for this Amendment and support it. I must leave my hon. Friends to decide whether to vote on the other Amendments. If they do so, I shall certainly go into the Lobby with them to demonstrate that we feel that the Government have bungled this whole matter.
  Amendment agreed to.
  Mr. Cooper: I beg to move Amendment No. 27, in page 14, line 6, at the end to insert:

  Chapter 29

  …

  Acrylonitrile.

  The Deputy-Chairman: With this Amendment the Committee can consider Amendment No. 52, in page 14, line 7, at end insert:
  1:6 Hexolactam within 29.37.
  Amendment No. 68, in line 21, at end insert:
  Niax polyol within 38.19.
  Amendment No. 69, in line 21, at end insert:
  Nylon 6 polymer within 39.01 being material of the description specified in Schedule 2 to the Import Duties (Temporary Exemptions) (No. 8) Order 1964.
  Amendment No. 70, in line 21, at end insert:
  Polyadipate esters within 39.01 being material of the description specified in Schedule 2 to the Import Duties (Temporary Exemptions) (No. 8) Order 1964.
  Amendment No. 71, in line 21, at end insert:
  Nylon flake within 39.01.
  Amendment No. 84, in page 15, line 27, at end insert:
  Nylon yarn within 51.01.
  Amendment No. 85, in line 38, at end insert:
  Acrylic fibres within 56.06.
  Amendment No. 86, in line 42, at end insert:
  Glass marbles for the manufacture of glass yarn within 70.03.
  Amendment No. 94, in page 17, line 10, at end insert:

  Chapter

  100

  …

  Man-made fibres (continuous) being continuous filament synthetic gains made wholly from polyamide fibres or polyester fibres.

  Amendment No. 96, in line 17, at end add:

  Part

  2

  …

  …

  Raw materials not obtainable in the United Kingdom and used in the production of man-made fibres manufactured i n Northern Ireland and the development areas.

  Amendment No. 125, in line 17, at end add:

  Part 2

  …

  …

  Plait, braid and straw hoods and braids and hoods made of manmade fibres.

  Amendment No. 126, in page 15, line 38, at end insert:
  Nylon and rayon staple fibres within 56.01.
  Mr. Cooper: This group of Amendments can be broadly described as covering the man-made fibre industry. The whole Committee would agree that

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  over the years, since the war particularly, man-made fibres have made a striking contribution to our prosperity at home and to our export trade. I hope that the Minister will pay attention to what is said about acrylonitrile, which is mentioned in the Amendment I am moving, because it is exceptional as compared with all the other products we shall discuss. It was originally manufactured from acetylene.
  It was from this base product that man-made fibres started and its use in plastics and synthetic rubber was made. There was set up in Northern Ireland at Coleraine, through Monsanto, the big firm of Chemstrand to make synthetic fibres on a large scale based on acrylonitrile. The factory was set up to give employment in Northern Ireland, and for that reason I should have thought that the Government would apply a quite different test in considering raw materials for this factory.
  About two years ago a firm of chemical manufacturers in this country set up a plant to manufacture acrylonitrile here, but just as the plant was about to go on stream a new scientific development in the manufacture of this product was made and instead of acrylonitrile being made from acetylene the product is now made from ethylene. The result was a very substantial reduction in price, but this process was still for material manufactured in the United States.
  The reduction in price was so great that the British manufactured material based on acetylene was no longer economic, so the factory never went on stream at all. Now another group of British chemical manufacturers have got together and have evolved a process based on ethylene. A new plant is at present under construction, and will go on stream in about 12 or 18 months' time. In the meantime, under this Bill Chemstrand has to buy acrylonitrile plus a surcharge of 15 per cent., and it must be remembered that this firm is trying to sell its goods in a pretty tough market.
  If we want to provide employment in Northern Ireland, this is one product from which the surcharge must be removed. The product will be cheaper for the industry when the new factory comes on stream, but for the moment it is wrong, and quite illogical, to give
  538
  great tax concessions in Northern Ireland to provide employment, and at the same time slap on a 15 per cent. surcharge on the basic raw material of a product which is fed into one of the major factories in the country.
  7.15 p.m.
  Mr. Archie Manuel: I rise to support what was said by the hon. Member for Ilford, South (Mr. Cooper). I realise the significance of this 15 per cent. surcharge on the raw materials imported by Chemstrand for the manufacture of nylon yarn. For a long time the local authorities in my area, and the Scottish Development Council, were interested in getting this firm to come to Scotland. It ultimately decided to locate its new factory in my constituency—and I am intensely proud of it—and it bought 350 acres near the little village of Dundonald, a beautiful part of my constituency. It now needs the other ancillary attractions which are to be found in Ayr county, and housing and other social inducements have been promised and will be provided.
  I should like my right hon. and hon. Friends to recognise that Dundonald is in a development area. In fact, most of my constituency is listed as such. Unemployment is still high there, with an average of 6·5 per cent. The Ayr County Council did everything possible to attract industry into its area, and the local authority was unanimous in doing everything possible to bring Chemstrand to Ayrshire. Their efforts were ultimately crowned with success when this company decided to develop its product at Dundonald. The siting of the factory there was made possible by Ayr County Council undertaking a capital expenditure of £1½ million to provide an adequate water supply at the site. We must not lose sight of the fact that although this is capital expenditure, it is a rate-borne burden, and was made possible by the intense desire of the local authority to attract this firm to its area.
  This company is planning big. It is planning an initial capital investment of £6 million, which will provide employment for 800 people by early 1966. There are plans to quadruple the size of the plant during the next five years, and to invest a further sum of more than £30 million, which will provide employment for 2,900 people by late 1969.

  539
  I hope that my right hon. and hon. Friends will recognise that, while the plant is being constructed, the company must build up a market for the products it will ultimately produce. This is a most important time for the firm, and I go so far as to say that the product is in some danger of not being produced because of the imposition of this 15 per cent. surcharge at this time. I accept that this surcharge is necessary because of the position which the Government found when they came to power, but I emphasise that the surcharge imposed on the raw materials used by this firm must be for a very limited period, indeed. If the surcharge is maintained for too long, this firm's product will be endangered.
  I am heartened by the fact that during the E.F.T.A. talks the indications were that the surcharges were to be imposed for a short time only, but I submit that the surcharge on the raw materials required to make nylon yarn must be reconsidered at an even earlier stage than that indicated during those talks. I have been in touch with my right hon. and hon. Friends, and also with the firm, and I hope that tonight we shall be given some indication of the Government's proposed line of action.
  This is a young, growing industry. It is now at the cross-roads. We can make something of it in this modern age about which we hear so much. We can do something worth while, which will repay this country a hundredfold, and ultimately avoid the imports which are necessary at the present time. This firm must be listed as one to be given early relief. I have been informed that there is a Government Amendment to provide relief in respect of casein, but this is only one small item of the raw materials used in the manufacture of this product, and not much help will be derived from that concession.
  We appreciate that, but that is not the relief that we are looking for. Because of its efforts to locate this development in Scotland, Chemstrand and other firms allied with it in this field should be treated as cases of an exceptional character, to the extent that they should be given relief from the surcharge at the earliest moment.
  540
  We appreciate the significance of the surcharge, but we also realise that this year the firm is already paying import duties of 16 per cent., plus 7½d. per lb. on yarn imported, amounting to a total sum of £750,000. On top of that must be added the 15 per cent. surcharge. It will be appreciated that this is an intolerable burden for a firm that is starting up, and which is putting in the amount of capital that this firm is putting in.
  I am well aware of the development in Coleraine, in Northern Ireland. I support what I am sure will be said about that, because I know the position, and I know that the firm went to that area not only because it liked it, but because it wanted to relieve unemployment. It is taking the same view in Scotland. As yet, nothing has gone back to the firm in the way of profits. It is merely holding its own. We know that at least a 10 per cent. return is expected on capital invested. The principals of the firm will be visiting this country in the next few days and will need some reassurance. That is why it is important for the Government to realise that early relief should be given in this case. Exemption should be given because of what this production means to the country.
  Mr. Edward Heath: The hon. Member said, first, that early relief should be given, and at the end that exemption should be given. He is fully supporting the case made by my hon. Friend the Member for Ilford. South (Mr. Cooper), but does he agree that there is a real danger that this project will not go forward if the surcharge has to be paid, and, therefore, that the surcharge ought not to be imposed on these items?
  Mr. Manuel: When I said "exemption", I meant early total relief from the 15 per cent. surcharge. I believe that the firm would be satisfied if it felt that within a month, or a month and a half, or some such period, the Government would give it relief. The firm would appreciate it, because it understands the difficulties that the Government found when they came to office, with our imports exceeding our exports to such an extent. I would not want to say

  541
  anything to stop my right hon. Friends giving exemption right away. If they accepted the Amendments I should be very happy. I would throw my weight, for what it is worth, in that direction.
  But I understand the position, and if my right hon. Friends say that exemption will be given in a couple of months I shall he fairly satisfied, and I believe that the firm will be satisfied. I want to impress upon my tight hon. and hon. Friends the fact that this project means very much to my constituency, to Ayrshire, and to the whole of Scotland. For many years my constituency has been suffering from a high rate of unemployment. This project would break the back of it. Let us seize the opportunity of this modern age by giving relief where it is necessary and so helping an industry to expand where expansion is needed, thereby bringing something really worth while to Scotland.
  Mr. R. Chichester-Clark: It have a great deal of sympathy with the hon. Member for Central Ayrshire (Mr. Manuel). I am well acquainted with the Chemstrand works in Coleraine. I, too, have heard from the firm. It has told me what I have no doubt it has told the hon. Member, about the plant in his constituency. It says:
  "Imports of nylon yarn are necessary to support Chemstrand's planned nylon production in Scotland. These imports are essential if Chemstrand is to create a market for the Dundonald plant. Chemstrand's customers for the output of this plant must be familiarised with the product before and not after production begins. Surcharge on these imports threatens the feasibility of the plans to develop production in this development area…"
  I can understand why the hon. Member for Central Ayrshire is worried about this.
  I believe that we are discussing several Amendments together, and I welcome this, in that it will enable me to avoid having to pronounce some of the names in the various Amendments. I shall direct most of my remarks to Amendment No. 96. In the last few years Northern Ireland has become very much a centre of the man-made fibre industry. This has been very welcome, in that it has taken up the slack of employment at a time when some of the older and more traditional industries have run down to some extent. In Northern Ireland, Chemstrand, British Enkalon and Courtaulds, are all household names.
  542
  In the last few months, a degree of optimism has been generated in Northern Ireland, which was nothing to do with the result of the British General Election. Optimism was generated in terms of fuller employment. When we saw the November employment figures we were delighted to find that they were the best for November for 14 years. So, if I may borrow a phrase from elsewhere, we thought, that we were "on our way". But that was before we heard about the 6d. on petrol tax, the 7 per cent. Bank Rate and the 15 per cent. surcharge.
  I hope that when he replies the Minister will not say anything which will cause more gloom. I hope that we shall hear something to make us a little more hopeful than we have been in the last few weeks. All the firms that I have mentioned so far are to a lesser or greater extent dependent upon the import of the materials mentioned in the Amendments. The firms consider that these are basic raw materials, consistent with the definition in the White Paper. I do not doubt that the Government will contend—as they have been contending practically all the afternoon—that these are manufactured materials, but I very much doubt whether that is a tenable argument in this case. It must be pointed out that all natural fibres need some processing before entering the United Kingdom as imports. Does not cotton go through certain processes? Silk goes through elaborate processes between leaving the cocoon and entering the mill, and even wool has to be shorn from the sheep and then washed and put through many processes. I see very little difference between those materials and these mentioned in the Amendments.
  If what I have said does not make out a case, it must be remembered that in the case of these man-made fibres there is often a middle-man, and nearly always a middle price. Let met take the example of silk. The price to the silk farm owner is different from the price paid for the landed product in the United Kingdom, and the difference is not accounted for merely by transport costs.
  7.30 p.m.
  Incidently, if it is alleged that these are manufactured materials, why are such items as leather, vinegar, metal alloys and confectionery regarded as non-manfactured items?

  543
  Many of the materials that we are talking about are common needs of the industries that I have mentioned. From our point of view one of the interesting things about them is the situation of their plants. They are nearly all in areas of high unemployment. Let me take Chemstrand as an example. It has an acrylic fibre production plant at Coleraine. It also has the nylon plant, about which the hon. Member was speaking, at Dundonald, in Scotland. We known how serious is the problem there. I have more sympathy with the hon. Member for Central Ayrshire because I noticed that throughout his speech there was not a single Scottish Minister in the Chamber. I think that they ought to be taking this more seriously, I should have thought that by now they would have got over St. Andrew's Day.
  On present plans, Chemstrand will invest £10 million per annum over the next five years. Coleraine will benefit to the extent of £12 million and employ in future about 700 more people than today. This will make a big dent in the local unemployment figure which at the moment stands at 1,094. A sum of £38 million is to go to the new Dundonald plant in which the hon. Member is interested and it is envisaged that 2,900 people will be employed by 1969.
  Chemstrand also has Elastomeric Fibre, producing nylon, using niax, located in Northern Ireland, where plans have been made to increase the total investment to £1 million. I will not say anything about the costs passed on to customers, deriving from this surcharge. It seems to me that the effect of the surcharge on a firm which forms part of an international organisation—and all three firms which I have mentioned do—will be to tempt them to serve their export markets from their plants elsewhere abroad. This, it seems to me, could have very serious results. At present Chemstrand contends that the level of the surcharge is such that the firm would have to export 10 times the value of its imports in order to nullify its effect. With the best will in the world that must be beyond all commercial feasibility.
  It is obvious that, unless these raw materials are exempted, the surcharge will have a very serious consequence for some of the companies which I have mentioned. It will provide at least an
  544
  attendant risk—I do not wish to appear alarmist and to put it too high—but there will be a certain risk to employment in difficult areas and to future employment in these areas.
  The White Paper has been quoted a good deal and I must quote from it again. It states that the Government will
  "…foster more rapid development in the under-employed areas of the country."
  If these Amendments are not accepted, can it really be said that the Government are fostering rapid developments or indeed development at all, in these areas? The Government have a chance, which I hope they will take, to make amends for the effect of some of the policies which they have been putting into practice in the last few weeks. I hope that this may prove a test of the sincerity of the Government toward the areas of unemployment about which I have been speaking.
  I hope that the Government are sincere and that they will accept these Amendments. This provides them with a chance. Let them take that chance, and not shrug off their responsibilities to Northern Ireland, Scotland and the development districts.
  Mr. Patrick Jenkin: Like my hon. Friend the Member for Londonderry (Mr. Chichester-Clark), I was delighted to hear the speech of the hon. Member for Central Ayrshire (Mr. Manuel). The hon. Gentleman drove a coach and four through the argument of the Government on this Schedule; perhaps a coach and four is the wrong term—one should say a multiple diesel unit.
  With these Amendments to this immensely complicated Chapter 29 of the tariff list we arrive at a point where the effect of a surcharge of this sort is shown up in its full futility. In the organic chemical industry, a large part of which is comprised within Chapter 29, there are a large number of products which range over the whole field of the industry.
  After the speech of my hon. Friend the Member for Ormskirk (Sir D. Glover) I hesitate to intervene as another lawyer. My hon. Friend talked about the blind leading the blind. Perhaps I should declare an interest, because, although a lawyer, I work in the chemical industry in a fairly subordinate capacity. If the debate so far is anything to go by, it is not so much a case of the blind leading

  545
  the blind as the blind striving to lead the slightly myopic.
  The chemical industry seems to have three major characteristics which render it totally inappropriate for the application of a complicated surcharge of this sort. The first seems to be the nature, and the reasons for the nature, of the very substantial international trade in chemicals which has always gone on and which always will go on. The second is the sheer impossibility of drawing a line or, at any rate, drawing a rational line between raw materials and manufactured goods. Thirdly—this point was touched on during the previous debate—there is the virtual impossibility, in a great many cases, of making any provision for drawback on exports. I wish to say a word about all three of those characteristics of the trade.
  There will always be a big international trade in chemicals, for two main reasons. One was touched on by my hon. Friend the Member for Ilford, South (Mr. Cooper) namely, the high rate of obsolescence. New processes inevitably come along which render existing processes obsolete overnight, and plants close down. It is in the national interest, one might almost say in the international interest, that this should be done in order that technology may progress and resources may be used to the best advantage.
  I am proud to be associated with the firm in this country which is building a new plant to produce the material acrylonitrile by an ammoxidation process, that is, the reaction of an olefin—propylene—with ammonia. The scientists who have developed this process deserve the highest possible praise. This plant is not yet ready for use and will not be ready until the middle of next year. Acrylonitrile ceased to be economic when made by the old process. It has to be imported and is being imported to a high degree.
  The other characteristic under this head is that of capital. In an intensive industry investment comes, if I may use the term, in very large dollops. It can be calculated not on the purely national market, but on a wider international market. The result is that over a period of years there is a flow of chemical materials from the countries which have most recently put in new capacity because they are in a position to supply the growing market.
  546
  Importing countries tend to take imports for a period of two or three years until the market has reached a stage at which the next dollop of major investment is provided, when the trade will flow in another direction.
  There will be substantial quantities of some of these imports because our existing plants are being expanded. It is nonsensical to impose a surcharge of this sort on a short-term basis on imports of chemical raw materials which are being imported as part of an inevitable longterm development. The nature of the international trade in chemicals makes it quite inappropriate for the imposition of such a surcharge. Taking acrylonitrile as an example, the cost adds to the nonsense. Here we have a raw material supplying the synthetic fibre industries, which is one of the most exciting growth points in the whole of our industry. If they are to be held back, if the surcharge works and imports are reduced, the consequence will be that unit costs will go up and exports will become more uneconomic, even if it is possible to calculate the rebate and drawback. It seems to me that we are proceeding in a totally wrong direction.
  The next point is that one man's finished product is often the next man's raw material. This is nowhere more true than in plastics and synthetic textiles. Another material imported on a very large scale, though at present not in the Schedule—although I have tabled an Amendment to have it included—is benzene. I refer, of course, to the chemical grade of benzene which falls within Chapter 29-the raw substance made in Britain from coal mainly goes into fuel. This cannot be used in chemical manufacture. Imports of benzene are running at between 100,000 and 150,000 tons a year.
  The surcharge has been placed on plastic materials and this will have some effect—perhaps not as much as is being hoped—on reducing imports of these materials. It will, however, add to the amount of raw materials that will be needed to produce goods to satisfy the home market by domestic producers of these plastic materials. This will increase the demand for the raw material benzene—yet we find that this raw material will itself be subject to the surcharge. It has been calculated

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  that, based on a 15 per cent. surcharge on the average landed price of about £25 per ton, £400,000 to £500,000 will be added to the costs of importing this material.
  There is then the problem of calculating the drawback in an industry where the products completely lose their identify by chemical changes or reaction. Often two or three changes take place by a chemical process. I would be grateful if the Minister would comment on the report which appeared in the Financial Times yesterday to the effect that the Government were considering amending the rules so that products produced as a result of chemical reactions could qualify for drawback. I hope that this will be done.
  The Financial Times report seemed to suggest that a change of policy would be necessary to enable this to happen. I do not understand this, for there has never been any suggestion, in relation to protective duties, that drawback cannot be claimed in these circumstances. However such a change is necessary I hope that it will be made, otherwise there will be large quantities of exports of plastics, fibres and other materials which have undergone some chemical reaction in their manufacture—thereby the material having entirely changed its nature—not qualifying for drawback. Thus the surcharge could make these exports more expensive.
  The surcharge, particularly in this sphere of organic chemicals, has caused immense uncertainty in the chemical industry. Without doubt, it must be harmful to the growth of the industry and, in this connection, I remind the Committee of what was stated in the N.E.D.C. Report about the chemical industry and the 4 per cent. growth rate. The Report indicated that the industry would have to work extremely hard to match the growth requirements of the economy as a whole.
  The surcharge is bound to be detrimental to our exports, particularly if there is any suggestion that drawback will not apply where products have gone through a chemical reaction. I hope that the Government will, as a result of this debate, adopt a more flexible attitude, particularly to organic chemicals within Chapter 29 of the tariff list.
  Sir Knox Cunningham: In rising to support the Amendment I wish to refer particularly to Amendment No. 96, which refers to raw materials not obtainable in the United Kingdom and used in the production of man-made fibres manufactured in Northern Ireland and the development areas. I will not follow the remarks of my hon. Friend the Member for Wan-stead and Woodford (Mr. Patrick Jenkin), who, as we heard, has expert knowledge of the chemical industry. He covered this subject much better than I could hope to do.
  7.45 p.m.
  I wish to refer to my constituency of South Antrim. In it, and in Northern Ireland as a whole, there has been established in the last decade a centre of the man-made fibre industry. In South Antrim we have at Carrickfergus the large Courtaulds factory. It has been in the area for some years and works a 24-hour shift. I am told that if it closed it would take a fortnight to start again. Working around the clock is necessary for the type of goods which are produced there.
  Also, in Antrim recently we have welcomed the firm of British Enkalon, which has come from Holland to open a plant. Its activities will revolutionise the area. It has brought employment and its presence is very welcomed. Housing has been provided for the workpeople and expansion in the area is considerable.
  The hon. Member for Central Ayrshire (Mr. Manuel) mentioned the firm of Chemstrand, a subsidiary of which is to start in his constituency. I know that my hon. Friend the Member for Londonderry (Mr. Chichester-Clark) has the main plant of Chemstrand in Northern Ireland in his constituency, but too, have a plant belonging to that company at Newtownabbey, a new town in my constituency. I have been told by officials of these firms that the raw materials they use, and which are referred to in the various Amendments, cannot be obtained in Britain, but must be imported. The Minister said that this was irrelevant. I dispute that. When the White Paper was published it was stated that basic raw materials would be exempted. I now understand the Government to say that this is not so; that is, if any manufacture

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  takes place in that raw material. In that case the raw material is not exempt.
  What is the principle being adopted by the Government? I have understood the Government to say—and it seemed from the speech of the Minister without Portfolio on an earlier Amendment that this is so—that we need to reduce our imports to help our balance of payments. If these raw materials, because they are partly manufactured and are coming to firms in South Antrim and Ulster, are to be excluded—simply because there has been some process of manufacture abroad—what will be the result? It can only lead to a reduction in the output of our manufactured goods and a consequent reduction in employment. Is that what the Government want?
  I am speaking of an area into which new industry is coming. There has been a reduction in the rate of unemployment and until now an excellent future appeared to present itself to these firms. Do the Government, by placing a 15 per cent. surcharge on these goods, intend to make the workpeople of this area unemployed?
  I ask the Government to think very carefully about this matter and to make some concessions this evening on these items. If they do not, the people of Ulster, who heard during the election statements made by the Labour Party of Northern Ireland about its desire to help the employment position will draw their own conclusions. There will be great bitterness in Ulster and great sadness and, if the Government intend to make no exclusion of the basic raw material used by these firms, the quality of their election protestations will be taken at their true value.
  Mr. Cole: I want to refer to an industry that has been rather longer established than some of those that we have been hearing about but which is very modern in its working. Amendment No. 125 seeks to add to the Schedule, and thereby exempt from the surcharge
  "Plait, braid and straw hoods and braids and hoods made of man-made fibres."
  I should here explain, in fairness, that the hon. Member for Luton (Mr. Howie) is somewhat inhibited from addressing this Committee as he is in the Government, but as one of the Members for the County Borough of Luton, where I
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  have nearly 40,000 constituents, I am privileged to represent the views of Luton hat manufacturers, and probably of hat manufacturers in other centres who must be similarly affected by this surcharge on their raw materials.
  In the County Borough of Luton, which has rejoiced in that status since 1st April of this year, no fewer than 5,000 people are employed in the hat industry, by about 150 firms. As this is a somewhat technical matter, I must be very careful to get my following descriptions correct. The hat manufacturers are at present manufacturing for the spring and summer of next year hats made from imported plait, braid, and straw hoods and braids and hoods made of man-made fibres, and it is categorically so stated that none of these is available or manufactured in this country.
  About 100 years ago, there was a straw plaiting industry in Bedfordshire, and those who have made their representations have asked "Is it intended that the cottage industry of straw plaiting should be revived so that we may have some home-made materials in this country?". I hasten to say that I do not think that that is the Government's intention.
  Although Luton is very famous for the manufacture of motor cars—we have the Vauxhall Works there—hat making, amongst other industries, is an important industry, and it is now presented, out of the blue, with a 15 per cent. surcharge on all its raw materials. This is to be a surcharge on the raw materials of the industry concerned. The Minister without Portfolio told me earlier that non-availability of a home product was no criterion in trying to get exemption from the surcharge—in other words, the Government said, it was irrelevant. But who decided that it was irrelevant? I hope sincerely that the Government will not regret this idea of irrelevancy in the next few weeks. We have already heard of what might happen in Northern Ireland in certain circumstances. I hope that, even now, the Government will not be too pontifical about irrelevancy.
  The purpose of the surcharge is to try to damp down imports. I cannot see any kind of guiding plan on how that is to be effected, except that some items are surcharged and some are exempt, but there will be two net results

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  for Luton. First, people will still wear hats, and manufacturers will still sell them. I hope that that will go on, but the net result is that everyone buying a hat will pay 3s. in the £ more for the same hat than they would have paid had they bought earlier. That increase may not appear in the cost of living, but it is a considerable irritant.
  The other result is one which I am sure the Government never intended. There will be no palpable diminution in the amount of imports of these raw materials, so the net result there will be that, instead of damping down imports, the raw material account in the trade will be increased by 15 per cent. That leads to another point. It was said on Monday that this 15 per cent. surcharge would yield about £100 million. I hope that the Government have not overlooked the fact that the £100 million added to the import bill has to be made up by exports.
  I do not wish to overstate the case by suggesting that there will be high unemployment in any particular area because of this impost to the hat trade, but I do suggest that those employed in the smaller specialist firms may be minimally hit by the 15 per cent. surcharge. It may lead to little pockets of unemployment, not only in the County Borough of Luton but in other places where hats are made. Have the Government considered the effect of putting on 3s. in the £—which is by no means a trifling addition—on industries that depend on competitive selling to the public?
  I do not expect that the Government will necessarily lean over to make an exception in the case of the hat industry. They will probably say that these are manufactured articles—very much manufactured—and that the fact that alternative materials are not availble is not relevant. But will they please keep the way open for these raw materials, which cannot figure very largely in our impost bill? Will they please remember that the effect on the happiness of the 5,000 people employed in the industry in Luton—and of those engaged in the industry elsewhere—is greater than is reflected by the amount concerned on the import bill?
  I hope that the Government will Keep all these considerations in mind and, at an early date—if not immediately, as I would hope—make some concessions.
  The Minister of State, Board of Trade (Mr. Edward Redhead): If I intervene at this early stage, conscious that there are still some hon. Members who wish to debate this long list of Amendments, it is not with the intention of trying to baulk them in any way. They will obviously have an opportunity to speak, if they so desire. However, as we have a great deal yet to do, and I think there will be a common desire that we should make as rapid progress as possible, I hope that what I have to say may in some degree help to shorten the debate.
  Things are a little complicated when one is faced with a rather long list of Amendments, as in this case, but I think that I am correct in saying that the group as a whole concerns a series of specific chemicals and, in another context, other raw materials used in the manufacture of man-made fibres. Other Amendments deal specifically with man-made fibres themselves. So far as I have followed the general trend of the discussion, the arguments adduced in respect of the Amendments to which hon. Members have addressed themselves have drawn upon a variety of arguments which represent a degree of repetition of what has already been said in preceding debates.
  8.0 p.m.
  We have had again the argument as to what could rightly be construed in the context of this charge as a basic raw material. We have had again, rehashed and rehearsed, the argument as to availability in the home market of some of these commodities, and tacked on to this group we have had a plea for a regional concession in regard to certain of these commodities, and even, on the part of my hon. Friend the Member for Central Ayrshire (Mr. Manuel), virtually a request for a concession for a particular firm.
  I think that it would be worth while refreshing the minds of the Committee once more on what my right hon. Friend the Chancellor of the Exchequer said on Second Reading:
  "The phrase 'basic raw materials' has been used in a generally descriptive sense. We have not attempted to apply it with precision because, obviously, there are many opinions about what is a raw material."
  In the light of the debates which we have had in the last few days that

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  statement might be regarded as virtually prophetic. He went on to say:
  "We have adopted as a guide the general principle that materials which have undergone only elementary processing should be exempted."
  Later he said:
  "I am aware that even such a principle has no generally accepted rules which could he applied precisely and consistently over the whole field."
  From that he said that the Schedule exemptions had been drawn upon that basis, and while he was still considering certain items he would consider the possibility of producing further Amendments some of which have appeared on the Amendment Paper and some of which the Committee has already dealt with. But he added:
  "I shall, of course, always be ready to consider any similar glaring anomalies which hon. Members may alight upon."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1096–7.]
  This stands as an assurance. I want to make it abundantly clear that my right hon. Friend means by that that, while it may not be possible in advance of more detailed examination of what the repercussions would be in specific cases of making concessions for which there have been claims before this Committee, either now or even on the Report stage, this reconsideration does not mean that of necessity we have to wait until there is a general review of the scheme as whole. I give this assurance. In a number of instances which have been urged upon us both by correspondence and in discussions in Committee, we have taken careful note of the submissions, and if, therefore, within the ambit of the general principle which I have again referred to by quoting my right hon. Friend, the answer has to be that we cannot concede a particular concession requested at this stage, I beg hon. Members to believe that we will give most earnest consideration to any further representations that are made. We will examine them. I am not to be construed as committing myself on any specific instance, but I want it to be clear that this is not the last word until such time as there will be a general review of the charge as a whole.
  Mr. John Hall: The hon. Gentleman has stressed to the Committee the principles announced by the Chancellor of the
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  Exchequer which guide him in selection of materials for exclusion. Does this mean that the objective laid down in the White Paper has been abandoned? The objective was that, so far as imports are concerned, a sharp distinction must be drawn between increases in raw material imports required to service as an expansion in production. Many of the chemicals which have been referred to in the debates that we have had so far are required for that very purpose. Am I to understand from what has just been said to us that this objective laid down in the White Paper has been abandoned in favour of the principles stated by the Chancellor in his speech?
  Mr. Redhead: If the hon. Gentleman will be good enough to await what I have to say about a particular Amendment which seeks a regional concession, I think that he will find that it will have some bearing on this matter.
  I should like to look at the set of Amendments within this particular group. The first set deals with a series of highly complex manufactured chemicals which are used for the manufacture of man-made fibres. Because they are manufactured, by reference to the principle that I have already enunciated, they clearly cannot be regarded as basic raw materials and for that reason we cannot concede the Amendments in that respect.
  It is perfectly true that in some instances these chemicals are wholly unobtainable, or insufficiently obtainable, from United Kingdom sources. The need of particular firms and industries to import them is accepted, but—this is again reiteration—the criterion of availability from home sources cannot be conceded as a valid ground for exemption in the context of this charge. To do so—I want to emphasise this once more—would be to give credence to the very point which the right hon. Member for Bexley (Mr. Heath) was trying to emphasise at an earlier stage in Committee, that this was a protectionist charge. In fact this is not the purpose or intention of the charge, but clearly to do this would involve creating that protectionist flavour about it.
  Mr. Cole: I am trying hard to see a way through all this and to find a path. What would be the position if

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  the Chancellor thinks that the nearest he can get to a garden path is to talk about basic raw materials irrespective of what definition is used? If there was a raw material which was available in reasonable quantities in this country—I know that this is hypothetical, but I am trying to arrive at the Government's mind—but by some quirk of production it was cheaper to import, would it still be exempted, although it could be produced here?
  Mr. Redhead: I think that I made it abundantly clear in quoting from my right hon. Friend that no precise rules can possibly be applied in determining the issue of what is a basic raw material. I should find it extremely difficult to seek to do so in relation to a hypothetical question, and I am sure that the hon. Member will forgive me if I do not enter into a somewhat difficult argument on that score.
  I want to refer now to the particular Amendments which relate to man-made fibres, Amendments Nos. 84, 85 and 94. May I say in passing that there seems to be some little defect in the drafting of Amendment No. 94 in that I gather that it refers to a non-existent chapter of the tariff. We gather the purpose. It may be that there is a typographical error in it as well. The purpose is to try to secure a concession for man-made fibres. I think that it must be accepted as completely illogical to exempt them. If we reject the case for exempting specific complex manufactured chemicals which are used for the purposes of producing man-made fibres, we cannot logically concede exemption to the man-made fibres themselves. For that reason, I cannot urge the Committee to accept these Amendments.
  The Temporary Chairman (Sir Harry Legge-Bourke): I think I heard the hon. Gentleman say that Amendment No. 94 referred to Chapter 100, which does not exist. Is that so?
  Mr. Redhead: My advice is that it is a non-existent chapter of the tariff. I would not pursue the point unduly. I would not in any case want to take advantage of any little technical defect in the drafting.
  The Temporary Chairman: Order. The only reason why I ask the hon.
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  Gentleman the question is that, if Chapter 100 does not exist any longer, Amendment 94 must be out of order.
  Mr. Redhead: I do not raise the point from that point of view, Sir Harry. In so far as the general argument applies to man-made fibres, I accept that those responsible for the Amendment want to urge this point for consideration in the context of the charge.
  One specific Amendment goes a little beyond the aspect of chemicals but, on the same principle as it is sought to exempt chemicals which go into the making of man-made fibres, it is suggested in Amendment No. 86 that exemption should be given to glass marbles which are used for the manufacture of glass yarn. Again, I think that the Committee must accept that it would be wholly illogical and inconsistent, when glass in the mass and glass balls, rods and tubes are subject to the charge as manufactured materials, to exempt glass marbles used in the manufacture of glass yarn.
  On the third category of Amendments—the hon. Member for Ilford, South (Mr. Cooper) by cross-reference tied this up with Amendment No. 27 in his reference to the chemical stipulated in that Amendment—the problem is in regard to regions where industrial concerns manufacturing man-made fibres are under the necessity of importing raw materials which, it is said, are not obtainable in the United Kingdom but are essential for these industries. The contention is made that, because these establishments are located in Northern Ireland and in certain development districts—my hon. Friend the Member for Central Ayrshire brought Scotland into the picture—there should be a regional exemption for the raw materials used for these manufactures in these areas.
  I accept that these firms are contributing to the expansion of a major growth industry. The case of Chemstrand has been quoted. In the Board of Trade we have been made very much aware of the problem of Chemstrand in this connection. We are not insensitive to the problem, but we are bound to look at the problem enshrined in the Amendment not solely from the point of view of one company or, indeed, from the point of view of any one region. I think that on reflection hon. Members will accept that

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  the line of argument that we should apply the concession of duty exemption on the basis of some regional consideration, because there is high unemployment or because firms are operating in an area where it is important that there should be an expansion of industry, would lead us to almost impossible situations in the application of duty generally. Nor would the argument possibly be confined to raw materials for these purposes. It would stretch out inevitably to pressure for many other goods and commodities, and it might well be argued in respect of other duties outside the scope of the immediate surcharge.
  8.15 p.m.
  Mr. Manuel: My hon. Friend is talking about particular regions. Will he turn his mind to development districts? Development districts are well defined: Already they get reliefs in many ways which are not available to other areas. This is accepted as a principle. If Chemstrand could provide 2,900 jobs in my constituency, there would be comparatively large savings in other directions through people being taken off the unemployment queue and provided with employment.
  Mr. Redhead: I ask the Committee to recognise that the argument in this connection is essentially an argument for giving special treatment to particular user industries or to firms in certain geographical areas. However appealing that may be in general principle, we must face the fact that from the point of view of administration and equity it would be completely unworkable. The burden which would be involved in setting up elaborate machinery to ensure that the goods which were supposedly destined to those for whom this tax concession might he granted in fact reached them would be of such a character as clearly to vitiate the whole apparatus and, indeed, would make it impossible to cope with what would follow as a result of any such concession.
  Sir D. Glover: In dealing with this problem the Minister seems to have forgotten that his hon. Friend the Member for Central Ayrshire (Mr. Manuel) has quoted an area which is a development district. Hon. Members on this side have quoted Northern Ireland and other development districts. Outside Liverpool
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  there is another factory producing this sort of synthetic fibre. Because they are new industries, the bulk of these factories are in development districts. That is one of the reasons why we on this side want to get the best use of this surcharge.
  Mr. Redhead: I suggest, nevertheless, that the pattern which would have to be followed in an entirely novel procedure in the application of any form of tax would be such as to render it completely unworkable and in fact it would not result in an equitable arrangement.
  The Temporary Chairman: I am sorry to have to interrupt the hon. Gentleman, but I think that all the Amendments we are discussing in this group relate to man-made fibres. I would, therefore, hope that the Committee would feel it as well to concentrate mainly on that rather than to go into the general argument as to the incidence of the surcharge.
  Mr. Redhead: Naturally I bow to your Ruling, Sir Harry. I was construing the argument on the last of the Amendments to involve the very claims which I was trying to deal with in regard to a concession of this kind. In so far as Chemstrand—there are other firms involved—is affected by this matter, although I cannot possibly hold out any hope of a relief for the firm on the basis of any special concession on a regional or development district basis, or by reference to any specific firm, nevertheless its circumstances in relation to its problem can be, and will be, taken into account as a factor when consideration is given to the specific items which we have been discussing.
  Although I am not able at this stage without further examination to make any concession and accept that any item should be included in the exempt list, this matter will be considered and, as I said at the outset, consideration need not be deferred until the general review of the surcharge scheme itself. But indeed I give an undertaking that those considerations will be made, and will be made on their merits, so long as we can have a reasonable time to examine the possible repercussions. I am not committing myself about any one of them, but there is nothing to prevent the consideration which I have promised we shall give. We shall give most careful consideration

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  to what has been said about these and, indeed, any other anomalies which are brought to our attention.
  Sir Knox Cunningham: Could the hon. Gentleman give this consideration before the Report stage?
  Mr. Redhead: I thought I had made it clear that I could not necessarily give that undertaking. The Report stage, I believe, is fixed for next week and obviously in some instances it would require more detailed consideration than would be possible in order to arrive at a decision in time for the Report stage. Clause 3(9) gives an opportunity for dealing with goods of descriptions specified in the order if a substantial case is made out.
  Mr. Rafton Pounder: I have listened with considerable interest and attention to the remarks made by the various Government spokesmen during the past five hours. As the discussion has continued I have found myself becoming more and more at a loss to understand some of the definitions which have been put to the Committee. One has had the impression that we are almost playing a word game. We are not. We are dealing with the vital future of vast sections of British industry. From some of the things which have been said—such as, if we were to reduce the surcharge on some articles we would have to increase it on others—one almost gets the idea that one is not discussing a reduction in the import bill so much as imposing a 15 per cent. penalty on vast sections of British industry.
  In the recent election manifesto of the party opposite great play was made on regional development. This has been knocked firmly on the head in the speech to which we have just listened. Endeavours to give tangible effect to these protestations of interest in areas of regional development seem to have gone out of the window.
  In view of the hour and the fact that many other hon. Member wish to speak, I shall make my few points very briefly. The arguments advanced by my hon. Friend the Member for Londonderry (Mr. Chichester-Clark) and my hon. and learned Friend the Member for Antrim, South (Sir Knox Cunningham) with regard to specific firms apply also to the
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  entire synthetic fibre industry of Northern Ireland. Over the last decade and, indeed, over an even shorter period, there has been in Ulster a meteoric rise from nothing at all in the man-made fibre field to the position of leader in Western Europe. We are rightly proud of these achievements, and now that this field of activity and employment in Northern Ireland is reaching a position of considerable importance, the industry is suddenly faced with an ill-defined and ill-conceived measure of the kind of the surcharge which we are discussing. It strikes at the whole root and concept of attracting new firms to development areas when a surcharge is introduced against which these firms are absolutely powerless.
  The hon. Member for Central Ayrsshire (Mr. Manuel) could well have joined us on these benches in his impassioned argument in favour of the Dundonald branch of Chemstrand. The hon. Member's remarks could well have been made by any Ulster Member and with equal validity. The fact that these firms have been set up largely in development areas does not invalidate the argument that they should be given preferential treatment. The purpose of setting up firms in development areas is surely to encourage employment in various places where hitherto it has been difficult to provide. Yet as soon as we get this opportunity there is this 15 per cent. surcharge.
  I say in all sincerity that if in the coming months the unemployment figures in Northern Ireland rise—my hon. Friend the Member for Londonderry said that last month they were the lowest in any November for the last 14 years—the responsibility will rest fairly and squarely on the shoulders of right hon. and hon. Members opposite because of this surcharge. I hope they will think again.
  Mr. G. Elfed Davies: The hon. Gentleman has just said that the unemployment figures are the lowest for the last 14 years. May I ask where he has been during the last 13 years?
  Mr. Pounder: I fail to see the relevance of that intervention. I made a perfectly valid statement. The figures are going down and down. If there is any increase in unemployment, the hon. Gentleman knows as well as I do—
  The Temporary Chairman: Order. It is important that we should remember what the topic is in these Amendments. They are all concerned with man-made fibres, and unless man-made fibres can be related to the last 13 years I must ask the hon. Member to confine himself to the subject of the Amendment.
  Sir D. Glover: The reply given by the Minister of State, Board of Trade was the most unconvincing that I have heard during the whole of today and yesterday. If he will carry out a survey in his Department between now and the Report stage he will find that the bulk of the man-made fibre factories in the United Kingdom, because they are new factories and because it was easy to direct them into the areas where they were required to go, are, by and large, in areas, which without them, would suffer from greatly increased unemployment. Therefore, hon. Members have not been speaking solely on behalf of their particular parts of Ulster or of Ayrshire. If one studies Scotland, one finds that by granting these concessions we would be doing something for the benefit of the less prosperous areas in Great Britain.
  However, I want to devote my main argument to a different aspect of the problem. I want to speak on Amendment No. 96 which deals with raw materials not obtainable in the United Kingdom. I do not think hon. Members opposite appreciate that they are proposing a direct disincentive to exports. The whole basis of the Budget is supposed to be an attempt to reduce the volume of imports and increase exports.
  Let me take the Committee with me into these factories to see what happens. A raw material comes in; it is processed and made into some type of yarn. It may be processed in a factory which produces synthetic fibres, or it may be a factory which processes raw wool.
  In Britain we export very little of the completely raw material in the shape of yarn, but we still export considerable quantities of piece-goods, particularly synthetic fibre piece-goods in hosiery from Leicestershire. We use some strange terms in the trade and by hosiery I mean cardigans, jumpers and dress fabric which is knitted, particularly in
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  the synthetic fibres. All these have a growing impact on the export market, and they are growing exports.
  What happens as a result of the 15 per cent. surcharge? The price of the raw material to that factory goes up by 15 per cent. The manufacturer in Leicester or in Lancashire decides that because of the increase there will be a reduction in the demand for that product in the United Kingdom, but, of course, the manufacturer can use viscose or a combination of wool and viscose materials which are available for use in his factory for the home market. He puts these combinations of materials on to his machines and then his salesmen overseas send him an order, if he has not already withdrawn synthetics from his range. Orders come in from Australia, Canada, New Zealand and so on for a fabric or a garment of material which is made up of, or contains a large element of, the synthetic fibre which he no longer has on his machines because of the increased price in the home market. As a result the export orders are lost.
  8.30 p.m.
  I emphasise that in this sort of trade when these exports are lost it does not mean that they are lost on one particular order. It means that the firm overseas which wants cardigan material of synthetic fibre or jumpers or cardigans made of nylon and which finds that it cannot obtain them from this country gets them from other countries which are competitors and which build up good will for a continuation of those orders in the future. We have not lost one order in isolation. We have lost a continuation of orders over the years in a growing market. We give our competitors in the overseas market a golden opportunity to take those markets from us because of the Government's ill-conceived proposal to put a 15 per cent. surcharge on what is obviously today a growing element in the textile industry.
  Mr. Ron Ledger: The hon. Gentleman has studied this matter closely and he obviously has a considerable knowledge of the industry. He may be giving the impression that the cost to the firm has gone up by 15 per cent. following the surcharge on raw material, but can he say what percentage increase there is in the total cost of these goods

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  so that we may know exactly how uncompetitive we are?
  Sir D. Glover: I am grateful to the hon. Member for asking that question. I do not think that without delaying the Committee I can give those figures in detail, but at a rough guess, depending on the quality of the goods and of the raw material, I think that it would be at least 7½ per cent.
  If, therefore, we are dealing with that sort of figure we are putting the garments, material or the yarding out of court. A great many jobs in Britain are involved in this matter and I seriously ask the Minister whether between now and Report he will have another look at it.
  On the question of the siting of the factories which produce the raw material in the form of yarn, it would not be difficult to carry out a survey. They are large units and there are not so many of them in the United Kingdom. The hon. Gentleman will find the great bulk of them in areas where the Government are pledged to increase employment. If the hon. Gentleman carries out this survey between now and Report he will do a great deal to help the development areas and—which is claimed to be the purpose of the Budget—to buttress our export performance in the months to come.
  Mr. Henry Clark: It is a belief of mine that more sins are committed in the name of principle than in any other name. One of the most pathetic things that I have seen today has been hon. Members opposite looking for a principle by which to justify the sin which the Government have clearly decided to commit against the synthetics industry. The Government's decision to impose the 15 per cent. surcharge on the raw material of the synthetics industry is purely arbitrary. There is no possible principle on which even the most casuistic member of the Labour Party can possibly draw to justify it.
  I should like to consider one aspect of this case. Hon. Members from constituencies on every side of mine have spoken, from the hon. Member for Central Ayrshire (Mr. Manuel) just across the sea to my hon. Friend the Member for Londonderry (Mr. Chichester-Clark)
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  and my hon. and learned Friend the Member for Antrim, South (Sir Knox Cunningham). They all have large synthetic fibre plants in their constituencies.
  There is no synthetic fibre factory in my constituency, but—this will be good news for the hon. Member for Central Ayrshire—we in the middle probably gain most of the benefits. During the past five years, four new factories, employing about 2,000 people, have been opened, based entirely on the ready supply on their doorstep of synthetic fibre as a raw material. I assure the hon. Member for Central Ayrshire that, when Chemstrand gets going in his area, he will be able to look forward to a number of secondary industries growing up.
  If the four large synthetic fibre factories in Northern Ireland provide a reasonable amount of employment, the secondary industries which are now growing, and growing very fast, based on this raw material, will probably provide ten times that amount of employment. All this has been a shot in the arm for the Northern Ireland textile industry, and I am sure that it will be a shot in the arm for the Lancashire textile industry.
  The Government have decided to hit the synthetic fibre industry. They say that they will consider the matter further, but they probably cannot have anything ready in time for the Report stage. If they change their mind in a month, they will have created just that kind of uncertainty which they seem to have been particularly expert at creating in the last six weeks. This surcharge is certain to do more damage to our economy than anything else. They must not think that they can get away with it on a stupid basis of so-called principle regarding raw materials. There is no such principle to be applied to substances as complicated as synthetic fibres.
  Mr. Anthony Kershaw: When the Minister went to the Dispatch Box, a few minutes ago, I hoped that we might have some assurances which would curtail the debate. I listened with mounting excitement as he came to the sentences in which he began to give assurances, but they were completely insufficient. They were vague in meaning and unrestricted as to time. They amounted to nothing more than an admission that the Government have not thought matters out in the way the Opposition have. Therefore, we must press our case.

  565
  I refer particularly to Amendment No. 126, which stands in the name of my hon. Friend the Member for Kidderminster (Sir T. Brinton) and myself. My hon. Friend has left word with me that, unfortunately, he cannot be present now, but the Committee will realise, from my mention of the name Kidderminster, that I intend to refer to carpets. There is a carpet factory in my constituency, too.
  In about 80 per cent. of carpets man-made fibres are used. There is no more man-made fibre available for carpet manufacture in this country than can be obtained today. I understand that British Nylon Spinners is having to import finished material from Japan to keep its deliveries going to the trade. In these circumstances, there is nothing that the carpet manufacturer can do to save himself from the 15 per cent. surcharge.
  The Government maintain that availability is irrelevant, but I have never been able to understand their argument. They say, also, that the surcharge is not protectionist in its nature. It may not be by intention, but it certainly is in its effect. If the material is not available, if one cannot buy more man-made fibre for carpets, what is the result? Costs are raised on the home market and exports are made more difficult. I cannot believe that this is the Government's intention.
  The demand for carpets is fairly inelastic. It depends quite closely on the number of houses completed, and those who buy carpets are, to a quite important extent, those who are furnishing houses for the first time. It is the younger people who will find it particularly difficult to pay 3s. extra in the £ on their carpets. This will be wholly bad. It will take money out of the pockets of the people. It will do nothing to bolster the carpet industry. It will harm our exports.
  I make so bold as to say that this surcharge in general, and the added duty on carpets in particular, will probably come off before long. It will come off not because it will have done its work in any financial sense, but because of the, administrative chaos which it will cause and because it will be seen to be completely useless as well.
  Mr. Geoffrey Lloyd: We are all in favour of modernising our industry. The Prime Minister invited the country to "Go with Labour" towards
  566
  the new technological age, but the Government spokesman tonight has shown their muddled approach to the question of the surcharge. They are hitting the newest industries, and hitting hardest of all the newest sections of the newest industries.
  Once again, the Government are striking at the prosperity of the Midlands. We, also, are interested in the man-made fibre industry, particularly in Coventry, where about 7,000 men are employed on this very work at Courtaulds. We are concerned about what is to happen as regards acrylic fibres, which make wool-like materials which can be used in suits, and about polyurethane yarn, which is used in the rapidly growing market for ladies' elastic underwear and corsets.
  The older man-made fibre industries have their chemical raw materials now available in this country, but this is not true of the new sections of the industry. The Minister without Portfolio told us that availability is irrelevant. Why? It is irrelevant, we are told, because to regard it otherwise would give a protective character to the surcharge. But this is not so as regards acrylonitrile, which is the chemical raw material which we have particularly in mind.
  It is now known—my hon. Friend the Member for Ilford, South (Mr. Cooper) demonstrated this—that there are plans for a plant to come into operation next year. This is all to happen and, very shortly, therefore, the material will be available here and it could not be alleged that there is a protective purpose in the surcharge. The only effect of the surcharge will be to increase the costs of production in the interim. This extra cost can amount to as much as 8½d. per lb. in the initial manufactured stage. The material then goes to the weaver, from the weaver to the converter, and from the converter to the garment maker, and I am advised that the increase can, with Purchase Tax, be sixfold over the original 8½d.
  8.45 p.m.
  This complicated chain also affects the question of the export rebate, because I am advised that, at any rate for the smaller men in the industry, the voluminous records which would be necessary in order to enable them to claim the export rebate would not be

  567
  a practical proposition. I therefore claim that to impose the surcharge on acrilonytrile is a mistake. My hon. Friend the Member for Dorset, West (Mr. Wingfield Digby), who has had to leave the Chamber, asked me to mention that he feels that the same considerations apply to marbles, which are the foundation of the glass fibre industry. In any case, this surcharge discriminates in favour of the older industry of cotton and also in favour of the older man-made fibres.
  Mr. Burden: My right hon. Friend is wrong in saying that it discriminates in favour of cotton. It imposes a surcharge on cotton grey cloth, about which I shall have something to say later.
  Mr. Lloyd: No doubt my hon. Friend will explain the position later. But the surcharge discriminates in favour of the older man-made fibres industries in which the chemical raw material is already available in this country.
  My hon. Friend the Member for Londonderry (Mr. Chichester-Clark) went to the heart of the matter when he said that he did not believe that the Government were approaching in the correct way the question of principle of what constitutes a raw material. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) gave a most interesting explanation of the exceptional features of this international trade in chemicals. I argue that this is the case and that the Government have not given sufficient weight to the different position of the raw material in these modern, technological, organic chemical industries as compared with the old-fashioned industries which were converting a natural product.
  There was some support for that view when we were told by the Minister without Portfolio, in explaining the new tariff list which had been adopted from the international model, that everything in that model was classified in a certain manner except chemicals. These were classified entirely differently. In this classification each chemical stands on its own and has to be considered on its own merits. This is a guide to us as to what we should do. It shows that the Government have been old-fashioned in their approach to this problem and have paid insufficient attention
  568
  to the dramatic revolution in industry which has come about in these man-made industries based on these very new organic chemicals.
  I suggest that it is not beyond the Government's wit even now, if they are prepared to do the work, to produce a series of principles which could be applied to the man-made fibres industry and to this particular and unusual class of product with these chemical raw materials. That is what I ask them to do.
  Mr. John Hall: We have had an exhaustive and exhausting debate over the last few hours and it has been notable, as was the previous debate, for the absence of speakers—with one solitary exception—from the Government back benches. Excepting the Minister, we have had 11 speakers so far, including only the hon. Member for Central Ayrshire (Mr. Manuel) from the Government side of the Committee. I suppose that if I used statistics as sometimes they were used by hon. Members opposite I could say that that is a 100 per cent. improvement on their previous record. I was delighted to listen to the hon. Member for Central Ayrshire's plea for his constituency. I do not share the Minister's view about the improper aspect of making a plea for one's constituency or about regional problems.
  Mr. Redhead: I did not use the term "improper".
  Mr. Hall: I withdraw the word "improper". I think that the hon. Member is properly concerned about the effect of the surcharge on a project which will bring considerable employment to his area. It is expected that, by 1969, 2,900 to 3,000 people will be given jobs in that area, and it must be a matter of concern to any hon. Member when measures taken by the Government are likely to have an unfortunate effect upon the growth of industry in his area.
  Mr. Burden: Perhaps the hon. Member for Central Ayrshire (Mr. Manuel) will vote with us in the Lobby.
  Mr. Hall: If my hon. and right hon. Friends take these Amendments to the Division Lobby, I shall confidently expect to see the hon. Member for Central Ayrshire there.
  Mr. Manuel: The right hon. Member for Bexley (Mr. Heath) asked me about the word "exemption". I pointed out that in consultations with the principals of these concerns I approached them about complete exemption within a month or two. My plea was for earlier consideration than that given to the general principle over the whole range. I got that assurance from the Minister. [HON. MEMBERS: "Oh."] Hon. Members should be truthful about it. Had I not been given that assurance I should have voted with the Opposition.
  Mr. Hall: If that is what the hon. Member says, he is very much more easily satisfied than any of my hon. and right hon. Friends are likely to be.
  I am sorry that my hon. Friend the Member for Ilford, South (Mr. Cooper) is not here, because he started off this debate with a very good speech which commanded the respect of the Committee because it sprang from the great knowledge that he has of the chemical industry. He was supported by some of my hon. Friends with constituencies in Northern Ireland, who, like the hon. Member for Central Ayrshire, showed concern about the effect of these measures on their own constituencies and, indeed, on the development areas as a whole.
  We do not want to leave the impression that in these Amendments my hon. Friends are seeking regional or constituency concessions. The examples that have been given show how the surcharge will "bite," to use the Government's own word, on certain very important industries. There are no doubt many other industries that will be similarly affected by these surcharges. In bringing forward these examples my hon. Friends were trying to find out whether an expanding industry of great importance to this country and with tremendous export potential would be very seriously affected.
  The Minister of State seems to be shifting ground a little. He mentioned one point which is entirely new to me and, I think, to my hon. Friends. He said that the Government would be prepared to look at various items which are drawn to the attention of the Chancellor or the Board of Trade between now and the review in the spring.
  570
  This is new. We have not had this said before, and it is an advance, but why do we have to wait for him to look at these matters again between now and the spring? How long is that going to take? It has not taken hon. Members of the Opposition very long to put down Amendments arising out of cases brought to their notice of damage which might possibly be done to very important industries in this country. Why will it take such a long time? Why could not the Minister say tonight when this review is likely to be undertaken? It is thought to be a matter of six months. But that depends upon what is thought of as "in the spring." Our spring is rather a movable season. It could be until the end of June—some people regard that as the end of the spring.
  Sir D. Glover: The Minister of State is in difficulty because the President of the Board of Trade has already told the countries of E.F.T.A. that the whole thing is coming off in the spring.
  Mr. Hall: We can only hope that what his right hon. Friend has told the countries in E.F.T.A. turns out to be accurate. We have had no indication that there is to be any removal of any of these charges. We pressed for an assurance in the debate yesterday that these surcharges would be removed in a matter of months, but we received no assurance whatever.
  The Minister of State denies that the surcharges will be on for a longer period, but, though this may not be the intention of the Government, this is what is likely to happen. As my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd) has pointed out, the effect of these surcharges to which we draw attention in this group of Amendments is to discriminate between synthetic and natural fibres—because the natural fibres in many cases are coming in exempt from this duty—and between allied types of synthetic fibres. This is a case of discrimination and protection. That may not have been the Government's intention, but that is precisely what has happened.
  I should like to turn now to the regional problem. The Minister of State thought that it would be impossible to make concessions for particular industries

  571
  or particular regions. Is he right in this? Is it not already the case that concessions are made to industries going into particular areas? The example of free depreciation allowance comes to mind, where particular concessions are made to particular industries to encourage them to go into particular areas. Furthermore, there are other examples of industries which import goods for which they are afterwards able to reclaim a duty because of special direction or some similar reason. There has been no real problem in arranging the necessary administrative machinery for cases of that kind.
  Why would it not be possible to treat certain extremely important expanding industries, which are vital to the country, in this way? The machinery is there and there is no great problem about doing so. I find it difficult to understand the reluctance of Ministers to consider the possibility.
  I intervened earlier to ask the Minister whether the Government have abandoned the objective which they laid down in paragraph 6 of the White Paper. I understood that in his remarks the Minister would answer this question. Although I listened with care—I admit that I might have missed something—I do not think that I was given an answer. The point I made was that the White Paper which first gave to a startled world the news that we were to have this imposition of the 15 per cent. surcharge said:
  "So far as imports are concerned a sharp distinction must be drawn between the increase in raw material imports required to service an expansion in production…"
  I stress the words, "service an expansion in production"—

  Division No. 22.]

  AYES

  [8.58 p.m.

  Agnew, Commander Sir Peter

  Birch, Rt. Hn. Nigel

  Chichester-Clark, R.

  Alison, Michael (Barkston Ash)

  Black, Sir Cyril

  Clark, Henry (Antrim, N.)

  Allason, James (Hemel Hempstead)

  Blaker, Peter

  Clark, William (Nottingham, S.)

  Amery, Rt. Hn. Julian

  Bossom, Hn. Clive

  Cole, Norman

  Astor, John

  Bowen, Roderic (Cardigan)

  Cooke, Robert

  Atkins, Humphrey

  Box, Donald

  Cooper, A. E.

  Awdry, Daniel

  Braine, Bernard

  Cordle, John

  Baker, W. H. K.

  Brewis, John

  Costain, A. P.

  Balniel, Lord

  Brooke, Rt. Hn. Henry

  Crowder, F. P.

  Barlow, Sir John

  Brown, Sir Edward (Bath)

  Cunningham, Sir Knox

  Batsford, Brian

  Buchanan-Smith, Alick

  Curran, Charles

  Beamish, Col. Sir Tufton

  Buck, Antony

  Dalkeith, Earl of

  Bennett, Sir Frederic (Torquay)

  Burden, F. A.

  Dance, James

  Bennett, Dr. Reginald (Gos & Fhm)

  Campbell, Gordon

  Davies, Dr. W. R. (Perry Barr)

  Berkeley, Humphry

  Carlisle, Mark

  d'Avigdor-Goldsmid, Sir Henry

  Berry, Hn. Anthony

  Carr, Rt. Hn. Robert

  Dean, Paul

  Biffen, John

  Cary, Sir Robert

  Donaldson, Cmdr. C. E. M.

  Biggs-Davison, John

  Channon, H. P. G.

  Doughty, Charles

  Bingham, R. M.

  Chataway, Christopher

  Drayson, G. B.

  "and the disturbing increase in manufactured goods."
  These are the very items we have been talking about. They are meant to service industries which we want to expand. Have the Government now departed from that principle? Does the paragraph not mean what it says? There have been so many shifts of ground over the last few days that hardly anything would surprise me, but this seems very depressing indeed.
  What my hon. Friend the Member for Ilford, South said at the beginning of this debate is probably correct. In a way, we are almost wasting time trying to put a case for industry because we are met with constant stonewalling from hon. Members opposite. There is no attempt to understand the problems. The Minister must look at this again, because I do not think that he understands the tremendous harm—perhaps lasting harm—which will be caused, not merely in the next few months.
  There are the effects in lost markets and the appalling difficulty of getting drawback. Does the Minister understand the number of hands through which synthetic fibres pass, the many products which are used in their manufacture, and the difficulty about producing different types of product which are used? The effect on export markets will be quite dramatic over the next 12 months.
  Having listened to the Minister, I confess that I am bitterly disappointed. I can only advise my right hon. and hon. Friends to carry the Amendment to a Division.
  Question put, That those words be there inserted:—
  The Committee divided: Ayes 194, Noes 219.

  du Cann, Rt. Hn. Edward

  Jopling, Michael

  Peyton, John

  Eden, Sir john

  Kaberry, Sir Donald

  Pike, Miss Mervyn

  Emery, Peter

  Kerby, Capt. Henry

  Pounder, Rafton

  Fletcher-Cooke, Charles (Darwen)

  Kerr, Sir Hamilton (Cambridge)

  Prior, J. M. L.

  Fletcher-Cooke, Sir John (S'pton)

  Kershaw, Anthony

  Pym, Francis

  Forrest, George

  Kilfedder, James A.

  Quennell, Miss J. M.

  Fraser, Ian (Plymouth, Sutton)

  King, Evelyn (Dorset, S.)

  Ramsden, Rt. Hn. James

  Galbraith, Hn. T. G. D.

  Lagden, Godfrey

  Rawlinson, Rt. Hn. Sir Peter

  Gammans, Lady

  Lambton, Viscount

  Redmayne, Rt. Hn. Sir Martin

  Gardner, Edward

  Lancaster, Col. C. G.

  Rees-Davies, W. R.

  Gibson-Watt, David

  Langford-Holt, Sir John

  Renton, Rt. Hn. Sir David

  Giles, Rear-Admiral Morgan

  Litchfield, Capt. John

  Ridsdale, Julian

  Glover, Sir Douglas

  Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)

  Roberts, Sir Peter (Heeley)

  Glyn, Sir Richard

  Longbottom, Charles

  Rodgers, Sir John (Sevenoaks)

  Goodhart, Philip

  Longden, Gilbert

  Roots, William

  Goodhew, Victor

  Loveys, Walter H.

  Royle, Anthony

  Gower, Raymond

  Lubbock, Eric

  Russell, Sir Ronald

  Grant, Anthony

  Lucas-Tooth, Sir Hugh

  Scott-Hopkins, James

  Griffiths, P. H. S. (Smethwick)

  McAdden, Sir Stephen

  Spearman, Sir Alexander

  Grimond, Rt. Hn. J.

  Mackenzie, Alasdair (Ross & Crom'ty)

  Stainton, Keith

  Gurden, Harold

  Mackie, George Y. (C'ness & S'land)

  Taylor, Edward M. (G'gow, Cathcart)

  Hall, John (Wycombe)

  McNair-Wilson, Patrick

  Taylor, Frank (Moss Side)

  Hall-Davies, A. G. F.

  Maginis, John E.

  Temple, John M.

  Harrison, Col. Sir Harwood (Eye)

  Mathew, Robert

  Thomas, Sir Leslie (Canterbury)

  Hastings, Stephen

  Maude, Angus E. U.

  Thorneycroft, Rt. Hn. Peter

  Hawkins, Paul

  Mawby, Ray

  Thorpe, Jeremy

  Hay, John

  Maxwell-Hyslop, R. J.

  Tiley, Arthur (Bradford, W.)

  Heald, Rt. Hn. Sir Lionel

  Maydon, Lt.-Cmdr. S. L. C.

  Turton, Rt. Hn. R. H.

  Heath, Rt. Hn. Edward

  Meyer, Sir Anthony

  Tweedsmuir, Lady

  Higgins, Terence L.

  Mills, Peter (Torrington)

  van Straubenzee, W. R.

  Hiley, Joseph

  Mills, Stratton (Belfast, N.)

  Vickers, Dame Joan

  Hill, J. E. B. (S. Norfolk)

  Miscampbell, Norman

  Walder, David (High Peak)

  Hirst, Geoffrey

  Mitchell, David

  Walker, Peter (Worcester)

  Hobson, Rt. Hn. Sir John

  Monro, Hector

  Walker-Smith, Rt. Hn. Sir Derek

  Hogg, Rt. Hn. Quintin

  More, Jasper

  Ward, Dame Irene

  Hooson, H. E.

  Morgan, W. G.

  Weatherill, Bernard

  Hordern, Peter

  Murton, Oscar

  Whitelaw, William

  Hornsby-Smith, Rt. Hn. Dame P.

  Nicholls, Sir Harmar

  Wills, Sir Gerald (Bridgwater)

  Howard, Hn. G. R. (St. Ives)

  Noble, Rt. Hn. Michael

  Wise, A. R.

  Howe, Geoffrey (Bebington)

  Nugent, Rt. Hn. Sir Richard

  Wolrige-Gordon, Patrick

  Hunt, John (Bromley)

  Onslow, Cranley

  Woodhouse, Hn. Christopher

  Hutchison, Michael Clark

  Osborne, John (Hallam)

  Woodnutt, Mark

  Iremonger, T. L.

  Osborne, Sir Cyril (Louth)

  Younger, Hn. George

  Irvine, Bryant Godman (Rye)

  Page, John (Harrow, W.)

  Jennings, J. C.

  Page, R. Graham (Crosby)

  TELLERS FOR THE AYES:

  Johnston, Russell (Inverness)

  Pearson, Sir Frank (Clitheroe)

  Mr. McLaren and Mr. MacArthur.

  Jones, Rt. Hn. Aubrey (Hall Green)

  Percival, Ian

  NOES

  Abse, Leo

  Cullen, Mrs. Alice

  Gregory, A.

  Albu, Austen

  Dalyell, Tam

  Griffiths, David (Rother Valley)

  Allaun, Frank (Salford, E.)

  Davies, G. Elfed (Rhondda, E.)

  Hale, Leslie

  Alldritt, W. H.

  Davies, Ifor (Gower)

  Hamilton, James (Bothwell)

  Allen, Scholefield (Crewe)

  Davies, S. O. (Merthyr)

  Hamling, William (Woolwich, W.)

  Armstrong, Ernest

  Delargy, Hugh

  Harper, Joseph

  Atkinson, Norman

  Dell, Edmond

  Harrison, Walter (Wakefield)

  Bacon, Miss Alice

  Dempsey, James

  Hart, Mrs. Judith

  Bagier, Gordon A. T.

  Diamond, John

  Hattersley, Ray

  Barnett, Joel

  Dodds, Norman

  Heffer, E. S.

  Baxter William

  Doig, Peter

  Henderson, Rt. Hn. Arthur

  Beaney, Alan

  Donnelly, Desmond

  Herbison, Rt. Hn. Margaret

  Bence, Cyril

  Driberg, Tom

  Hobden, Dennis (Brighton, K'town)

  Bennett, J. (Glasgow, Bridgeton)

  Duffy, Dr. A. E. P.

  Holman, Percy

  Binns, John

  Dunn, James A. (L'pool, Kirkdale)

  Horner, John

  Blackburn, F.

  Dunnett, J.J.(Nottingh'm,Central)

  Houghton, Rt. Hn. Douglas

  Blenkinsop, Arthur

  Edwards, Rt. Hn. Ness (Caerphilly)

  Howarth, Harry (Wellingborough)

  Boardman, H.

  Edwards, Robert (Bilston)

  Howarth, Robert L. (Bolton, E.)

  Bowden, Rt. Hn. H. W. (Leics S.W.)

  English, Michael

  Howell, Denis (Small Heath)

  Boyden, James

  Ensor, David

  Howie, W.

  Braddock, Mrs. E.M.

  Evans, I. L. (Birmingham, Yardley)

  Hoy, James

  Brown, Hugh D. (Glasgow, Provan)

  Fernyhough, E.

  Hughes, Emrys (S. Ayrshire)

  Brown, R. W. (Shoreditch & Fbury)

  Finch, Harold

  Hughes, Hector (Aberdeen, N.)

  Buchan, Norman (Renfrewshire, W.)

  Fitch, Alan

  Hunter, Adam (Dunfermline)

  Buchanan, Richard

  Fletcher, Eric (Islington, E.)

  Hunter, A. E. (Feltham)

  Butler, Herbert (Hackney, C.)

  Fletcher, E. J. (Darlington)

  Irvine, A. J. (Edge Hill)

  Butler, Mrs. Joyce (Wood Green)

  Floud, Bernard

  Irving, Sydney (Dartford)

  Carmichael, Neil

  Foot, Michael (Ebbw Vale)

  Jackson, Colin

  Coleman, Donald

  Freeson, R.

  Jeger, George (Goole)

  Corbet, Mrs. Freda

  Galpern, Sir Myer

  Jeger, Mrs. Lena (H'bn & St.P'cras, S.)

  Crawshaw, Richard

  Garrett, W. E.

  Jenkins, Hugh (Putney)

  Cronin, John

  Garrow, A.

  Jones, Dan (Burnley)

  Crossman, Rt. Hn. R. H. S.

  Gourlay, Harry

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  574

  575

  Jones, J. Idwal (Wrexham)

  Neal, Harold

  Smith, Ellis (Stoke, S.)

  Jones, T. W. (Merioneth)

  Newens, Stan

  Snow, Julian

  Kelley, Richard

  Noel-Baker, Francis (Swindon)

  Solomons, Henry

  Kenyon, Clifford

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Sorensen, R. W.

  Kerr, Mrs. Anne (R'ter & Chatham)

  Norwood, Christopher

  Spriggs, Leslie

  Kerr, Dr. David (W'worth, Central)

  Oakes, Gordon

  Stewart, Rt. Hn. Michael

  Lawson, George

  O'Malley, Brian

  Stones, William

  Leadbitter, Ted

  Oram, Albert E. (E. Ham S.)

  Stross, Sir Barnett (Stoke-on-Trent, C.)

  Ledger, Ron

  Orme, Stanley

  Summerskill, Dr. Shirley

  Lee, Miss Jennie (Cannock)

  Oswald, Thomas

  Swain, Thomas

  Lever, Harold (Cheetham)

  Owen, Will

  Swingler, Stephen

  Lever, L. M. (Ardwick)

  Page, Derek (King's Lynn)

  Symonds, J. B.

  Lewis, Ron (Carlisle)

  Paget, R. T.

  Taverne, Dick

  Lomas, Kenneth

  Park, Trevor (Derbyshire, S.E.)

  Taylor, Bernard (Mansfield)

  Loughlin, Charles

  Pavitt, Laurence

  Thomas, George (Cardiff, W.)

  McBride, Neil

  Pearson, Arthur (Pontypridd)

  Thomas, Iorwerth (Rhondda, W.)

  MacColl, James

  Popplewell, Ernest

  Thornton, Ernest

  MacDermot, Niall

  Probert, Arthur

  Tinn, James

  McGuire, Michael

  Pursey, Cmdr. Harry

  Urwin, T. W.

  McInnes, James

  Rankin, John

  Varley, Eric G.

  McLeavy, Frank

  Redhead, Edward

  Wainwright, Edwin

  MacMillan, Malcolm

  Reynolds, G. W.

  Walden, Brian (All Saints)

  Mahon, Peter (Preston, S.)

  Rhodes, Geoffrey

  Walker, Harold (Doncaster)

  Mahon, Simon (Bootle)

  Richard, Ivor

  Wallace, George

  Mallalieu, E. L. (Brigg)

  Roberts, Albert (Normanton)

  Watkins, Tudor

  Manuel, Archie

  Robertson, John (Paisley)

  Weitzman, David

  Mapp, Charles

  Robinson, Rt. Hn. K. (St. Pancras, N.)

  Whitlock, William

  Mayhew, Christopher

  Rodgers, William (Stockton)

  Wilkins, W. A.

  Mellish, Robert

  Rogers, George (Kensington, N.)

  Willey, Rt. Hn. Frederick

  Mendelson, J. J.

  Ross, Rt. Hn. William

  Williams, Alan (Swansea, W.)

  Mikardo, Ian

  Rowland, Christopher

  Williams, Mrs. Shirley (Hitchin)

  Millan, Bruce

  Sheldon, Robert

  Williams, W. T. (Warrington)

  Miller, Dr. M. S.

  Shinwell, Rt. Hn. E.

  Willis, George (Edinburgh, E.)

  Milne, Edward (Blyth)

  Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

  Wilson, William (Coventry, S.)

  Molloy, William

  Silkin, John (Deptford)

  Winterbottom, R. E.

  Monslow, Walter

  Silkin, S. C. (Camberwell, Dulwich)

  Woodburn, Rt. Hn. A.

  Morris, Alfred (Wythenshawe)

  Silverman, Julius (Aston)

  Woof, Robert

  Morris, Charles (Openshaw)

  Silverman, Sydney (Nelson)

  Wyatt, Woodrow

  Morris, John (Aberavon)

  Slater, Mrs. Harriet (Stoke, N.)

  Mulley, Rt. Hn. Frederick (SheffieldPk)

  Slater, Joseph (Sedgefield)

  TELLERS FOR THE NOES:

  Murray, Albert

  Small, William

  Mr. Grey and Mr. McCann.

  9.0 p.m.
  Sir Ronald Russell: I beg to move Amendment No. 37, in page 14, line 6, at the end to insert:

  28·20

  …

  …

  Aluminium oxide.

  28·56

  …

  …

  Silicon carbide

  The Temporary Chairman: With this Amendment it is proposed to take Amendment No. 40, in page 14, line 6, at end insert:

  28·20

  …

  …

  Artificial corundum.

  Amendment No. 47; in line 6, at end insert:

  28·56

  …

  …

  Silicon carbide.

  and Amendment No. 48, in line 6, at end insert:

  28·20

  …

  …

  Artificial corundum.

  Sir R. Russell: Yes, Sir Harry.
  This Amendment deals with two substances; aluminium oxide—or artificial corundum, as my hon. Friend the Member for Shipley (Mr. Hirst) has called it in his Amendment—and silicon carbide, which are the chief raw materials of the abrasive industry. I have listened during the last five hours to most of the discussion in this debate and I have
  576
  followed the arguments of right hon. and hon. Members on the Government Front Bench. I cannot understand how the imposition of a 15 per cent. surcharge on these two materials will help in any way to solve the balance of payments problem. In fact, it may easily make it considerably worse.
  These two materials constitute, I understand, the largest single item in the cost of bonded abrasive products such as grinding wheels, and they are the operative element of coated abrasive products such as emery cloth. The reason why I have put down this Amendment is that one of the 25 firms affected by the 15 per cent. Surcharge—Anglo Abrasive Works Limited—is in my constituency. I appreciate that these two products are classified as manufactured products in Chapter 28 of the tariff, but they have always been regarded as raw materials. During the last war they were under the same control as asbestos and graphite. It was called the abrasive, graphite and asbestos control. Graphite and asbestos are classified as raw materials under Chapter 25 of the tariff and, like them, these two substances have always been regarded as

  577
  raw materials, although I admit that they are classified as manufactured products and have to be processed.
  Half our requirements of aluminium oxide are manufactured at a plant in Hull. The other half have to be imported. No silicone carbide is manufactured here at all because of the large consumption of electric power needed in the process, so that all our requirements are imported. The imports of aluminium oxide come under the description of abrasive crude unground and ground and coated. For the first nine months of this year the total was 10,199 tons, of a value of £690,000. The imports of silicone carbide over the same period totalled 11,000-odd tons of a value of nearly £1¼ million of which more than half came from Norway. From that I calculate that the cost of exempting these two materials from the surcharge for a whole year would be something like £375,000.
  This industry plays an absolutely vital part in our national economy because abrasives are used for grinding and polishing in almost every branch of the engineering industry and particularly the motor and machine tool industries which are two obvious examples. We have been told ad nauseam that the object of the surcharge is to improve the balance of payments. If the 15 per cent. surcharge is to have the effect in reducing imports of these materials or cutting them down, all that will happen is that unemployment will be caused in those industries, and production will be reduced in almost every other industry in the engineering field. The reduced imports cannot be replaced by home production, at any rate not at once, because there is not any in respect of silicone carbides. Only half of our requirements of aluminium oxide are produced in this country and all existing output is needed.
  I understand that the application of the surcharge may increase from 5 per cent. to 10 per cent. the manufacturing costs of the abrasive industry. Although it is hoped that this may be countered without increasing prices, it is almost inevitable that prices will have to be increased. An amount of 15 per cent. of the total production of the abrasive industry is being exported and already the export side of the industry is having difficulty in competing with cheaper European products. Clearly, the export side would
  578
  be badly hit if prices of home products have to be increased.
  9.15 p.m.
  I cannot help feeling that the surcharge on these materials just does not make sense. It can not possibly assist our balance of payments. Cutting down our imports of these materials would seriously damage the engineering industry because no part of that industry can do without grinding and polishing materials. If the surcharge does anything, it will, I believe, make our balance of payments position worse rather than better. I hope, therefore, that the Government will reconsider the matter and add these two materials to the exempted list.
  Sir Eric Fletcher: I hope that the Committee will not think it discourteous it I reply immediately to the hon. Member for Wembley, South (Sir R. Russell) because we have discussed the principle involved in this matter on a number of earlier debates and it seemed that it might be for the convenience of the Committee if we avoided repetition on the question of principle, which my hon. Friends and I have tried to explain.
  One naturally appreciates the inconvenience which the surcharge produces for those who are interested in the abrasive industries, but I must repeat that these two chemicals—aluminium oxide and silicon carbide—are chemical products of a kind which can only clearly be described as fully manufactured. They therefore fall within the scope of the charge.
  Sir Harmar Nicholls: I understand that the Minister without Portfolio wishes to help the Committee by giving his answer quickly, but on this occasion I think that he is a little too quick. I should like to read him a letter which I have received. It would take me only a minute or two to do so and, since the Minister may be giving a negative reply, the reading of this letter might just tip the scales in the other direction and he might accept the Amendment.
  Sir E. Fletcher: I must continue.
  I appreciate that the hon. Gentleman has received a letter from a constituent and that he is anxious to read it. In that respect he is no different from practically every hon. Member. We have all received letters indicating that in particular cases

  579
  hardship will result from the imposition of the 15 per cent. surcharge, but the Committee has agreed to the principle of the surcharge. We have passed Clauses 3 and 4 and we are dealing with a whole series of Amendments which suggest that particular commodities should be included in the Schedule. My hon. Friends and I have endeavoured to explain the principles on which we are operating and the reasons which make it impossible for us, without wrecking the whole scheme, to make additional exemptions which depart from the principle we have tried to enunciate.
  Aluminium oxide and silicon carbide could not, in the view of the Government, be exempted from the charge without serious repercussions on a wide range of other manufactured chemicals which must remain subject to it in the interest of maintaining the charge over as wide a range of products as possible.—[HoN. MEMBERS: "Reading."]—I am reading my notes in the interest of accuracy. We appreciate the difficulties involved and I repeat the undertaking that when the Chancellor comes to review this he will naturally give the most sympathetic consideration to the cases of difficulty which have been raised from time to time.
  Mr. John Hall: I should like to know in what way these chemicals are more fully manufactured than those, say, coming under 25.01 and 25.32—salt, sulphur, plaster, lime and cement. I confess that I find it hard to follow how they differ in this way.
  Sir E. Fletcher: It is always difficult to draw a precise line. I am not a technical expert—and I am not sure that the hon. Member for Wycombe (Mr. John Hall) is—but I understand that aluminium oxide is, as the Committee probably knows, obtained by calcining aluminium hydroxide, which is itself obtained from bauxite. Silicon carbide is obtained from a combination of carbon and silicon fused in an electric furnace. Those operations seem to us to produce chemical products that can only be fairly classified as being fully manufactured chemicals and, therefore, outside the scope of the Schedule.
  Mr. Hirst: This is really getting hopelessly out of hand, Sir Harry, and I must protest. This is a very serious debate on
  580
  a matter which affects many people, yet we have the Minister without Portfolio telling the Committee, after only one speech has been made, that the Government are not even prepared to listen to the arguments that are to come along, and praying in favour of that the monstrous argument that certain products are more or less manufactured than is something else.
  Quite frankly, his right hon. Friend the Chancellor of the Exchequer did not know anything about this himself. He said on Second Reading:
  "The phrase 'basic raw materials' has been used in a generally descriptive sense. We have not attempted to apply it with precision because, obviously, there are many opinions about what is a raw material."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1096.]
  It was palpably clear from the very beginning that there would have to be arguments about details, and throughout our discussions it has been clear that there must be some argument about necessity, about the question of availability, and about the economic terms to be applied in relation to Government policy. For the Minister without Portfolio to jump up and try to short-circuit a debate that seriously concerns a whole range of industries is just not good enough. I hope that arguments in favour of other products will be deployed, and that is what I myself propose to do.
  Mr. Bernard Braine: Does my hon. Friend recall that, on Second Reading, the Chancellor went so far as to say, in conciliatory tones:
  "I shall, of course, always be ready to consider any similar glaring anomalies which hon. Members may alight upon."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1097.]
  The Minister without Portfolio has done less than justice to the Committee in trying to quash a debate on this important subject. The Chancellor himself, as my hon. Friend will agree, was ready to listen to serious argument, and it is a great pity that he is not here to see the way in which this matter, vital to the trade and future prosperity of the country, is being handled by the Treasury Bench.
  The Temporary Chairman: Sir Harmar Nicholls.
  Mr. Hirst: On a point of order, Sir Harry. I only want to clear up a misunderstanding. I am perfectly ready to give way to my hon. Friend the Member for Peterborough (Sir Harmar Nicholls), if that is suitable to you. I just thought that you believed I had finished my speech.
  The Temporary Chairman: I may have made a mistake in assuming that the hon. Member for Shipley (Mr. Hirst) had finished his speech, when I called the hon. Member for Essex, South-East (Mr. Braine), but if the hon. Member was merely giving way he has the Floor, and has the right to continue.
  Mr. Hirst: That was precisely the position, Sir Harry. I was very grateful for the intervention of my hon. Friend, because I thought it right to get that point clear, as the Minister earlier said that we could not deal with anomalies. It shows the confusion into which the debate could be plunged. We pointed out earlier—it would not be right for me to go over that background—that there were many anomalies. Many things have been said to show that there were. That was recognised by the Chancellor of the Exchequer, who in this matter I think, although I do not like this Measure, has shown more common sense than we are getting from the Treasury Bench tonight. I do not wish to be at all rude, but it is monstrous to attempt to foreshorten such an important debate as this.
  My hon. Friend the Member for Wembley, South (Sir R. Russell) rightly drew attention to the importance of this material. It is an historic situation. I can go a little further than my hon. Friend went, because I happen to know that during the war and in following years it was regarded as a highly strategic raw material and was stockpiled by this country. There is evidence from the Director-General of Raw Materials Controls, at the Ministry of Supply, to support that. It was considered to be a material which was absolutely basic and which even under war-time conditions had to be allowed a certain amount of entry into the country. It applies particularly to silicon carbide. Aluminium oxide or, as I call it, artificial corundum, is slightly different, because a certain amount—approximately 48,000 tons—is made in
  582
  this country, but nothing like sufficient to satisfy our needs.
  I want to add a little to what my hon. Friend said about its uses. The most well known use of this is in grinding wheels in the industries to which my hon. Friend referred. He did not mention the optical industry. What is immensely important is the use of this material as a lining for crucible work in steel plants. There is not a steel producer in this country who does not use this material. It is basic to one of our most substantial and most important industries. It is wrong that that should be completely overlooked. It is an insult to the Committee for it to be said, "It is not for the convenience of the Government", that it does not fit into one of their miserable Schedules, and that therefore we cannot even discuss it. The less we have of that tonight the better.
  Sir Harmar Nicholls: I can understand the manœuvre of the Minister without Portfolio in rising quickly. I never blame people who get away with it. I blame those that let them. It is right that my hon. Friends, who object as strongly as they do on this very important matter, should take steps to ensure that it is properly aired.
  If I may venture an opinion, I think that the reason why the right hon. Gentleman did not give a clear answer to my hon. Friend the Member for Wycombe (Mr. John Hall) is that there is no substantial difference between the two products. However much the right hon. Gentleman may have tried to cover it up by reading a technical brief quickly, the fact is that if one material is exempted there is no sound reason why the other should not be.
  I merely want to reinforce the arguments advanced by my hon. Friend by reading a letter written by the manufacturers. It is their business. They live with it. They depend upon its success if they are to remain in business. The letter reads:
  "Silicon carbide is not manufactured in the United Kingdom and nearly half the total requirements of aluminium abrasive have to be imported.
  The imposition of this levy will be a heavy burden on our manufacturing costs, and will inevitably have the most damaging effects on our exports in spite of the marginal incentives which are now being offered.

  583
  Strong representations have been made to the Board of Trade by the Abrasive Industries Association who sent a deputation to discuss the matter on 11th November but there is. as yet, no indication that this levy on abrasives will be rescinded.
  We are most anxious to avoid any increase in grinding wheel prices at this time and will absorb the substantial additional cost involved…
  If we fail"—
  to get this exemption approved—
  "some contribution towards this levy will be inevitable"—
  that is, from customers.
  One takes into account what the right hon. Gentleman said about the Government considering that this group is essential for the success of their import restriction endeavour, but the other side of the coin should not be disregarded. If it will do more damage to our export endeavour—all the evidence we get from all sources shows clearly that this is more than likely to happen—it seems rather stupid to attempt to reduce imports if by so doing we do much more damage to our export trade. The balance of trade figure at the end is our concern. Even at this late hour, having had this deputation and having heard the representions from my hon. Friends, despite the fact that the Minister is committed to some extent to that rather premature and quickly read answer that he gave, I hope that his Department will have another thought on this matter. Exports are more important than the slightest effect we may have on import restriction, and on the evidence of my hon. Friends and of the association, I hope the Minister will have second thoughts.
  9.30 p.m.
  Mr. Burden: Does not my hon. Friend agree that this makes no contribution at all to solving the balance of payments situation? If the commodity is not made in this country it has got to be imported anyhow.
  Sir H. Nicholls: Yes. How stupid of me not to have emphasised that most important point. If we add that fact to the points that I have already made, it is certain that second thoughts ought to prevail.
  Mr. Peter Emery: May I take a step further the argument adduced by my hon. Friend
  584
  the Member for Peterborough (Sir Harmar Nicholls). May we have an absolutely clear answer from the Government Front Bench to this question? If they are not willing to accept this Amendment, are they suggesting that industry should reduce its imports of silicon carbide and the aluminium abrasives which are necessary for industry? If that is not what they want, surely they must accept this Amendment. Will they clearly let industry know? Industry has a right to know. Are they suggesting that these imports should be stopped? That is what this debate is all about—nothing more and nothing less.
  Mr. Diamond Mr. Diamond indicated dissent.
  Mr. Emery: If those on the Treasury Bench shake their heads, I presume that they suggest that imports should not be stopped. They therefore want to put up the costs of production in this country.
  Mr. Diamond Mr. Diamond indicated dissent.
  Mr. Emery: The Chief Secretary shakes his head. The Government want it both ways. You cannot be half-pregnant.
  The Chairman: Order. The hon. Member must know that the Chair cannot be either half or entirely pregnant.
  Mr. Emery: Dr. King, in another life when somebody with a name similar to yours was sitting on these benches he was frequently able to deliver some very forceful addresses to the House. We greatly respect the Ruling that you have given.
  Mr. Diamond: Does not the hon. Gentleman agree that those speeches were pregnant with wisdom?
  Mr. Emery: I have always been willing to accept any Ruling so full of wisdom, Dr. King. Whether or not it was pregnant to begin with, I do not know. Obviously the decisions of the Government Front Bench are not pregnant with wisdom. Judging by the attitude of the occupants of the Front Bench in this debate, they have indicated clearly that we must not stop importing this product, but at the same time they do not intend to have costs put up. This is just nonsense.
  May I deal with the matter not from the point of view of constituency cases but by mentioning three major firms in

  585
  this country? I want to produce evidence from nationalised industries. The Government will not listen to ordinary industry, but perhaps they will listen to the views of some nationalised industries. The letter which was read out by my hon. Friend the Member for Peterborough was sent to me by the chief buyer of Richard Thomas and Baldwins suggesting that I should bring it to the attention of the Government. The chief buyers of two nationalised industries have referred specifically to this matter and have said that it is bound to increase their purchasing costs which at any time will be reflected in the cost to consumers.
  Is this really what the Government are trying to do? If they will not listen to us, will they listen to the nationalised industries? Can we, therefore, clearly understand that if the Government are not willing to accept the Amendment there can be only two alternatives: either we stop importing—and these things are not made at home—or the costs go up? Which do the Government want?
  Hon. Members: Answer.
  Sir H. d'Avigdor-Goldsmid: We are frequently told here that hard cases make bad law. It is perfectly clear from our discussion this evening that bad law makes a great number of hard cases. It is a matter of regret, for which both sides of the Committee can share the blame, that we should have taken a decision in principle on this important matter without having had a chance of hearing these details. This is a case where we allowed our natural obedience to the laws of procedure to take precedence over considerations of common sense. I hope that next time we consider a matter of this sort

  Division No. 23.]

  AYES

  [9.38 p.m.

  Agnew, Commander Sir Peter

  Blaker, Peter

  Cole, Norman

  Alison, Michael (Barkston Ash)

  Bossom, Hn. Clive

  Cooke, Robert

  Allason, James (Hemel Hempstead)

  Bowen, Roderic (Cardigan)

  Cooper, A. E.

  Astor, John

  Box, Donald

  Cooper-Key, Sir Neill

  Atkins, Humphrey

  Braine, Bernard

  Costain, A. P.

  Awdry, Daniel

  Brewis, John

  Crawley, Aidan

  Baker, W. H. K.

  Brooke, Rt. Hn. Henry

  Crowder, F. P.

  Balniel, Lord

  Brown, Sir Edward (Bath)

  Cunningham, Sir Knox

  Barlow, Sir John

  Buchanan-Smith, Alick

  Curran, Charles

  Batsford, Brian

  Buck, Antony

  Dance, James

  Beamish, Col. Sir Tufton

  Burden, F. A.

  Davies, Dr. Wyndham (Perry Barr)

  Bennett, Sir Frederic (Torquay)

  Campbell, Gordon

  d'Avigdor-Goldsmid, Sir Henry

  Bennett, Dr. Reginald (Gos & Fhm)

  Carlisle, Mark

  Dean, Paul

  Berkeley, Humphry

  Carr, Rt. Hn. Robert

  Donaldson, Cmdr. C. E. M.

  Berry, Hn. Anthony

  Channon, H. P. G.

  Doughty, Charles

  Biffen, John

  Chataway, Christopher

  Drayson, G. B.

  Bingham, R. M.

  Chichester-Clark, R.

  du Cann, Rt. Hn. Edward

  Black, Sir Cyril

  Clark, William (Nottingham, S.)

  Emery, Peter

  we shall study the procedural Motion very closely and that next time we discuss a Finance Bill we shall discuss the Schedules before we take the decision in principle on the Clause itself.
  The Minister without Portfolio referred to hon. Members in all parts of the Committee as having received appeals for help from the abrasive industries. It is curious that these appeals have been voiced only from one side of the Committee and that hon. Members opposite do not consider their constituents' legitimate claims in this matter. It therefore falls on the smaller side of the Committee to try and obtain justice for the individual case which is so hard hit. The case in logic made by my hon. Friend the Member for Reading (Mr. Peter Emery) was unanswerable, and it is perfectly clear that this is a very bad law indeed and that this particular example proves the folly of the whole business.
  Mr. John Hall: The hour is getting late and we have a great deal to do. I therefore do not propose to detain the Committee for more than a moment. The case presented by my hon. Friend the Member for Wembley, South (Sir R. Russell), supported with such powerful speeches by my hon. Friend the Member for Shipley (Mr. Hirst) and my hon. Friend the Member for Reading (Mr. Peter Emery), has been absolutely unanswerable. Indeed, it has not been answered, and because it has not been answered I would advise my hon. and right hon. Friends to proceed to a Division.
  Question put, That those words be there inserted:—
  The Committee divided: Ayes 181, Noes 210.

  Fletcher-Cooke, Charles (Darwen)

  Kerby, Capt. Henry

  Percival, Ian

  Fletcher-Cooke, Sir John (S'pton)

  Kerr, Sir Hamilton (Cambridge)

  Pike, Miss Mervyn

  Forrest, George

  Kershaw, Anthony

  Pounder, Rafton

  Fraser, Ian (Plymouth, Sutton)

  Kilfedder, J. A.

  Prior, J. M. L.

  Galbraith, Hn. T. G. D.

  King, E. M. (Dorset, S.)

  Pym, Francis

  Gammans, Lady

  Lambton, Viscount

  Quennell, Miss J. M.

  Gardner, Edward

  Lancaster, Col. C. G.

  Ramsden, Rt. Hn. James

  Gibson-Watt, David

  Langford-Holt, Sir John

  Rawlinson, Rt. Hn. Sir Peter

  Giles, Rear-Admiral Morgan

  Litchfield, Capt. John

  Redmayne, Rt. Hn. Sir Martin

  Glover, Sir Douglas

  Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)

  Rees-Davies, W. R.

  Glyn, Sir Richard

  Lloyd, Ian (P'tsm'th, Langstone)

  Renton, Rt. Hn. Sir David

  Goodhart, Philip

  Longbottom, Charles

  Ridsdale, Julian

  Goodhew, Victor

  Longden, Gilbert

  Roberts, Sir Peter (Heeley)

  Gower, Raymond

  Loveys, Walter H.

  Rodgers, Sir John (Sevenoaks)

  Grant, Anthony

  Lubbock, Eric

  Roots, William

  Griffiths, Peter (Smethwick)

  Lucas-Tooth, Sir Hugh (Hendon, S.)

  Royle, Anthony

  Grimond, Rt. Hn. J.

  McAdden, Sir Stephen

  Russell, Sir Ronald

  Gurden, Harold

  MacArthur, Ian

  Scott-Hopkins, James

  Hall, John (Wycombe)

  Mackenzie, A. R. (Ross & Cromarty)

  Spearman, Sir Alexander

  Hall-Davis, A. G. F.

  Mackie, G. Y. (C'ness & S'land)

  Stainton, Keith

  Harrison, Col. Sir Harwood (Eye)

  McNair-Wilson, P. M. E. D.

  Taylor, Edward M. (G'gow, Cathcart)

  Hawkins, Paul

  Maginnis, John E.

  Taylor, Frank (Moss Side)

  Hay, John

  Mathew, Robert

  Temple, John M.

  Heald, Rt. Hn. Sir Lionel

  Maude, Angus, E. U.

  Thorneycroft, Rt. Hn. Peter

  Heath, Rt. Hn. Edward

  Mawby, Ray

  Thorpe, Jeremy

  Higgins Terence L.

  Maxwell-Hyslop, R. J.

  Tiley, Arthur (Bradford W.)

  Hiley, Joseph

  Maydon, Lt.-Cmdr. S. L. C.

  Turton, Rt. Hn. R. H

  Hill, J. E. B. (S. Norfolk)

  Meyer, Sir Anthony

  Tweedsmuir, Lady

  Hirst, Geoffrey

  Mills, Peter (Torrington)

  van Straubenzee, W. R.

  Hobson, Rt. Hn. Sir John

  Mills, Stratton (Belfast, N.)

  Vickers, Dame Joan

  Hogg, Rt. Hn Quintin

  Miscampbell, Norman

  Walder, David (High Peak)

  Hooson, H. E.

  Mitchell, David

  Walker, Peter (Worcester)

  Hordern, P. M.

  Monro, Hector

  Walker-Smith, Rt. Hn. Sir Derek

  Hornsby-Smith, Rt. Hn. Dame P.

  Morgan, W. G.

  Ward, Dame Irene

  Howard, Hn. G. R. (St. Ives)

  Murton, Oscar

  Weatherill, Bernard

  Howe, R. E. G. (Bebington)

  Nicholls, Sir Harmar

  Whitelaw, William

  Hunt, John (Bromley)

  Noble, Rt. Hn. Michael

  wise, A. R.

  Hutchison, Michael Clark

  Nugent, Rt. Hn. Sir Richard

  Wolrige-Gordon, Patrick

  Iremonger, T. L.

  Onslow, Cranley

  Woodhouse, Hn. Christopher

  Irvine, Bryant Godman (Rye)

  Osborn, John (Hallam)

  Woodnutt, Mark

  Jennings, J. C.

  Page, John (Harrow, W.)

  Younger, Hn. George

  Johnston, Russell (Inverness)

  Page, R. Graham (Crosby)

  Kaberry, Sir Donald

  Pearson, Sir Frank (Clitheroe)

  TELLERS FOR THE AYES:

  Mr. More and Mr. McLaren.

  NOES

  Abse, Leo

  Delargy, Hugh

  Hayman, F. H.

  Albu, Austen

  Dell, Edmund

  Heffer, Eric S.

  Allaun, Frank (Salford, E.)

  Dempsey, James

  Henderson, Rt. Hn. Arthur

  Alldritt, W. H.

  Diamond, John

  Herbison, Rt. Hn. Margaret

  Allen, Scholefield (Crewe)

  Dodds, Norman

  Hobden, D. H. (Brighton, K'town)

  Armstrong, Ernest

  Doig, Peter

  Holman, Percy

  Atkinson, Norman

  Donnelly, Desmond

  Horner, J.

  Bacon, Miss Alice

  Driberg, Tom

  Houghton, Rt. Hn. Douglas

  Bagier, Gordon A. T.

  Dunn, James A.

  Howarth, Harry (Wellingborough)

  Barnett, Joel

  Dunnett, Jack

  Howarth, R. L. (Bolton, E.)

  Baxter, William

  Edwards, Rt. Hon. Ness (Caerphilly)

  Howell, Denis (Small Heath)

  Beaney, Alan

  Edwards, Robert (Bilston)

  Howie, W.

  Bence, Cyril

  English, Michael

  Hoy, James H.

  Bennett, J. (Glasgow, Bridgeton)

  Ensor, David

  Hughes, Emrys (S. Ayrshire)

  Binns, John

  Evans, Ioan (Birmingham, Yardley)

  Hughes, Hector (Aberdeen, N.)

  Blackburn, F.

  Fernyhough, E.

  Hunter, Adam (Dunfermline)

  Blenkinsop, Arthur

  Finch, Harold (Bedwellty)

  Hunter, A. E. (Feltham)

  Boardman, H.

  Fitch, Alan (Wigan)

  Irvine, A. J. (Edge Hill)

  Bowden, Rt. Hn. H. W. (Leics S.W.)

  Fletcher, Sir Eric (Islington, E.)

  Irving, Sydney (Dartford)

  Boyden, James

  Fletcher, Ted (Darlington)

  Jackson, Colin

  Brown, Hugh D. (Glasgow, Provan)

  Foot, Michael (Ebbw Vale)

  Jeger, George (Goole)

  Brown, R. W. (Shoreditch & Fbury)

  Freeson, Reginald

  Jones, Dan (Burnley)

  Buchan, Norman (Renfrewshire, W.)

  Galpern, Sir Myer

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  Buchanan, Richard

  Garrett, W. E.

  Jones, Idwal (Wrexham)

  Butler, Mrs. Joyce (Wood Green)

  Garrow, A.

  Jones, T. W. (Merioneth)

  Carmichael, Neil

  Gourlay, Harry

  Kelley, Richard

  Coleman, Donald

  Gregory, Arnold

  Kenyon, Clifford

  Corbet, Mrs. Freda

  Grey, Charles

  Kerr, Mrs. Anne (R'ter & Chatham)

  Crawshaw, Richard

  Griffiths, David (Rother Valley)

  Kerr, Dr. David (W'worth, Central)

  Cronin, John

  Hale, Leslie

  Leadbitter, Ted

  Crossman, Rt. Hn. R. H. S.

  Hamilton, James (Bothwell)

  Lee, Miss Jennie (Cannock)

  Cullen, Mrs. Alice

  Hamling, William (Woolwich, W.)

  Lever, Harold (Cheetham)

  Dalyell, Tam

  Harper, Joseph

  Lever, L. M. (Ardwick)

  Davies, G. Elfed (Rhondda, E.)

  Harrison, Walter (Wakefield)

  Lewis, Ron (Carlisle)

  Davies, Ifor (Gower)

  Hart, Mrs. Judith

  Lomas, Kenneth

  Davies, S. O. (Merthyr)

  Hattersley, Ray

  Loughlin, Charles

  588

  589

  McBride, Neil

  Orme, Stanley

  Stress,Sir Barnett (Stoke-on-Trent,C.)

  MacColl, James

  Oswald, Thomas

  Summerskill, Dr. Shirley

  MacDermot, Niall

  Owen, Will

  Swain, Thomas

  McGuire, Michael

  Page, Derek (King's Lynn)

  Swingler, Stephen

  Mclnnes, James

  Park, Trevor (Derbyshire, S.E.)

  Symonds, J. B.

  McLeavy, Frank

  Pavitt, Laurence

  Taverne, Dick

  MacMillan, Malcolm

  Perry, E. G.

  Taylor, Bernard (Mansfield)

  Mahon, Peter (Preston, S.)

  Popplewell, Ernest

  Thomas, George (Cardiff, W.)

  Mahon, Simon (Bootle)

  Probert, Arthur

  Thomas, Iorwerth (Rhondda, W.)

  Mallalieu, E. L. (Brigg)

  Pursey, Cmdr. Harry

  Thornton, Ernest

  Mallalieu, J. P. W. (Huddersfield, E.)

  Rankin, John

  Tinn, James

  Manuel, Archie

  Redhead, Edward

  Urwin, T. W.

  Mapp, Charles

  Reynolds, Gerald

  Varley, Eric G.

  Mayhew, Christopher

  Rhodes, Geoffrey

  Wainwright, Edwin

  Mellish, Robert

  Richard, Ivor

  Walden, Brian (All Saints)

  Mendelson, J. J.

  Roberts, Albert (Normanton)

  Walker, Harold (Doncaster)

  Mikardo, Ian)

  Robertson, John (Paisley)

  Wallace, George

  Millan, Bruce

  Robinson, Rt. Hn. K. (St. Pancras, N.)

  Watkins, Tudor

  Miller, Dr. M. S.

  Rogers, George (Kensington, N.)

  Weitzman, David

  Milne, Edward (Blyth)

  Ross, Rt. Hn. William

  Whitlock, William

  Monslow, Walter

  Rowland, Christopher

  Wilkins, W. A.

  Morris, Alfred (Wythenshawe)

  Sheldon, Robert

  Williams, Alan (Swansea, W.)

  Morris, Charles (Openshaw)

  Short, Rt. Hn. E. (N'castle-on-Tyne, C.)

  Williams, Mrs. Shirley (Hitehin)

  Morris, John (Aberavon)

  Silkin, John (Deptford)

  Williams, W. T. (Warrington)

  Mulley, Rt. Hn. Frederick (SheffieldPk)

  Silkin, S. C. (Camberwell, Dulwich)

  Willis, George (Edinburgh, E.)

  Murray, Albert

  Silvcrman, Julius (Aston)

  Wilson, William (Coventry, S.)

  Neal, Harold

  silverman, Sydney (Nelson)

  Winterbottom, R. E.

  Newens, Stan

  Slater, Mrs. Harriet (Stoke, N.)

  Woodburn, Rt. Hn. A.

  Noel-Baker, Francis (Swindon)

  Slater, Joseph (Sedgefield)

  Woof, Robert

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Small, William

  Wyatt, Woodrow

  Norwood, Christopher

  Solomons, Henry

  Oakes, Gordon

  Spriggs, Leslie

  TELLERS FOR THE NOES:

  O'Malley, Brian

  Stewart, Rt. Hn. Michael

  Mr. Lawson and Mr. McCann.

  Oram, Albert E. (E. Ham S.)

  stones, William

  Mr. Scott-Hopkins: I beg to move Amendment No. 38, in page 14, line 6, at the end to insert:

  28.38

  (A)

  (14)

  Manganese sulphate.

  28.40

  (H)

  …

  Calcium hydrogen orthophosphate.

  The Chairman: I think that it will be for the convenience of the Committee to discuss, with this Amendment, Amendment No. 39, in page 14, line 6, at the end to insert:

  28.17

  …

  …

  Potassium hydroxide (solid forms).

  Amendment No. 41, in page 14, line 6, at the end to insert:

  28.30

  …

  …

  Magnesium chloride.

  Amendment No. 42, in page 14, line 6, at the end to insert:

  28.38

  …

  …

  Calcined magnesium sulphate.

  Amendment No. 43, in page 14, line 6, at the end to insert:

  28.38

  …

  …

  Magnesium sulphate.

  Amendment No. 44, in page 14, line 6, at the end to insert:

  28.39

  …

  …

  Potassium nitrate.

  Amendment No. 45, in page 14, line 6, at the end to insert:

  28.40

  …

  …

  Calcium hydrogen orthophosphate.

  Amendment No. 46, in page 14, line 6, at the end to insert:

  28.42

  …

  …

  Potassium carbonate.

  Amendment No. 54, in page 14, line 8, at the end to insert:
  Ammonium sulphate nitrate within 31.02.
  I suggest, also, that the Government Amendment No. 55, in page 14, line 10, coloumn 1, at the end to insert:
  Basic slag within 31.03.
  be taken with this group.
  Mr. Scott-Hopkins: Yes, Dr. King; I am obliged.
  I intended to discuss Amendments Nos. 38 and 54, and I hope that my hon. Friend the Member for Shipley (Mr. Hirst), if he catches your eye, will advance the arguments in support of the Amendments standing in his name, which, as you have said, Dr. King, are related to mine.
  These Amendments deal with essential trace minerals used to a large extent in the preparation of animal feedingstuffs and compounds fed to stock. The two trace substances referred to in Amendment No. 38 are vital minerals for this purpose. Manganese sulphate is particularly valuable in the feeding of poultry, and we have in this country only about 10 per cent. of our requirement of this substance for addition to feed compound.
  About 2,000 tons of this mineral is imported, and it is largely used, by spraying, as a plant nutrient. It is essential to the compound industry. At the

  591
  moment a duty of 10 per cent. is paid, and the addition of the extra 15 per cent. means an addition of £10 or £12 per ton. When it comes down to the compound sold to the farmer the increase is between 4d. and 5d. a ton. This may be a small amount, but when it is taken with the other trace mineral, which is calcium hydrogen orthophosphate, or, for shortness, dicalcium phosphate, it comes to a considerable amount.
  Dicalcium phosphate is used to a much larger extent and for exactly the same reason. It is vital to have it in the compounds used in the animal feeding trade by the fanning industry. A large quantity is imported. We produce here about 20,000 tons, but the remainder of the 60,000 tons of this mineral which is used is imported. It is a vital mineral if we are to get the right balance in our animal feedingstuffs. Modern science has moved so far ahead that this is one of the essential elements in a balanced diet for our livestock.
  Earlier we heard both from hon. Members opposite and from my hon. Friends that one of the exceptions to the surcharge is for materials to service the expansion of production. We all know how anxious the Minister of Agriculture is to expand production. This is one of the vital compounds in feedingstuffs which will help to expand agricultural production. These two trace elements, dicalcium phosphate and manganese sulphate, are vital to the compound industry and to the compounds which farmers buy. The additional cost of manganese sulphate will be about 4d. or 5d. a ton, but the additional cost of the dicalcium phosphate will be about 5s. a ton. This extra cost will have to be borne by the agricultural industry.
  There is no alternative source available. The surcharge will not help the Chancellor in his balance of payments difficulties—and we have always understood that that was the purpose of the surcharge—because the 40,000 tons of dicalcium phosphate and the 2,000 tons of manganese sulphate must be imported. All that the surcharge does is to impose an extra burden. This is a revenue-raising operation, and the cost will be passed directly on to agriculture. This is a particularly unfortunate action at the moment.
  592
  Manganese sulphate comes almost exclusively from our E.F.T.A. partners in Denmark. It must be remembered that 2,000 tons is a considerable amount to import. The surcharge on manganese sulphate is one of the causes of the difficulty with Denmark, and I have a feeling that the Government already realise that.
  Earlier in the debate I understood from the Minister without Portfolio that waste products or by-products would be excluded from the surcharge. I am advised that dicalcium phosphate is a by-product, or waste product if hon. Members prefer, of the extraction of glue from bones. It is a waste product from that industrial process. Therefore, if that is so, these would have qualified for the exemption which the Government are adding to the Schedule in the Amendment we are discussing at the moment.
  Amendment No. 54 refers particularly to ammonium sulphate nitrate, which has nothing whatever to do with the feeding-stuffs industry, as the Minister will realise. It has to do with the fertiliser industry and this has a particular bearing on the efficiency of the farming industry and the productivity of farming, because the use of proper fertilisers increases the productivity of the farm.
  Once again, as we understand it, the Government are engaged in increasing productivity. I am sure that the hon. Gentleman will know that there is an overall shortage of nitrogenous material at the moment and there is no alternative to this particular chemical coming into this country, until the plant—which, I think, will cost £12 million and is being erected at the moment—goes into operation in about 1966. Between now and 1966 there will be no alternative supply of this ammonium sulphate nitrate, which is a vital chemical in the modern use of nitrogenous fertiliser.
  We have moved on to such an extent now that fertilisers are highly concentrated. They are compounds and are of very high quality. In these highly concentrated fertilisers, it is vital to have ammonium sulphate nitrate. There is a general shortage of this material and there is no alternative source, as I have said. Once again, the same argument applies. By the imposition of this charge, the Government and the hon. and right hon. Gentlemen opposite are not going to halt the importation of this

  593
  material. It will continue to come in, regardless. What will happen is an increased charge and cost on the industry. [An HON. MEMBER: "A tariff."] Indeed, some kind of tariff. I must agree with my hon. Friend.
  This will raise the cost of ammonium sulphate nitrate. At the moment it bears a duty, which I think is quite heavy, of £3 4s. a ton, and if this 15 per cent. surcharge is added to this there will be an increase of £2 9s. on the existing £3 4s. So the hon. Gentleman will see that with these three substances—the two trace elements and ammonium sulphate nitrate—which are used in fertilisers, he is adding quite considerably to the costs of the farming industry. I do not want to weary the Committee—
  Mr. Charles Loughlin: Hear, hear.
  Mr. Scott-Hopkins: It is all very well for the hon. Gentleman to say "Hear, hear," but these are important matters, particularly to the farming community. One of the important factors and one of the astonishing things is the lack of speeches and the lack, one might almost say, of interest shown by hon. Members opposite in these details and these exemptions which we on this side of the Committee are trying to put forward for industry, agriculture and other interests. It is of great importance to the farmer, large or small, to the compounders, and to the fertiliser industry as well.
  I understood from what the Minister of State said earlier, that we have now advanced from the position as outlined by his hon. Friend the Minister without Portfolio. We are now at the stage of not having to wait until April for a review, but are to have a review in the shortest possible period, of the various points we are making in this Committee—but not before the Report stage, if I understand the Minister correctly. I hope that, while he listens to the arguments we are putting forward, and if he is not able to accept them—though I hope he is—he will bear these matters in mind. I hope that they will be among the first to be included in the reviewed list, and I hope that this will take place before Christmas. Perhaps the hon. Gentleman can give an assurance that this earlier review will
  594
  take place before Christmas and that we shall have the results announced to the House before we rise for the Christmas Recess.
  It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
  Committee report Progress.

  BUSINESS OF THE HOUSE
  Ordered,
  That the Proceedings on the Motion relating to the Business of the House (Finance Bill) may be entered upon and proceeded with at this day's Sitting, at any hour, though opposed.—[Mr. Lawson.]

  FINANCE BILL
  Again considered in Committee.
  Mr. Scott-Hopkins: I do not want to weary the Committee by repeating what I have said. These two trace elements and ammonium sulphate are vital to the industry concerned. I hope that the Committee agrees that they should be included in the list in the Schedule.
  Mr. Hirst: If anything can cheer me up during these rather miserable proceedings on this even more miserable Schedule it is the presence of a Board of Trade Minister on the Treasury Bench. I mean no disrespect to any Minister on that Bench, but when the Treasury starts to arrange our trade affairs I have more than a natural degree of wind-up.
  My hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins), with his great knowledge and feeling for the agricultural industry, has rightly addressed himself to these Amendments, which have a direct bearing in the main on that industry. He made a very strong case and I support him entirely, but I do not think that I shall be telling him anything when I say that I saw that some of the products he has mentioned have other purposes than for use in agriculture. They are included in a number of the Amendments which we are discussing. My name is attached to seven of these Amendments. Potassium hydroxide generally comes under the heading of products which are used in an amazing mass of industry, for instance, for dyestuffs,

  595
  alkaline batteries and the photographic industry, and it is not obtainable in this country.
  We have been told tonight, somewhat erroneously, that we are supposed to have accepted a principle. I certainly have not accepted it as a principle in any way consistent with what is alleged to be the Government's economic policy—a more accurate term would not be appropriate. The alleged principle is that it is essential for a large number of items to be restricted to reduce imports when so large a selection have to be imported as they are essential to production in this country and therefore will not affect that issue.
  I hope that now we have a Minister of State of the Board of Trade present—that has been my "pin-up" Ministry for all the years I have spent in this place—the Board of Trade, which has to be receptive—and normally is—of the views and requirements of industry, will agree that that is necessary in this connection. I do not want to start believing that every Minister at the Board of Trade is automatically an ass and not capable of being receptive to the requirements of industry and trade, and I am not going to do that. I have a respect for the hon. Gentleman, who, I think, will be receptive.
  It may be that the hon. Gentleman has a badly marked brief. I suppose that we cannot do much about that. The Chancellor of the Exchequer and the President of the Board of Trade are not here to try to explain away the things the Government are doing with which we are dealing. That is a tragedy, but it has to be accepted. If he says the same stuff that we have had—I cannot put it better than that—from the Minister without Portfolio— "without portfolio" has been particularly obvious this evening—we shall have to come back to these things in one way or another at another stage of the Bill. We do not want to do that, because this uncertainty in industry is upsetting, and it is only right that it should receive consideration as quickly as possible.
  Another product on my list is magnesium chloride. This, too, comes under the same heading as not being produced here and being essential to commerce and industry. Next, there is magnesium sulphate, and this again comes under the heading of not being
  596
  produced and being essential to more or less the same range of industries which I mentioned earlier, plus the artificial silk industry, just to indicate the wide range of industries selected in this omnibus collection.
  Potassium nitrate is produced here in a small way, but by no means equal to the demand. This is essential for the glass industry, the vitreous enamel industry, and—and I am not sure what is the precise connection between the two things—the explosive and meat preservation industries.
  My hon. Friend dealt at some length with the other items. Calcium hydrogen orthophosphate, or dicalcium phosphate and magnesium sulphate, are basically used for animal feedingstuffs. Despite the fact—and I am not sure whether my hon. Friend underlined this point—that a number of feedingstuffs in a wide range of raw materials are exempt from the surcharge, these particular chemical ingredients are not, although they are essential. This is the only sound way of introducing phosphorus—in some cases as much as 41 per cent.—into these products.
  The action taken by the Government is not logical. My hon. Friend talked about guide dogs for blind people. It is not sufficient, when dealing with a matter like trade and industry in this country, with all its related issues, to say something which is essential is not a feedingstuff unless it is so applied. Magnesium sulphate is also an essential raw material in the leather and tanning trade, to there is a wide link in these matters.
  Finally, in my last Amendment there is potassium carbonate and potassium B carbonate. That is not an abbreviation of anything that is unparliamentary. This, too, is required in a considerable range of industries.
  The night is long, and so many points are involved. I have skipped over these things. I am ashamed for so doing, but I have done so out of consideration for hon. Members on both sides who I know are fully conscious of the problems here, especially those who have more knowledge than I have of several of the industries involved. They know how important these things are, and they are not to be dismissed by reference to a vague principle which even the Chancellor of the Exchequer could not explain on Second Reading.

  597
  If he cannot explain it, I hardly expect the Minister without Portfolio, or, indeed, the Minister of State, who, one has to assume, has a portfolio, to be explicit in this matter. But I do ask them to produce to us some reasonable satisfaction in this matter, and not give us the sort of completely irrelevant—not to say dusty—answer that we got from the right hon. Gentleman in the earlier debates. If we can have some satisfaction the mood of the Committee will materially change, Dr. King, and your task will be made all the easier and the state of our industry all the more healthy.
  Mr. Redhead: I am deeply touched by the kindly references of the hon. Member for Shipley (Mr. Hirst), although I confess to a little embarrassment at the fact that he got near the point of describing me as his pin-up boy. But if he holds me in such affection he might have noticed that I have been here for some hours. He greeted me as if I had just arrived. That is hardly the sort of attention one expects from a person who holds one in such affectionate esteem.
  Mr. Hirst: I have been in the debate for most of the evening, and I have seen the hon. Member here. I was referring to the change of leadership at the Dispatch Box itself.
  Mr. Redhead: I thank the hon. Member very much. Before I destroy this bond of affection I will try to take the Amendments in order.
  10.15 p.m.
  Many of the arguments that have been adduced are repetitions of the general arguments adduced on earlier Amendments. I am sure that the Committee does not want to be wearied by another rebuttal of those arguments, and a further dragging out of the general arguments that we have had in this connection. It is obvious that hon. Members opposite are not convinced by the reasons that have been advanced, and in the circumstances they have an obvious right to express their disapproval at the appropriate times.
  Mr. Braine: The hon. Member has told us that there has been a rebuttal of our arguments in earlier stages of the debate. That is not true. He will recall that in the Second Reading debate the Chancellor stated that as the debate
  598
  developed he would listen carefully to all references to anomalies and difficulties, and would seek to meet them. Throughout the debate ever since the attitude of the hon. Member and his colleagues has been quite inflexible. There has been no attempt to rebut our arguments. The hon. Gentleman must not deceive the Committee; he must not even deceive himself.
  Mr. Redhead: If the hon. Member will have a little patience he will probably find that I am not so inflexible as he suggests.
  I want first, to deal with Amendment No. 38. I acknowledge that both the chemicals there referred to—manganese sulphate and calcium hydrogen orthophosphate—are tracers in animal feedingstuffs, but I think that he will acknowledge that both chemicals have other uses.
  Mr. Scott-Hopkins: I am informed that there is practically no use whatever for dicalcium phosphate other than in animal feedingstuffs. I accept the argument about manganese sulphate.
  Mr. Redhead: I do not hide from the hon. Gentleman that these two chemicals give cause for some consideration and concern. Feedingstuffs have been exempted from the charge. Nevertheless, the difficulty about these two is that they have some degree of other use, and it will be inevitable that they would call in question the charge in respect of other chemicals classified with them. There is the fear of the chain reaction that might be set up at this stage if we gave exemption to those two. That is the reason why I am not entirely forthcoming about the Amendment tonight.
  But it is possible to overstate the burden of the import charge in respect of these two chemicals. My information is that if we take the cost of imported dicalcium phosphate as £30 per ton—which is the figure quoted to me—the import charge would be about £4 10s. per ton. Assuming that a ton of feedingstuffs contains an average of 1 per cent. trace element, the effect of the import charge, broadly speaking, is to add 1 per cent. of £4 10s. to the cost of a ton of feedingstuffs. That is about 11d. on the present cost of about £35 per ton. I do not think that anyone

  599
  could seriously argue that that is a severe burden in that category.
  Again, if we take the question of manganese sulphate, taking the figure of £80 a ton as average cost and the maximum addition rate as being 8 oz. a ton, the approximate effect is to add ½d. to £35 worth of animal feedingstuffs. I do not think that anyone can seriously argue that there is a case of hardship there. Nevertheless, having regard to the degree of affinity with feedingstuffs, about which we have some difficulty in our minds, and while we are not prepared to accept the Amendment—for the basic reason that we are anxious to avoid setting up any chain reaction—I give an undertaking that the matter will be reconsidered when the coverage charge is reviewed.
  I am sure that the hon. Member for Shipley will forgive me, he having so splendidly defined the purposes and the character of the various chemicals listed under his Amendments, if I do not attempt to go over the ground again.
  Mr. Peter Emery: We are delighted to see the hon. Member, in magnanimous mood, attempting to help hon. Members on this side of the Committee. I am sure that he would not wish to be misunderstood. He said that this matter would be reconsidered. Are we to believe that this will be done before the Report stage and that we shall be able to bring it into the Bill, or—I am certain I am wrong—am I to believe that this is something which, again, will not be done until April or March?
  Mr. Redhead: I can confirm the hon. Gentleman in his conviction of his own error. It will not be possible to contemplate—I did not suggest it—on Report—[HoN. MEMBERS: "Why not?"] What I said expressly was that we would be prepared to reconsider the matter when the coverage charge is reviewed; and I go no further than that at this stage.
  Sir D. Glover Sir D. Glover rose—
  Mr. Redhead: No, I cannot give way. [HON. MEMBERS: "Oh."] Hon. Gentlemen are entitled to express their dissent or concern about it, but that is the position that I was anxious to make clear and I hope that the interjection of the hon. Member for Reading (Mr. Peter Emery) has given me the opportunity of so doing.
  600
  May I again say to the hon. Member for Shipley that it is with no intention of being discourteous that I do not go through the whole list, itemising the chemicals which he mentioned. I must say—this is in conformity with everything said before on this point—and much as I know it will be disappointing to his point of view, like so many other chemicals which are subject to the charge, everyone of these, whether obtainable in this country or not—we have had that argument ad nauseam—is prepared in a manner which involves elaborate chemical processing.
  In that sense they cannot be regarded as being within the broad aspect of basic raw materials adopted in determining the area of the charge and the exemptions respectively.
  Mr. Burden Mr. Burden rose
  Mr. Redhead: No, I cannot give way to the hon. Gentleman. I have been most accommodating in giving way to hon. Members opposite.
  There is the further Amendment, No. 54, and this, again, would produce difficulty if it were included in the exemption list. Again, I am prepared to have a look at this—[HON. MEMBERS: "When?"]—if hon. Members will have the courtesy to let me finish the sentence they will hear the result—when we come to review the coverage charge. Included in this group is the Amendment in the name of my right hon. Friend the Chancellor of the Exchequer, No. 55. That flows from the expressed intention of my right hon. Friend, on Second Reading, that he would give consideration to any glaring anomalies which were known to be causing hardship and which could be accepted as candidates for exemption, but only if it were not likely to set up an uncontrollable chain reaction.
  We are satisfied, on examination, that basic slag is a commodity which satisfies that requirement and, accordingly, in due course, I am prepared to move that that be added to the Schedule of exemptions.
  Mr. Burden: I had hoped that it would not be necessary for me to intervene in this discussion. What amazes me about the party opposite is the apparent relish with which they turn down every reasonable proposal made from this side

  601
  of the Committee—not, I hasten to add, relish from hon. Members sitting behind the Front Bench opposite because they have gloomy faces, but the relish of Ministers of the new Government. It is obvious that the hon. Members sitting behind them have been whipped into silence.
  This apparent relish with which they turn down our reasonable and reasoned proposals will be of interest not only to the people of this country but to the people against whom these import charges are being levied. They, too, are watching the relish with which these proposals are being turned down.
  One can understand why the Minister, in turning down our suggestions, referred to uncontrollable reactions. The Government have been suffering from uncontrollable reactions since they took office. This is one of their great difficulties. No wonder hon. Members opposite are stonewalling so hard tonight, for only yesterday the Minister of Health said that they must have more planners. It is clear that they will not give way to our suggestions, because they are waiting for the extra planners to come along to give them more advice.
  I am not surprised at the stonewalling tactics of the Front Bench opposite. When important questions on points of detail are, addressed to them they do not appear to know the answers. This is probably why they are reluctant to give way to us. Their lack of knowledge of industrial and commercial matters prevents them from answering our reasonable questions. If they wish to get their business through more quickly they will do so if they give way occasionally when my hon. Friends and I rise in the middle of their speeches to put reasonable questions on specific points of detail.
  Mr. Scott-Hopkins: I thought for a moment when the Minister was speaking that we were going to make a small amount of progress tonight, but I was disappointed to hear him merely repeat what he had previously said. It is obvious that we will not make real progress until the Government change their attitude.
  It appears that the Government have virtually accepted the basic logic of our argument, particularly for the three
  602
  chemicals we are discussing. That would appear so since the Minister singled them out for special review. Despite this, his remarks were totally unsatisfactory, particularly since he said that he would reconsider the matter when the coverage of the charge is reconsidered. I do not know what that means. We have not been given a date and I have a suspicion, from what was said on earlier Amendments by the Minister without Portfolio, that hon. Members opposite have not had sufficient time to study the details of the case
  Indeed, the Minister made an extremely good case to prove that the Government acted far too quickly. They want time to reconsider what they have done, examine it in detail, get the official machine working and look through the various chapters of the very excellent salary to see whether or not the particular elements can be isolated and, therefore, exempted.
  I suspect that that is why the hon. Gentleman stalled, asked for extra time, and used the extraordinary words "reconsidering the coverage of the charge"—whatever that may mean. I am sorry that the Government do not feel that they can do this before Report, but if they want a few days more I am sure that my right hon. and hon. Friends will he ready to accommodate them, and let them put off the Report stage for a few more days so that they may have time to reconsider these things, and do their homework.
  These matters are important to the industries concerned. If the hon. Gentleman does not want to put back the Report stage for a week or so, I ask him to assure the Committee that before the Christmas Recess either he or his right hon. Friend the Chancellor will tell the House the result of the reconsideration. There seems to be no point in waiting, except to give the hon. Gentleman and his friends time for detailed consideration.
  The hon. Gentleman must get his figures right when talking about dicalcium phosphate. I am advised that this is used exclusively for animal feedingstuff, but his figures were not correct. The incidence of the 15 per cent. surcharge on this mineral will be between £5 and £6 a ton. The amount of dicalcium phosphate used in the animal feeding

  603
  compound is as high as 5 per cent. That means that the price rise of the compound, as opposed to the pure mineral itself, would be about 5s. a ton, not the 11d. per ton that the hon. Gentleman mentioned. I suggest that he gets his figures right, and restudies that one as well.
  Exactly the same thing applies to manganese sulphate, in connection with which he mentioned an increase of ½d. per ton in the price of the compound at the end of the day. Once again, the hon. Gentleman's figures are not quite right. The duty on the pure mineral will be between £10 and £12 a ton, resulting in an end charge on the compound itself of between 4d. and 5d. a ton. If one adds all these things together there is an addition of 5s. and 6s. a ton in the cost of the two vital trace elements in this compound.
  However, enough has been said on this side of the Committee to show that we are completely unsatisfied with the Minister's explanation, and with his promise that he will reconsider the matter. I ask him to consider whether he ought not to put back the Report stage or, if not, give a definite assurance that he or his right hon. Friend will tell the House the result of the review he has now promised.
  Mr. Hirst: I must follow up what my hon. Friend has said, because I do not think that the Minister can just sit there without replying to that request. I must say that to me the hon. Gentleman has rather lost his stripes this evening. My file is absolutely fat with letters to the Board of Trade, and I have myself sent the Department some letters, so this cannot be a surprise to Ministers. The hon. Gentleman should not say that dicalcium sulphate has other uses, and that that is one of the major reasons for refusing the request, unless he can be forthcoming and say what those other uses are. I have considerable contacts with the chemical industry but I do not know it all. I am prepared to admit that I may be wrong—one comes here to learn. If the hon. Gentleman tells me so, I will accept it from him, although I must add that I will check it up tomorrow. It is not fair to try to assuage the feelings of hon. Members on this side of the Committee in that way and not follow
  604
  it up by a fact that must be known to the Board of Trade, because this is no new thing at all.
  10.30 p.m.
  Right hon. and hon. Members opposite are fishing in every dirty pond for anything that looks like a fish. I am referring to the defence that some of these articles cannot be exempted because they are half manufactured. But there are numerous articles of that kind. There is raw rubber. The reclamation of rubber is a considerable business. There are all sorts of chemical fertilisers. The Committee must be surprised. I assure the Government that the country is surprised when we draw attention to matters of this calibre when the explanations are so insufficient.
  I feel very strongly about this matter, although I have tried to be goodhumoured about it. There is no reason why one should become unduly cross publicly, but, internally, I am very angry. The Opposition Front Bench should be treated with respect as representing the Opposition. It is not right that a question the answer to which is so important to so many people and rather vital to the Minister's personal reputation should go unanswered.
  Mr. Redhead: I have been accused of approaching this matter with a degree of relish. It is necessary to bring the Committee back to the point at issue and to make it clear that the Government did not relish having to impose this charge at all. Basically, we did not relish the situation that we inherited from right hon. and hon. Gentlemen opposite. I grant that the instrument that has been employed under circumstances of an emergency cannot be regarded as an absolutely precise instrument, and for that reason it is obvious that there are bound to be anomalies some of which have been corrected by official Amendments here, and in some other cases where there are possibilities of anomalies existing I have indicated the possibility of reconsideration.
  This reconsideration is not confined to the general review which will be undertaken of the charge as a whole, but it is competent for the Government to use Clause 3(9) for the purposes of dealing with any established case where

  605
  it is clearly and demonstrably desirable, notwithstanding whatever risks there may be of eroding the charge to an extent seriously to destroy its purpose.
  As to the question raised by the hon. Member for Cornwall, North (Mr. Scott-Hopkins), I am sorry that I cannot go beyond the terms that I have already indicated tonight. If the hon. Gentleman does not find that acceptable, I am sorry, but I have gone as far as I can.
  Sir Peter Roberts: On a point of order. I wonder whether I would be in order in following up the Minister's innuendo that there is some idea that there is a crisis caused by the former Government, when the crisis

  Division No. 24.]

  AYES

  [10.34 p.m.

  Agnew, Commander Sir Peter

  Forrest, George

  Maginnis, John E.

  Alison, Michael (Barkston Ash)

  Fraser, Ian (Plymouth, Sutton)

  Mathew, Robert

  Allason, James (Hemel Hempstead)

  Gammans, Lady

  Maude, Angus E. U.

  Astor, John

  Gardner, Edward

  Mawby, Ray

  Awdry, Daniel

  Giles, Rear-Admiral Morgan

  Maxwell-Hyslop, R. J.

  Balniel, Lord

  Glover, Sir Douglas

  Maydon, Lt.-Cmdr. S. L. C.

  Barlow, Sir John

  Glyn, Sir Richard

  Meyer, Sir Anthony

  Batsford, Brian

  Goodhart, Philip

  Mills, Peter (Torr ngton)

  Beamish, Col. Sir Tufton

  Goodhew, Victor

  Miscampbell, Norman

  Bennett, Sir Frederic (Torquay)

  Gower, Raymond

  Mitchell, David

  Berkeley, Humphry

  Grant, Anthony

  Monro, Hector

  Berry, Hn. Anthony

  Griffiths, Peter (Smethwick)

  More, Jasper

  Bessell, Peter

  Grimond, Rt. Hn. J.

  Morgan, W. G.

  Biffen, John

  Gurden, Harold

  Mott-Radclyffe, Sir Charles

  Biggs-Davison, John

  Hall, John (Wycombe)

  Murton Oscar

  Bingham, R. M.

  Hall-Davis, A. G. F.

  Nicholls, Sir Harmar

  Black, Sir Cyril

  Harrison, Col. Sir Harwood (Eye)

  Noble Rt. Hn. Michael,

  Blaker, Peter

  Hawkins, Paul

  Nugent, Rt. Hn. Sir Richard

  Bossom, Hn. Clive

  Hay, John

  Onslow, Cranley

  Bowen, Roderic (Cardigan)

  Heald, Rt. Hn. Sir Lionel

  page, John (Harrow, W.)

  Box, Donald

  Heath, Rt. Hn. Edward

  Page, R. Graham (Crosby)

  Boyle, Rt. Hn. Sir Edward

  Higgins, Terence L.

  Pearson, Sir Frank (Clitheroe)

  Braine, Bernard

  Hill J. E B. (S. Norfolk)

  Peyton, John

  Brinton, Sir Tatton

  Hobson, Rt. Hn. Sir John

  Pike, Miss Mervyn

  Brooke, Rt. Hn. Henry

  Hogg, Rt. Hn. Quintin

  Pounder, Rafton

  Brown, Sir Edward (Bath)

  Hooson, H. E.

  Prior, J. M. L.

  Buchanan-smith, Alick

  Hornsby-Smith, Rt. Hn. Dame P.

  Pym, Francis

  Buck, Anthony

  Howe, Hn. G. R.(St. Ives)

  Quennell, Miss J. M.

  Carlise, Mark

  Howe, Geoffrey (Bebington)

  Ramsden, Rt. Hn. James

  Channon H. P. G.

  Hunt, John (Bromley)

  Rawlinson, Rt. Hn. Sir Peter

  Chataway, Chaistopher

  Hutchison Michael Clark

  Redmayne, Rt. Hn. Sir Martin

  Chichester-Clirk, R.

  Iremonger, T. L.

  Rees-Davies, W. R.

  ClarK, William (Nottingham, S.)

  Irvine, Bryan, Godman (Rye)

  Renton Rt. Hn. Sir David

  Cole, Norman

  Johnston, Russell (Inverness)

  Roberts, Sir Peter (Heeley)

  cooke Robert

  Jopling, Michael

  Rodger, Sir John (Sevenoaks)

  Cooper, A. E.

  Kaberry, Sir Donald

  Roots, William

  Cooper-Key, Sir Neill

  Kerr, Sir Hamilton (Cambridge)

  Russell, Sir Ronald

  Costain, A. P.

  Kershaw, Anthony

  Scott-Hopkins, James

  Crowder F. P.

  King, Evelyn (Dorset, S.)

  Stainton, Keith

  Cunningham, Sir Knox

  Lambton, Viscount

  Taylor, Edward M. (G'gow, Cathcart)

  Curran, Charles

  Lancaster, Col. C. G.

  Taylor, Frank (Moss side)

  Dance, James

  Langford-Holt, Sir John

  Temple, John M.

  Davies, Dr. Wyndham (Perry Barr)

  Lloyd, Rt. Hn. Geonrey (Sut'nC'dfield)

  Thorneycroft, Rt. Hn. Peter

  d'Avigdor-Goldsmid, Sir Henry

  Lloyd, Lan (P'tsm'th, Langstone)

  Thorpe, Jeremy

  Dean, Paul

  Lloyd, Rt. Hn. Selwyn (Wirral)

  Tiley, Arthur (Bradford, W.)

  Donaldson, Cmdr. C. E. M.

  Longbottom, Charles

  Turton, Rt. Hn. R. H.

  Doughty, Charles

  Longden, Gilbert

  Tweedsmuir, Lady

  Drayson, G. B.

  Lubbock, Eric

  van Straubenzee, W. R.

  du Cann, Rt. Hn. Edward

  Lucas-Tooth, Sir Hugh

  Vickers, Dame Joan

  Eden, Sir John

  McAdden, Sir Stephen

  Walder, David (High Peak)

  Emery, Peter

  Mackenzie, Alaedair (Ross & Crom'ty)

  Walker, Peter (Worcester)

  Fletcher-Cooke, Charles (Darwen)

  Mackie, George Y. (C'ness & S'Iand)

  Ward, Dame Irene

  Fletcher-Cooke, Sir John (S'pton)

  McNair-Wilson, Patrick

  Weathcrill, Bernard

  has been caused by the activities of hon. Members opposite.
  The Chairman: Order. The hon. Gentleman, with his long Parliamentary experience, knows that that is not a point of order.
  Mr. Scott-Hopkins: In view of the unsatisfactory reply that we have had from the Minister of State. I cannot advise my hon. Friends to withdraw the Amendment. We shall insist on going to a Division.
  Question put, That those words be there inserted:—
  The Committee divided: Ayes 167, Noes 192.

  Whitelaw, William

  Woodhouse, Hn. Christopher

  Wise, A. R.

  Woodnutt, Mark

  TELLERS FOR THE AYES:

  Wood, Rt. Hn. Richard

  Younger, Hn. George

  Mr. McLaren and Mr. MacArthur.

  NOES

  Abse, Leo

  Harper, Joseph

  Noel-Baker, Francis (Swindon)

  Albu, Austen

  Harrison, Walter (Wakefield)

  Noel-Baker, Rt. Hn. Phillp (Derby, S.)

  Allaun, Frank (Salford, E.)

  Hart, Mrs. Judith

  Norwood, Christopher

  Alldritt, W. H.

  Hattersley, Ray

  Oakes, Gordon

  Allen, Scholefield (Crewe)

  Hayman, F. H.

  O'Malley, Brian

  Armstrong, Ernest

  Heffer, Eric S.

  Oram, Albert E. (E. Ham S.)

  Atkinson, Norman

  Henderson, Rt. Hn. Arthur

  Orme, Stanley

  Barnett, Joel

  Hobden, Dennis (Brighton, K'town)

  Owen, Will

  Baxter, William

  Holman, Percy

  Page, Derek (King's Lynn)

  Beaney, Alan

  Horner, John

  Park, Trevor (Derbyshire, S. E.)

  Bence, Cyril

  Houghton, Rt. Hn. Douglas

  Pavitt, Laurence

  Bennett, J. (Glasgow, Bridgeton)

  Howarth, Harry (Wellingborough)

  Perry, E. G.

  Binns, John

  Howarth, Robert L. (Bolton, E.)

  Probert, Arthur

  Blackburn, F.

  Howell, Denis (Small Heath)

  Redhead, Edward

  Blenkinsop, Arthur

  Howie, W.

  Rees, Merlyn

  Boardman, H.

  Hoy, James

  Reynolds, G. W.

  Bowden, Rt. Hn. H. W. (Leics S. W.)

  Hughes, Emrys (S. Ayrshire)

  Rhodes, Geoffrey

  Braddock, Mrs. E. M.

  Hughes, Hector (Aberdeen, N.)

  Richard, Ivor

  Brown, R. W. (Shoreditch & Fbury)

  Hunter, Adam (Dunfermline)

  Roberts, Albert (Normanton)

  Buchan, Norman (Renfrewshire, W.)

  Hunter, A. E. (Feltham)

  Rohertson, John (Paisley)

  Buchanan, Richard

  Irvine, A. J. (Edge Hill)

  Robinson, Rt. Hn. K. (St. Pancras, N.)

  Butler, Mrs. Joyce (Wood Green)

  Irving, Sydney (Dartford)

  Rodgers, William (Stockton)

  Carmichael, Neil

  Jackson, Colin

  Rogers, George (Kensington, N.)

  Coleman, Donald

  teger, George (Goole)

  Ross, Rt. Hn. William

  Corbet, Mrs. Freda

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Rowland, Christopher

  Crawshaw, Richard

  Jenkins, Hugh (Putney)

  Sheldon, Robert

  Cullen, Mrs. Alice

  Jones Rt. Hn. SirElwyn (W. Ham, S.)

  Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

  Dalyell, Tam

  Jones, J. Idwal (Wrexham)

  Silkin, John (Deptford)

  Davies, G. Elfed (Rhondda, E.)

  Jones, T. W. (Merioneth)

  Silkin, S. C. (Camberwell, Dulwich)

  Davies, Ifor (Gower)

  Kelley, Richard

  Silverman, Julius (Aston)

  Davies S. O. (Merthyr)

  Kenyon, Clifford

  Silverman, Sydney (Nelson)

  Delargy, Hugh

  Kerr, Mrs. Anne (R'ter & Chatham)

  Small, William

  Dell, Edmund

  Kerr, Dr. David (W'worth, Central)

  snow, Julian

  Dempsey, James

  Lawson, George

  Solomons, Henry

  Diamond, John

  Leadbitter, Ted

  Spriggs, Lesile

  Dodds, Norman

  Lee, Rt. Hn. Frederick (Newton)

  stewart, Rt. Hn. Michael

  Doig, Peter

  Lee, Miss Jennie (Cannock)

  Stones, William

  Donnclly, Desmond

  Lever, Harold (Cheetham)

  stross, Sir Barnett (Stoke-on-Trent, C.)

  Driberg, Tom

  Lever, L. M. (Ardwick)

  Summerskill, Dr. Shirley

  Duffy, Dr. A. E. P.

  Lewis, Ron (Carlisle)

  Swain, Thomas

  Dunn, James A.

  Lomas, Kenneth

  Swingler, Stephen

  Dunnett, Jack

  Loughlin, Charles

  Symonds, J.B.

  Edwards, Rt. Hn. Ness (Caerphilly)

  McBride, Neil

  Taverne, Dick

  Edwards, Robert (Bilston)

  McCann, J.

  Thomas, George (Cardiff, W.)

  English, Michael

  MacDermot, Niall

  Thomas, lorwerth (Rhondda, W.)

  Ensor, David

  McGuire, Michael

  Thornton, Ernest

  Evans, Ioan (Birmingham, Yardley)

  Mclnnes, James

  Tinn, James

  Fernyhough, E.

  MacMillan, Malcolm

  Urwin, T. W.

  Finch, Harold (Bedwellty)

  Mahon, Peter (Preston, S.)

  Varley, Eric G.

  Pitch, Alan (Wigan)

  Mahon, Simon (Bootle)

  Wainwright, Edwin

  Fletcher, Sir Eric (Islington, E.)

  Mallalieu, E. L. (Brigg)

  Walker, Harold (Doncaster)

  Fletcher, Ted (Darlington)

  Mallalieu, J.P.W.(Huddersfield, E.)

  Wallace, George

  Floud. Bernard

  Manuel, Archie

  Watkins, Tudor

  Foot, Michael (Ebbw Vale)

  Mapp, Charles

  Weitzman, David

  Freeson, Reginald

  Mayhsw, Christopher

  Wilkins, W. A.

  Garrett, W. E.

  Mendelson, J. J.

  Williams, Alan (Swansea, W.)

  Garrow, A.

  Mikardo, Ian

  Williams, Mrs. Shirley (Hitchin)

  Ginsburg, David

  Millan, Brune

  Williams, W. T. (Warrington)

  Gourlay, Harry

  Miller, Dr. M. S.

  Willis, George (Edinburgh, E.)

  Gregory, Arnold

  Milne, Edward (Blyth)

  Wilson, William (Coventry, S.)

  Grey, Charles

  Morris, Alfred (Wythenshawe)

  Woodburn, Rt. Hn. A.

  Griffiths, David (Rother Valley)

  Morris, Charles (Openshaw)

  Woof, Robert

  Hale, Leslie

  Murray, Albert

  Hamilton, James (Bothwell)

  Neal, Harold

  TELLERS FOR THE NOES:

  Hamling, William (Woolwich, W.)

  Newens, Stan

  Mr. Whitlock and Mrs. Slater.

  Lord Balniel: I beg to move Amendment No. 120, in page 14, line 6, at the end to insert:

  28.01

  …

  …

  Iodine, pharmaceutical quality.

  Iodine, other.

  28.02

  …

  …

  Sulphur, precipitated, pharmaceutical quality.

  Sulphur, precipitated, other.

  28.05

  …

  …

  Mercury.

  28.49

  …

  …

  Silver protein, which satisfies the requirements of the British Pharmacopoeia.

  Silver protein, mild, which satisfies the requirements of the British Pharmacopoeia.

  The Chairman: I think that it will be for the convenience of the Committee if we discuss with this Amendment the following further Amendments:
  Amendment No. 122, in line 6, at the end to insert:

  Chapter 28 & 29

  Goods used in the manufacture of life saving and life prolonging drugs.

  Amendment No. 50, in line 7, at the end to insert:

  29.16 (A)

  …

  Calcium tartrate.

  Amendment No. 51, in line 7, at the end to insert:

  Chapter 30 (all headings)

  Pharmaceuticals.

  Amendment No. 121, line 7, at the end to insert:
  Goods within Chapter 29 used at any stage in the manufacture of pharmaceuticals (as comprised in Chapter 30) which are the subject of permanent or temporary exemption from import duties.
  Amendment No. 118, line 19, at the end to insert:
  35.05 Dextrins.
  10.45 p.m.
  Lord BaIniel: I should like to refer both to Amendment No. 120 and to Amendment No. 121. The purpose of Amendment No. 120 is to include in the list of exemptions from the 15 per cent. surcharge the raw materials of the pharmaceutical industry, those raw materials which are included in Chapter 28 of the tariff list. The purpose of Amendment No. 121 is to include in the list of exemptions from the 15 per cent. surcharge the partially processed substances used in the
  610
  pharmaceutical industry which are included in Chapter 29 of the tariff list.
  I should first of all like to say that I welcome the decision reached earlier in these debates to exclude from the 15 per cent. surcharge the materials iodine and mercury, which were included originally. I welcome their exclusion, but I must admit that I am staggered that hon. Gentlemen opposite even thought of including them in the first instance. This is just another example of the Government's muddle-headedness.
  Although these two substances have now been excluded, there are many others which are basic raw materials used in the pharmaceutical industry which are not available in the United Kingdom and which in the past have been granted permanent or temporary exemption from tariff duties. The principle on which the exemption from tariff duties for these raw materials has been based has been that these raw materials do not exist in the United Kingdom, nor can they be economically produced in the United Kingdom, and therefore it is inevitable that they must go on being imported if the industry is to continue its work. It means that they would continue to go on being imported and would be subject to a 15 per cent. surcharge.
  There can be no possible consequence except that the cost of the National Health Service will be substantially increased. I think that hon. Gentlemen opposite must realise that by imposing this 15 per cent. surcharge they are imposing a surcharge direct upon medicine. It is a surcharge which will be paid individually by persons who have their prescriptions prescribed by private doctors, and by increasing the costs of the National Health Service.
  There is no indication, of course, that the consumption of drugs made by these materials will decrease. If it decreased as a result of the surcharge, this would indeed he a very serious responsibility which hon. Gentlemen opposite are taking on their shoulders. But it is unlikely to decrease. I should like to quote from a memorandum prepared by the Association of the British Pharmaceutical Industry. The Association wrote as follows:
  The consideration which distinguishes pharmaceutical materials from most of the thousands of other chemicals in Chapter 29

  611
  for which temporary import exemptions have been given is that the consumption of essential medicines in the National Health Service is not governed by the Government nor by the trade, but by the medical profession. There can hardly be any disposition on the part of the Government to cut down the doctor's responsibility to prescribe what medicines he thinks necessary. The general object of the new charge of reducing home consumption thus does not apply."
  I think that hon. and right hon. Gentlemen opposite would agree that it cannot be their intention to cut down home consumption of drugs which are prescribed by the medical profession. The main reason for the surcharge is to cut home consumption, and yet it cannot possibly apply to the products of the pharmaceutical industry. Indeed, the probability is not that the consumption of drugs will diminish. I think that we can reasonably expect that in the next few years the consumption of drugs will substantially increase because the Government are proposing to abolish the prescription charge. On the one hand, we have the introduction of a surcharge of 15 per cent. and, on the other hand, we have the abolition of the prescription charge. The consequences are, first, that there will be an increase in the cost of many of these drugs.
  The purpose of the Amendment is to prevent an increase in the cost of these drugs. There are other considerations. It is not only the home market which is concerned here. The pharmaceutical industry is one of the great exporting industries of the country, and the addition of a 15 per cent. surcharge is certain to affect the export prospects of the pharmaceutical industry. It is true that Customs Notice No. 251 will assist the recovery of drawback, but in practice the complexities of the pharmaceutical industry are such that it will be almost impossible for them to obtain advantage of the drawback. Right hon. Gentlemen opposite may be interested to know the views of the export division of one of the pharmaceutical companies. I am told that this company has managed to gain a foothold in the export market by working at very low margins of gross profit and maintaining itself as a competitive export industry.
  Mr. Snow: Which company?
  Lord Balniel: I do not propose to give the name of the company, for this is information which is provided by the Association of the British Pharmaceutical Industry.
  Mr. Snow: An American firm.
  Lord Balniel: If the hon. Member wishes to intervene he should rise to his feet.
  Mr. Snow: I should be delighted to do so if the hon. Member gave way to me.
  Lord Balniel: Before he does so, may I say that he is ill advised to sneer at the British pharmaceutical industry, which has a great record in the export trade, which surely the Government are trying to encourage, not to discourage.
  Mr. Snow: The hon. Member keeps on talking about the Association of the British Pharmaceutical Industry. This is largely composed of, and certainly strongly influenced by, American companies which have established factories in this country. [HON. MEMBERS: "What is wrong with that?"] There is nothing particularly wrong with that, but at least they should admit that they have an axe to grind in their activities in this country, where many of them have milked the National Health Service for many years
  Lord Balniel: The hon. Member is entitled to his own views, but in the constituency which I represent is the great pharmaceutical firm of Smith, Kline and French. Admittedly the parent body is an American company, but we have no reason at all to regret the introduction of Smith, Kline and French and similar industries into the pharmaceutical industry in this country.
  This is the comment of the export division of a pharmaceutical company refering to the possibility of reclaiming drawback:
  " It was hoped that we would be able to overcome the present difficulty placed before us by the Temporary Import Charge by reclaiming the amount paid on importation under draw-back at the time of re-export. However, we find that the bulk of the material which we use for the manufacture of our products is supplied to us through third and fourth parties, and our suppliers are not able to give us the information we require to enable us to claim draw-back. Therefore, our export profitability is being affected and it seems that we will have no option but to increase our prices by 5 per cent. This we do not want to do but find there is no alternative."

  613
  There are two absolute certainties which will follow the imposition of this 15 per cent. surcharge on the raw materials of the pharmaceutical industry. The first is that, despite the provisions which have been made for the drawback in the export field, harm will be caused to the export potential of the pharmaceutical industry. The second certainty is that, in the home market for drugs, the surcharge will inevitably cause a rise in the price of drugs, because in this market there is no consumer resistance. The amount and the type and the Quantity of the drugs are prescribed by doctors in the interests of their patients. I think it quite wrong that they should alter their prescribing practices to try to compensate for these increased costs. All we ask in this Amendment is that the Government should exempt from the surcharge these essential raw materials used in the pharmaceutical industry.
  Amendment No. 121 deals, not with the raw materials, but with the partly processed materials—what are known technically as "intermediates"—which are used in the production of drugs. I have a list here of 10 closely-typed pages. It contains the names of substances, all of which are of a kind which I can hardly pronounce: I do not claim to have any detailed technical knowledge of these substances. I think that hon. Gentlemen opposite would like to know on what it is that they are imposing the 15 per cent. surcharge.
  These are all processed substances, and they include, for example, the substance which is used in the making of the drugs employed in the treatment of tuberculosis, the substance which has turned tuberculosis from being a killer disease into one which is now of relatively minor proportions. Hon Gentlemen opposite are proposing to put a 15 per cent. surcharge on drugs dealing with meningitis, or countering dysentery, or used in the manufacture of procaine penicillin. They are proposing to put the surcharge on substances which are used in the treatment of anaemia and mental disorders, inflammatory conditions, arthritis, gout, asthma and Hodgkin's and Addison's diseases. They are proposing to put the surcharge on substances used in the treatment of epilepsy and other convulsive states, and
  614
  they are also proposing to put it on substances which are used in anaesthetics.
  I accept that some of these substances are used in other industries, but most are used either solely or overwhelmingly in the manufacture of drugs. If all these intermediates become the subject of the 15 per cent. import charge, there is the certain consequence that the cost of drugs prescribed under the National Health Service will rise. I believe that right hon. Gentlemen opposite will be anxious to accept these Amendments. They cover raw materials which do not exist in this country and which have to be imported if we are to keep the drug industry strong in its fight against disease. The Amendments cover only substances which are at the moment, temporarily or permanently, exempted from tariffs. I believe that the case is so overwhelming that right hon. Gentlemen opposite cannot do anything but rise and accept the Amendments.
  11.0 p.m.
  Mr. R. H. Turton: Earlier, the Minister without Portfolio gave three criteria by which we could look at these different Amendments. I ask him and the Committee to judge these pharmaceuticals on those criteria.
  The first was that of a recurring anomaly. I have always felt that there was a good case when miscellaneous manufactured goods under section 8 of the Trade and Navigation returns had gone up by 50 per cent. in two years, for the Government to put a surcharge on that section, but I see no justification for putting taxes on medicines at the same time as they exempt luxury foods, either manufactured foods or food such as caviare. It is quite ridiculous to penalise drugs which are vitally necessary in the National Health Service and at the same time to exempt foods which can be bought in luxury establishments.
  The second question is whether the exemption would be likely to create hardship. I concede that as it will add to the cost of the Health Service it will be the taxpayer and not the majority of patients who will pay, but I do not think this is a valid charge when we look at the structure of the Service. This will be an insufferable burden on every hospital management committee in trying to meet its budget and finding that the drugs bill has gone up by 5 per cent. The effect

  615
  will be to increase the cost of most drugs by 5 per cent. If the Government are not to accept the Amendment, I ask for an assurance that every hospital management committee will be given a larger budget to provide against the extra cost of healing.
  The third criteria was that the granting of this concession will not endanger the whole fabric of the present Schedule. Having listened for some hours this afternoon to the arguments put forward, it seems that the fabric is in a pretty poor state at present. Parliament, by the 1958 Act, gave permanent exemption from duty to this class of goods because they were life-saving drugs or not available in this country. I cannot see how by granting at least one of these Amendments the fabric would be in any way endangered.
  I ask the Government to realise that this Amendment stands in a rather different relation from those we have discussed. Earlier the argument was that the surcharge would hamper industry, but this Amendment deals with an attack on the National Health Service and the economy of prescribing. I hope all hon. Members will co-operate in getting this anomaly wiped out. I therefore ask the Government to accept at least one Amendment.
  Mr. David Mitchell: While speaking in favour of all the Amendments calling attention to pharmaceuticals, I refer especially to Amendment No. 122 in the names of my hon. Friends the Members for Bromley (Mr. Hunt), Lewisham, West (Mr. McNair-Wilson) and myself. This would delete from the surcharge goods used in the manufacture of live-saving and life-prolonging drugs. The Chancellor of the Exchequer has made abundantly clear, and it has been made clear in this Committee, that the purpose of the 15 per cent. surcharge is to restrict, control and limit imports.
  Is it really the intention to apply this to life-saving drugs? Are we to have a situation in which the Government say that they are putting forward a measure which they hope will not succeed? Are they seriously coming here and saying that they are to apply a surcharge, the purpose of which is to reduce imports, but hope that they will not succeed in
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  relation to this class of item? I cannot imagine anything quite so nonsensical as to bring in a measure and hope that it will not work. If, on the other hand, they propose that it should work, that it is their intention to reduce the import of life-saving and life-prolonging drugs, I can only ask whether they have considered this and whether they have thought this matter out.
  In my constituency we have not only one of the largest mental hospitals, at Park Prewett, but also a factory which manufactures cycloserine, used in the treatment of tuberculosis at this factory. The import charge on this drug would be about £5,000 a year. If one takes vincristine, used in the manufacture of Velbe for treating leukaemia and other forms of cancer, again substantial charges will arise on costs for anti-inflammation drugs, synthetic hormones and pain-killing drugs. On these items alone this one factory will have increased costs of more than £30,000 a year. This is, indeed, a substantial sum.
  My hon. Friend the Member for Hertford (Lord Balniel) has detailed many more, and it is not my intention to delay the Committee in dealing with them, but I should like to draw the attention of the Treasury Bench to the fact that on 11th November the Chancellor of the Exchequer said that books and periodicals would be exempt
  " because the Government do not wish to impose a charge which would be widely regarded as a tax on culture."—[OFFICIAL REPORT, 11th November, 1964: Vol. 701, c. 1027.]
  Do the Government propose to impose a tax which will be widely regarded as a tax on life-saving and life-prolonging drugs?
  I do not believe that this is a party matter. I know that the Minister without Portfolio has some interest in these matters. I hope that the will give us an assurance that he will accept the Amendment, and that he will invite his right hon. and hon. Friends to support us. Indeed, I think that there are some hon. Gentlemen opposite who would not be happy to go into the Lobby to vote in favour of increasing the tax on life-saving drugs.
  I have looked at a broad range of these drugs. It is perhaps worth mentioning as a minor aside that among the other drugs

  617
  which will be affected is Dista's Penicillamine, which is used in the treatment of Wilson's disease, a disease which attacks the brain, causes unintelligible speech, and, finally, the patient becomes paralytic. My medical researches have not told me whether this is infectious, but if the Government do not accept the Amendment I shall begin to fear that it is.
  Dame Patricia Hornsby-Smith: I have no doubt that the hon. Gentleman will put forward the case that this will really be a book-keeping item, because what the Treasury gain will be offset by what the Ministry of Health pays, and it can reasonably be argued that as the Government have abolished the prescription charge it will not have any major impact. I challenge that, because this is really a levy on the sick.
  Whether it is popular or not—and I know that it is very unpopular with many hon. Gentlemen opposite—there are still independent-minded people who prefer to pay as private patients. They have their private doctors, and when they go into hospital, at not inconsiderable advantage to the Health Service they are prepared to pay for privacy. They are prepared to pay fees to their doctors, and to pay for their drugs.
  These people already save the National Health Service a considerable sum of money. Although some hon. Members opposite, for sound political reasons, believe that there should be only one Health Service, and that everybody should use it, the fact remains that the people about whom I am talking, as private patients, are already rather hardly done by, in that they pay exactly the same charges, through their weekly stamp and taxation. Yet, although they pay to go to their own doctor, they are denied the opportunity of having their prescriptions free. Now they will have this surcharge on the drugs which are prescribed for them by their doctors.
  Some hon. Members opposite—I do not say all, because I do not think that all feel the same way—deplore the fact that there is still private practice. It is, nevertheless, grossly unfair that this additional burden should be placed on people who must have these drugs in order to maintain a reasonable standard of health. They are not insubstantial subscribers and buyers of Health Service drugs.
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  Individually, every hon. Member opposite, meeting somebody suffering from cancer, tuberculosis, or Parkinson's disease, has the same warm-hearted sympathy for him, whether he is a private patient or a National Health Service patient. This is a levy on health. I beg right hon. Gentlemen opposite to look at the matter again. It is not difficult. It is not a question of exempting articles which are difficult to define, and which can have other uses. These drugs are known. The largest buyer is the Health Service itself.
  This imposition will mean a Supplementary Estimate by the Minister of Health, to make up for the additional cost to the Health Service. This is a levy on sickness, and I beg right hon. Gentlemen opposite to consider the matter again and see whether they cannot rescind this surcharge on drugs.
  Mr. W. R. Rees-Davies: It is one of the curious facts that we sometimes find in Committee when new legislation is brought into effect that pornography is exempted and penicillin is taxed. That is the effect of this surcharge. Unfortunately, if we start at Elba and want to end at Waterloo, in a mass rush, like the Gadarene swine, in a period of 100 days, the inevitability is that we do not govern. We merely engage in a lot of hustle and bustle, because we are not able to consider with clear logic and thought what it is that we propose to do.
  This is the first time that I have spoken on these matters. I have realised, and my hon. Friends have realised—but, regrettably, it has not yet been realised throughout the country—that the failure of the party opposite is that it is not willing to give itself time to think—and without that it is not possible to govern.
  11.15 p.m.
  I want to say a few words about the pharmaceutical issues which are before us in Amendments Nos. 120 and 51. The first and most obvious fact—developing what was so ably put by my hon. Friend the Member for Hertford (Lord Balniel)—that emerges is that not only will prices rise over a wide range of goods on the home market which are used in the Health Service, as has been stated by my right hon. Friend the Member for Chislehurst (Dame Patricia Hornsby-Smith), but, also,

  619
  that it is quite clear that numerous incidences of the 15 per cent. surcharge will be quite irreclaimable in respect of a wide variety of the products that are re-exported almost immediately, those classes of pharmacy which, I shall argue, are really raw materials although partly processed.
  In respect of exports, it is almost impossible to get any effective administrative control because the process has reached such a stage that the identity of the material has been lost. The greater part of the materials with which we are concerned in these Amendments are, in fact, unobtainable from domestic sources. The hon. Gentleman suddenly recognised that iodine and mercury were neither manufactured nor obtainable in this country at all and that, therefore, it was preposterous to include them in the levy. They are vitally necessary to our manufacturers.
  Almost every one of the substances with which the pharmaceutical industry is concerned enter this country because we must have them for the Health Service, and thus the Government have to pay for them. Do the Government really intend to rob Peter to pay Paul? Do they intend to rob the Health Service and its executive councils, on the one hand, in order to pay out from a Government source on the other? If so, they are merely reducing the revenue at the local level and cutting down on the health services which they pride themselves are so important to them.
  Do the Government intend to do this because they want an excuse later to say that those engaged in the pharmaceutical industry have been robbing them?
  Mr. Snow Mr. Snow rose—
  Mr. Rees-Davies: I am a little worried about my constituents, or some of them. They work for Pfizer, one of the great American companies which employs solely English personnel in this country and which provides some of the finest scientists in the development of modern research in the country. These are the people who are developing something that is apt to be forgotten today. The fact is that there is only one great industry in the world in which Russia has never succeeded—indeed, in which no nationalised country has ever succeeded—and that is the chemical industry. This
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  is the only international industry in which Russia is far behind the free, competitive countries of the West. It is the only industry where nationalised and State interference has never helped.
  Yet on the very day that the Bank Rate went up to 7 per cent. the T.U.C. was minded to come out with the suggestion that the State should participate. I will not go any further on that line now, as, no doubt, I should be ruled out of order, but will sit down and allow the hon. Member for Lichfield and Tam-worth (Mr. Snow), who is anxious to intervene, to do so.
  Mr. Snow: The hon. Gentleman referred to Pfizer. It would be irresponsible to deny that that company has, chiefly in America, carried out major research work. At the same time, the hon. Gentlemen ought to know that it is one of the worst companies for maintaining price rings and for milking the National Health Service. Is it not a fact that this company has restricted the export franchise so that production in this country is not available in the main for export?
  Mr. Rees-Davies: I disagree with every word that the hon. Gentleman said. In my opinion, one of the great advantages that this country derives today is the immense international co-operation which can be seen between the pharmaceutical industries of the United Kingdom and the United States, as well as co-operation with other countries. That is the first feature.
  The second is in health research and medicine. I will not go into this subject in great detail or I would be out of order. We can see the immense amount of cooperation—not only in terms of money but of wisdom also—between this country and America. There is, for example, great co-operation on matters of communication, Telex, and so on. As a result, this country benefits enormously from the direct link we have with the United States. This is evidence of the activities of the great companies on which we and the United States depend.
  It is a measure of the complete reactionary, not-with-it approach of the Government that they are unable to have a true appreciation of effective international co-operation because of their extremely parochial mind on this subject.
  Mr. Snow Mr. Snow rose—
  Mr. Rees-Davies: I will not give way again, but will take another opportunity of debating with the hon. Gentleman the question of whether these companies overcharge. It is not true.
  Large sums of money must be invested to achieve just one project. Those of us who have had to make even a small study of these matters—and my study has certainly not been a great one—realise that it is not helpful to approach this matter on the basis that the articles being brought into this country by these companies or by their subsidiaries should be taxed before they are almost immediately re-exported to another country. It is interesting to note that in 1938 exports of chemicals from this country were worth £3 million. A couple of years ago they were worth £56 million. Much higher figures are to come.
  I return to the narrow point of the Amendment. As I see it, where a substance like iodine or mercury is not obtainable in this country, or where it is an intermediate substance, the role and the purpose of it is identical with the raw material. Thus it should be exempt, either because it is to be utilised in the Health Service or for re-export. The actual amount which is coming on to the home market is relatively small and, thus, what do we gain?
  Many of these substances—I will not list them; that would take too long—are now exempt from duty. They are either permanently exempt or exempt under temporary orders under the Import Duties Act, 1958. Therefore, if they are exempt for the reason that they cannot be made here, they should be exempt, and, if it is on the basis that they can be made here, it is only a short-term thing.
  It has already been pointed out by my hon. Friend that we have to maintain the supply for the Health Service. Therefore, as this must be imported in any case, if we are to maintain our treatment of the diseases my hon. Friend mentioned—whether it he for the diabetics, whether it be penicillin, whether it be for T.B., or asthma, or rheumatoid arthritis, or the other diseases, whichever they may be—these supplies must continue to be imported in any case. Here the Government will obtain no
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  significant reduction of imports, and as the whole purpose is to obtain a significant reduction in imports, what is the purpose of limiting this?
  Equally, if it is for export, the Government have already indicated that they wish to give relief in respect of exports. Or, if the material is to be re-exported, please look at this again, because if it is merely to be brought in to be partly processed for re-export it is not fair on the exporter concerned that he should lose the possibility of his drawback or, if I may say so, waste his time filling in the form if it is to be destroyed so that he cannot prove that he is engaged in processing something for re-export.
  This should be looked at with a far more all-party view than has been the case so far. I therefore submit that it is not really practicable. I quote the words of the Government's White Paper:
  "Relief … will be given, as far as this is practicable …"
  Regrettably, it may not always be practicable to say whether a particular material has been processed to such a degree that one is able to declare that relief. One may then get a lot of administrative controls.
  I would remind the hon. Gentleman that it was the Chancellor of the Exchequer who said in terms that the purpose of the surcharge was to avoid the dangers of quotas, of restrictions, of import controls—indeed, of the mound of paper that is associated with that form of restriction—which was why my right hon. and hon. Friends did not vote against this particular type of control. What is the advantage to be gained if we are now to be thrown into that state?
  Therefore, to turn now very briefly to two or three facts, I suggest that in relation to these imports so that the prime objective of re-export is to be achieved, it is really not practicable where the substance is a processed substance or a raw material that is to be used either for re-export or for the National Health Service; in the one case because one defeats the very object, which is to limit imports and, in the other case, because one defeats one's object, which is to create exports. The conversion process becomes identifiable, and the result is merely to produce a

  623
  tedious and cumbersome process of controls. We will get a rise in prices of both imports and exports.
  I hope that the hon. Gentleman does not take me wrong, but this is not a question of whether one is pro-American or anti-American. Today, we have to recognise that we want to get and not to lose the millions of pounds invested in this country. We have been losing that investment because of the crisis of confidence that exists throughout the Continent of Europe and the world today—and if he likes to talk to the Foreign Press Association he will be told quickly enough that there is a lack of confidence. If that investment is to be maintained, it depends on bringing in capital to this country, and not discouraging the great companies of the world—or, for that matter, discouraging our own great companies which go to Europe and other parts of the world.
  I do not derogate from this tax. I do not argue against it. I think that the way in which it was brought in was ham-handed, but I go so far as to say—very humbly, because I am the last person ever likely to be called to the Dispatch Box to produce it—that had I ever been in such a position I would have supported the view that this was the best type of general tax. But I ask right hon. and hon. Gentlemen opposite, when they consider it, if they turn us down tonight, to try to give us this answer which they have not so far given. Do they propose, when they take off the 15 per cent. surcharge, to be selective? Will they, first of all, exempt certain fields? Will they give consideration to excluding certain fields, or are they going back on their review, to bring it down from 15 per cent. to 5 per cent.? These are proper questions to ask.
  In my submission, the better course would be to take out the field which is really harmful to British industry, to the National Health Service and to exports. If we are turned down tonight this is preferable to merely a flat rate reduction. This is a matter which, whatever be the vote on this matter, Treasury and Board of Trade Ministers will have to consider carefully. I hope that they will try to forget these absurd notions of State participation, of banging around against American industry,
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  and will recognise that what they should do is to take these articles out tonight because their inclusion is of no benefit. If they fail to do that, they must realise that this matter has a very high priority for exclusion from the list.
  11.30 p.m.
  Mr. Braine: So far, in trying to persuade the Government of the anomalies, dangers and risks inherent in the import surcharge, we have been banging our heads against a wall of ignorance and even indifference. But here is a matter which cannot be treated in this way. I address myself in particular to Amendment No. 121. As matters stand, the Government's proposal can have only one result. It will have the effect of putting up the cost of medicines to those who need them.
  I do not think that any of us should mince words on this subject. In this context, as several of my hon. Friends have said, the import surcharge is a tax on health. Here we are not dealing strictly with commercial substances, with materials that are imported, but which nevertheless we could easily produce here in this country. I learned many things when I was at the Ministry of Health. Among them was that modern medicines and vaccines—I hope that hon. Gentlemen opposite will not sneer at this—are one of the most important tools which the medical profession has in its continual fight against pain, ill-health and premature death. The greatest benefits from the use of modern medicines and drugs in recent years have been among young children and young adults. Some of the results that have been obtained have been little short of miraculous.
  I have looked up some of the drugs manufactured from materials which will be affected by this surcharge. The sulphonamide Prontosil was first used to treat puerperal sepsis in 1936. That was then a killing disease. Maternal deaths from that cause have now virtually disappeared. Pneumonia mortality was falling slowly in the 1930s. The introduction of sulphonamides, then penicillin and later the broad spectrum of antibiotics reduced premature deaths sharply. The number of children between the ages of 1 and 14 who died from pneumonia in 1935 was 3,561. Two

  625
  years ago it had been reduced to a little over 500.
  At one time, prolonged and painful surgery was necessary in treating mastoid infections. Now the use of sulphonamides and antibiotics has virtually eliminated that need. I am sorry if, as it appears, the hon. Member for Nelson and Colne (Mr. Sydney Silverman) finds this boring to hear, but we are touching on something of enormous importance to every family in the land. Hon. Members opposite often boast of their care for suffering humanity, but here is an ill-considered action, which will put up the cost of life-saving drugs, about which there will have to be second thoughts. I hope that I carry the hon. Member with me in saying that.
  Mr. Sydney Silverman:I apologise for having yawned in the middle of the hon. Member's speech. I did not intend to be rude. I do not find the argument boring. I find it an intensely interesting argument. Some of the speeches tonight have been very interesting, but I am bound to say to the hon. Member that, however interesting the argument may be, it gets a little tiring when one has heard it at least twenty-five times.
  Mr. Braine: It is quite clear from the hon. Member's attitude that he has not learned the lesson from earlier speeches, because what I am now saying is that the Government's proposals will put up the cost of drugs which have played a major part in eradicating some diseases and sharply reducing the incidence of others. Surely this is a matter which should concern everyone in this Committee. This is not a party matter. It is one on which I hope every hon. Member will think long and deeply. I hope that when we hear the Minister's reply to the debate we shall be told that the Government have had second thoughts.
  The successful attack upon the diseases which I have mentioned—and I could mention a great many more—has developed as a result of the development of drugs upon which a surcharge is now to be put. Because of the structure of the pharmaceutical industry and the way in which pharmacists are remunerated under the Health Service the net effect of the Government's proposal will be
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  to put up the cost of drugs to the Service by about 34 per cent. Every £1 which the Government will collect from the import surcharge will cost the Health Service £1 6s. 9½d. This would not matter so much if, as in the case of other imported materials, the higher price caused a reduction in consumption, but surely it is no part of the Government's policy to bring about a reduction in the consumption of drugs. Indeed, one of my hon. Friends has pointed out that the Government's policy in eliminating the prescription charges will have the effect of sharply increasing the consumption of drugs. It surely can be no part of the Government's business to reduce the availability of medicines or to try to dictate to the medical profession what drugs it should prescribe for their patients. I take it that it is the Government's policy that the profession should continue to be free to prescribe for patients those drugs it considers necessary without regard to their cost or their place of origin.
  Thus, the general object of the import surcharge, namely, to rectify the balance of payments by reducing the consumption of imported materials, simply will not obtain in this case. The Government's proposal does not make any sense whatsoever in the context of pharmaceutical products. I say nothing about the effect of the surcharge on the export trade, because other hon. Members have referred to it and the hour is late. But there is no doubt at all that the pharmaceutical industry, which has contributed greatly to our balance of payments in recent years and has built up markets in a highly competitive field, will suffer gravely as a result of this impost.
  I beg the Minister of State, therefore, if he is not prepared tonight to give a definite and categorical acceptance of the Amendments, to tell us that the Government are prepared to think again. For the Government's proposal is one which the Committee, if true to its conscience, cannot possibly accept. Indeed, it is one which will shock the country when the full implications are known.
  Mr. Redhead: I say at the outset that we on this side were very gratified to hear the hon. Member for the Isle of Thanet (Mr. Rees-Davies) express his agreement in principle with the surcharge. I know that he had some reservations

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  about it, but it was a welcome indication that someone on that side of the Committee had the courage to come down definitely on one side of the fence on the principle of the surcharge itself.
  The hon. Gentleman asked whether it is our intention to abate or finally abolish the charge in any one of certain specified ways which he indicated. I ask him to accept that it is far too early for anyone to say precisely in what manner it will be abated or abolished. The hon. Gentleman will not have failed to notice that, by Clause 3(9), the Government take flexible powers by which each and every one of these methods is open in the light of circumstances and possibilities when we come to the point of reduction or complete abolition.
  Mr. Rees-Davies: Will it be the Government's policy, when they have given careful thought to the matter, to be prepared, as a continuing process, to consider representations for exemption not only from overseas but from this country? The hon. Gentleman takes the point I am making. Even if he were not able to say anything definite tonight, if there were representations from another country or trade representations, would they be considered with a view to seeing whether individual exemptions might be the subject of intervention under that Clause?
  Mr. Redhead: I indicated earlier that we should be prepared to consider any serious representations of this kind and the possibility of acceding to them if there were a clearly established case for so doing, according to the provisions of the subsection to which I have referred.
  The noble Lord the Member for Hertford (Lord Balniel), in moving Amendment No. 120, said, quite rightly, that two of the headings referred to had been dealt with already by Amendment No. 26, which added iodine and mercury to the exemption list. I am sorry that he acknowledged this fact in somewhat ungrateful terms. In view of the repeated complaints which have been made from the benches opposite, it is not particularly encouraging to the Government, when they have anticipated the desire of hon. Members, to be met in so ungrateful a fashion.
  The two more comprehensive Amendments are No. 51, which is designed to
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  exempt the whole area of pharmaceuticals, and No. 122, which goes even further in exempting all goods used in the manufacture of life-saving and life-prolonging drugs. It must be realised that, in the debate on both the more comprehensive Amendments and some of the itemised ones, we are having once again a repetition of the arguments which were put earlier about whether or not many of these things are essentially raw materials. I do not want to have to go all over this again, but I am bound to repeat and bring to the notice of the Committee the manner in which raw materials, for the purpose of this charge, have been construed—natural products, or those which require only the most simple and elementary form of preparation.
  11.45 p.m.
  The other argument that has been adduced repeatedly tonight is that of these items not being obtainable in the United Kingdom. That is something we have had ad nauseam, and there does not seem to be much profit in trying to pursue it all over again. But accept that argument in relation to this group of items and one is driven inevitably to accept the same contention which can similarly be adduced not only for a whole range of chemicals within the broad field of chemical products, but also for other goods which lie within the charge.
  When earlier I used the expression "chain reaction", some scorn was expressed by hon. Member's opposite. I beg them not to minimise the real difficulty in this regard. For if one does not have regard to the risks of chain reaction by giving way on a particular commodity which in isolation it may be perfectly possible to argue a persuasive and compelling case for, by so doing one immediately calls into question the whole range of other commodities. One would run a serious risk of eroding the sum effect of the surcharge.
  In regard to Amendment No. 51, there is no gainsaying the fact that these pharmaceuticals are fully manufactured products made from chemicals, and that their ingredients are themselves, in the main, highly processed and already subject to the charge. The exemption of these products would, therefore, call into question the charge on chemical products

  629
  as a whole, and this would make very serious inroads into the sum total effect of the import surcharge.
  Some play has been made about the effect of the charge upon the National Health Service. It is not possible—and I think that the hon. Gentleman the Member for Essex, South-East (Mr. Braine) would grant me this—to isolate accurately the pharmaceuticals and chemical products which are imported directly or indirectly for use in the National Health Service. But I am advised that, contrary to the fears which he and other hon. Member's expressed, while not being able to give any precise figure or estimate it is not thought that the cost to the National Health Service will indeed be very significant.
  Sir D. Glover: Will the Minister answer the real question about pharmaceuticals? Does he or his Government expect as a result of these measures to reduce our import bill for pharmaceuticals? If the answer to that is "Yes", we know that in fact it means a tax on ill-health.
  Mr. Redhead: That is a more general point which I will try to return to before I sit down. May I also point out, and this should not be overlooked, that the effect of this Amendment would be to exempt also all the proprietary medicines bought for self-medication. That in itself I would not think a very strong recommendation for the Amendment. [HON. MEMBERS: "Why?"] Most medical opinion has increasingly deplored the tendency and encouragement to self-medication. I therefore see no reason, on the pleas which have been made, to give further encouragement in that direction.
  Amendment No. 122 goes further and seeks exemption for pharmaceutical products used in the manufacture of lifesaving and life-prolonging drugs. I will not take advantage of the fact that there appears to be a drafting defect in the Amendment. It has been contended that the effect of the surcharge will be to injure exports of these commodities. Although paragraphs 5 and 6 of Schedule 2 make provision for drawback, it is contended, rather hurriedly, that this is an impossible provision, not worth while and unlikely to bring the degree of relief in respect of exports which is claimed for it.
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  There is a suggestion that the surcharge will have an adverse effect on the National Health Service. I do not accept that as a substantial argument. But having listened to the debate, I could not be other than sensitive to the fact that in this field, as the right hon. Member for Thirsk and Malton (Mr. Turton) said, we are dealing with a somewhat different category from many with which we dealt earlier. Because of the general considerations, which are equally applicable in respect of these other classes, I cannot enter into any firm commitment tonight. I ask hon. Members to accept that it is exceedingly difficult to separate those pharmaceutical products which may attract a measure of sympathy on the ground of the needs of the Health Service and of health generally from the whole range of chemicals. They must also accept the desire to avoid the chain reaction which is possible here.
  Nevertheless, I will draw to the attention of the Chancellor the general tenor and content of the debate. While I am not able to commit him or to enter into any definite commitment about this, I am sure that when we consider any modification of the surcharge it is in this area that we are bound to feel the greatest degree of sympathy. [HON. MEMBERS: "When?"] Obviously this is an extremely difficult matter which will require most careful examination, and some time must necessarily be spent upon it if the worst fears and apprehensions entertained by hon. Members opposite are to be avoided. I cannot promise that this will be reflected on Report, but I undertake to draw to the Chancellor's attention the contentions and feelings expressed by hon. Members and to make known to him the feelings of the Committee. I do not think that it would be reasonable for hon. Members to press me to go beyond that at this stage.
  Mr. Heath: Once again, my hon. and right hon. Friends have made an overwhelming case for the addition of certain items to the list of exemptions. My hon. Friend the Member for Hertford (Lord Balniel) moved the Amendment in a detailed speech. My hon. Friend the Member for Basingstoke (Mr. Mitchell), in a witty and pointed speech, added to it; and my right hon. Friend the Member for Chislehurst (Dame Patricia Hornsby-Smith) and my hon. Friend the Member for Essex, South-East (Mr. Braine), who have both had experience at

  631
  the Ministry of Health, added the weight of their experience; my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) spoke particularly of exports; and my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), a former Minister of Health, pointed out from his experience the problems which would arise for the National Health Service.
  What all this does is to make a weighty case for adding these items to the list of exemptions. Once again, we have had a completely unsatisfactory reply from the Minister of State. Once again, he gave us a series of vague hints and assurances that, if and when the time comes, these things will be considered, and this will be given sympathetic consideration. Five weeks after the publication of the plan for this surcharge, this simply is not good enough. We have now been fighting for rather more than eight hours against the blind obstinacy of the Government Ministers who are sitting on the Front Bench.
  This was a hastily-thought-out proposition. The Government took up a firm position, and since then they have tried to erect this position into a series of principles. That is why the Minister of State has been doing all that he can. He has replied to the debate, and he has expressed his astonishment that any hon. Members should question those principles. He is himself completely unable to explain the basis of his own justification for the principles. He says, "We have decided that raw materials shall be raw materials in their primitive form and hardly anything else", and he expects us to accept that.
  What is the justification for that? As far as industry in this country is concerned, raw materials can be in their basic state, or first-processed, or semi-processed, or even further-processed, and for particular items of British industry, they are still raw materials. They are the fundamental cost basis of raw materials for our industry. The Minister of State seemed to us to have no comprehension of this aspect. He expects us meekly to accept them, and says, "Why are you challenging these principles and reiterating these points?"
  The Minister says that we must accept that non-availability is not any sort of justification for the item not coming in.
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  Surely there can be no other justification? This must be a justification in itself—that the items are not available. Therefore, if British industry is to continue with the expansion which was the keynote of the Government's White Paper, "The Economic Situation", the Government must be prepared to let these items in, or deliberately put up the costs of British industry. This argument of non-availability has never been explained to us, either by the Minister without Portfolio or the Minister of State. It has just been stated as a dogma and a doctrine, and we have been told to accept it without explanation. It is quite unsatisfactory.
  The Government are forced to explain that there are exemptions to their principles, and they are driven to saying that they will not allow any more exemptions, because that will undermine the structure. I have heard this argument before. It is the argument of the weakest—never judge the item on its merits, always say, "If we do this, the consequence of everything else would undermine the structure." It is time that, on these surcharges, the items were looked at on their merits after a consideration of the arguments, instead of the Government meeting us with these arguments, which have been elevated into principles.
  The Minister of State did not answer the question he was asked by my hon. Friend the Member for Ormskirk (Sir D. Glover). Is it intended, by these surcharges to keep out a number of these pharmaceuticals? This is a key question for the health of the people. The answer is that the Minister of State dare not answer the question, because he knows that he is in a dilemma. If he says that the object is to keep out the pharmaceuticals, then the Government are open to the charge of damaging the health of the country.
  12 m.
  If the object is not to keep out the pharmaceuticals, of course it will not achieve the purpose of the surcharge, so what is the purpose of putting the surcharge on? This is the dilemma which the Minister of State has to face. It was the reason why he dare not answer the question put by my hon. Friend the Member for Ormskirk. If the surcharges keep out pharmaceuticals they will be damaging the health of our people and the Government will be responsible for

  633
  that. If they do not keep out pharmaceuticals, there will be an additional burden on the Health Service. My right hon. Friend the Member for Thirsk and Malton asked for an assurance that hospital management committees will get the additional amount of money necessary, but he has not been given that assurance.
  Mr. loan L. Evans: Will the right hon. Gentleman give way?
  The Deputy-Chairman: Order: The hon. Member must not persist if the right hon. Gentleman does not give way.
  Mr. Heath: Today we have been debating vital matters and for most of the time there have not been more than five hon Members opposite. The hon. Member who tried to interrupt me has had plenty of time to make a speech.
  The Minister of State has not explained how the Government are to get over the difficulty of drawback on these materials when they go through a number of processes in the pharmaceutical industry. They constitute a total of £54 million exports, which I should have thought even this Government could not afford to scoff at. Many of the raw materials are processed many times, how is drawback to be got on these complicated processes? The whole of industry is faced with this question. We did not expect to get satisfaction from the lawyers on the Government Front Bench, but we asked for a Board of Trade Minister to be present. He has now appeared, but he did not answer this question.
  From the point of view of the health of the country, of people buying pharmaceuticals privately, and from the point of view of the industry, no satisfactory explanation has been given. The plain fact is that these items ought to have been added to the list of exemptions. Because of the completely unsatisfactory explanation, I call on my hon. and right hon. Friends to divide the Committee.
  Mr. Jeremy Thorpe: I make no apology for intervening. I hope that when the Minister of State speaks to his right hon. Friend the Chancellor of the Exchequer he will bear various points in mind, because he could well manœuvre the Labour Party into an
  634
  unusual, unexpected and possibly embarrassing position. He will remember that in the last Parliament the Tory Government survived by only one vote on the Resale Prices Bill. That was an issue on which the then Opposition felt passionately. They were not prepared to see the cost of medicines being artificially inflated. There were many hon. and right hon. Members on the Conservative benches who, to their credit, voted with them or abstained.
  We know that the cost of drugs is something on which hon. Members opposite feel very strongly and sincerely. We know also that hon. and right hon. Members have quite rightly criticised the present structure of the drug industry. I have spoken on the Public Accounts Committee, which criticised the price structure of the drug firms of this country, but that is not what we are discussing tonight. We are discussing a move—not by the drug firms, but by the Government—which will have the effect of increasing the price of drugs.
  I hope that the Government will say that they are prepared to grant many compulsory licences so that patents which have been abused by firms which hold monopolies can face the healthy blast of competition by small drug firms which are prepared to produce more cheaply.
  But that is not the issue tonight. I hope that the hon. Gentleman will realise that the inflated cost of drugs is something on which he and many of his colleagues have felt passionately in the past. It is an issue on which Aneurin Bevin resigned because there was the prospect of prescription charges, and how right he was.
  I would not presume to speak for right hon. and hon. Gentlemen opposite, but I do not think that any one of them supported the continuation of prescription charges, or any suggestion that any patient should not be able to get the best drugs, however expensive they might be, and that they should be reserved for the rich and those who could afford to pay. Nobody doubts the integrity of right hon. and hon. Gentlemen opposite on this issue.
  Mr. Sydney Silverman: While the hon. Gentleman is on this subject, can he remember a single member of the Tory Party, when the Tory Party formed the

  635
  Government, who objected by voice or by vote to any of the constant increases in prescription charges over the years?
  Mr. Thorpe: The hon. Gentleman is very fair. I am having the difficult task of being the keeper of the Labour Party's conscience tonight. Surely he would not expect me to have the responsibility also, which would be a crushing burden, of looking after the Tory Party's conscience? My answer is that I should be very surprised if we could find a series of passionate speeches by Tory Members against prescription charges. But that is not the issue tonight. They are in opposition. We are dealing not with them, but with the Government of the day.
  If this goes forward, it will have the effect, which is admitted by the Minister, that the total bill for drugs will be inflated. What will that mean? It will mean one of two things: either there will have to be a larger allocation for the global sum needed for the Health Service, or we will have to do a little more cutting in the Health Service on many long overdue schemes.
  Mr. Manuel: I am listening attentively to the case which the hon. Gentleman is endeavouring to make. To get it into proper focus, can he tell the Committee how much delving he has done to discover what stocks of the drugs in question are held in this country, and what effect this will have?
  Mr. Thorpe: The position, to the best of my knowledge, which I can base on only two firms, is that they still have to import many of these drugs, and do import them, on a monthly basis, and sometimes on a three-monthly basis. if the suggestion is that the incidence of this surcharge will not have a great and immediate effect because of the prior existence of stocks, unhappily that argument does not carry tremendous weight, because my experience of these two firms is that there is a need to continue with monthly, and in certain cases three-monthly, imports. I am not prepared to risk it on the basis of prospective stocks.
  Unless we are going still further to increase the bill—and I take the view that we spend far too small a percentage of our national income on the Health Ser-
  636
  vice compared with certain European countries—the one effect of this will be that we will have to spend more if we are to bring hospitals up to date and provide the service that is needed. This surcharge will have the effect of being a tax on ill-health. It will increase the cost of treating ill-health. [HON. MEMBERS: "The National Health Service."]
  It is no good hon. Members sitting there like parrots, shouting the same thing—yelling out, "National Health Service, National Health Service". We are all aware of the existence of the Health Service. The Labour Party can take great credit for having laid the post-war foundations, and my own party can take great credit for having initiated the scheme at the turn of the century; but it is no good hon. Members opposite shouting "National Health Service". The money must be found to finance it. We need a tremendous amount of money for hospital buildings, and so forth.
  Therefore, we have the position in which the Labour Government, within a matter of weeks of being elected, are saying to the electorate, "There will be no charge on tobacco, or imported birds' eggs, or caviare, or spices, or cashew nuts, but there will be a tax on drugs used in the pharmaceutical industry." If the right hon. Gentleman says that those drugs can be used for non-pharmaceutical purposes in certain respects, it may be necessary to have a system of licensing imports—a system with which I believe a previous Labour Government were not totally unfamiliar.
  But it is a very strange situation, when a Division is taken in this House, to find the Tory Opposition castigating the Labour Government—who, on this issue, have a good record—for having put a surcharge on drugs which would be used in the pharmaceutical industry. It is very a strange situation. Therefore, whatever the right hon. Gentleman may have said, and however many hon. Members opposite feel that out of loyalty they must support him, I hope that there are still enough hon. and right hon. Gentlemen left on the other part of the Government side with sufficient radical fire within them not to allow themselves to be manœuvred by the Tory Opposition.
  Question put, That those words be there inserted:—

  Division No. 25.]

  AYES

  [12.12 a.m.

  Agnew, Commander Sir Peter

  Clover, Sir Douglas

  Maydon, Lt.-Cmdr. S. L. C.

  Alison, Michael (Barkston Ash)

  Glyn, Sir Richard

  Meyer, Sir Anthony

  Allason, James (Hemel Hempstead)

  Goodhart, Philip

  Miscampbell, Norman

  Astor, John

  Goodhew, Victor

  Mitchell, David

  Balniel, Lord

  Gower, Raymond

  Monro, Hector

  Batsford, Brian

  Grant, Anthony

  More, Jasper

  Beamish, Col. Sir Tufton

  Griffiths, Peter (Smethwick)

  Morgan, W. G.

  Bennett, Sir Frederic (Torquay)

  Gurden, Harold

  Mott-Radclyffe, Sir Charles

  Berry, Hn. Anthony

  Hall, John (Wycombe)

  Murton, Oscar

  Bessell, Peter

  Hall-Davis, A. G. F.

  Noble, Rt. Hn. Michael

  Biffen, John

  Harris, Reader (Heston)

  Page, John (Harrow, W.)

  Biggs-Davison, John

  Harrison, Col. Sir Harwood (Eye)

  Page, R. Graham (Crosby)

  Bingham, R. M.

  Hawkins, Paul

  Pearson, Sir Frank (Clitheroe)

  Black, Sir Cyril

  Heald, Rt. Hn. Sir Lionel

  Peyton, John

  Blaker, Peter

  Heath, Rt. Hn. Edward

  Pounder, Rafton

  Bossom, Hn. Clive

  Higgins, Terence L.

  Prior, J. M. L.

  Bowen, Roderic (Cardigan)

  Hill, J. E. B.(S. Norfolk)

  Quennell, Miss J. M.

  Box, Donald

  Hlrst, Geoffrey

  Ramsden, Rt. Hn. James

  Boyle, Rt. Hn. Sir Edward

  Hobson, Rt. Hn. Sir John

  Rawlinson, Rt. Hn. Sir Peter

  Braine, Bernard

  Hogg, Rt. Hn. Quintin

  Redmayne, Rt. Hn. Sir Martin

  Brinton, Sir Tatton

  Hornsby-Smith, Rt. Hn. Dame P.

  Rees-Davies, W. R.

  Brooke, Rt. Hn. Henry

  Howard, Hn. G. R. (St. Ives)

  Renton, Rt. Hn. Sir David

  Brown, Sir Edward (Bath)

  Hunt, John (Bromley)

  Roots, William

  Buck, Antony

  Iremonger, T. L.

  Russell, Sir Ronald

  Carlisle, Mark

  Irvine, Bryant Godman (Rye)

  Scott-Hopkins, James

  Channon, H. P. G.

  Johnston, Russell (Inverness)

  Shepherd, William

  Chataway, Christopher

  Jopling, Michael

  Stainton, Keith

  Chichester-Clark, R.

  Kaberry, Sir Donald

  Taylor, Edward M. (G'gow, Cathcart)

  Clark, William (Nottingham, S.)

  Kerr, Sir Hamilton (Cambridge)

  Temple, John M.

  Cole, Norman

  Kershaw, Anthony

  Thorpe, Jeremy

  Crowder, F. P.

  King, Evelyn (Dorset, S.)

  Tiley, Arthur (Bradford, W.)

  Curran, Charles

  Lancaster, Col. C. G.

  Turton, Rt. Hn. R. H.

  Dance, James

  Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)

  van straubenzee, W. R.

  Davies, Dr. Wyndham (Perry Barr)

  Lloyd, Ian (P'tsm'th, Langstone)

  Walker, Peter (Worcester)

  d'Avigdor-Goldsmld, Sir Henry

  Lloyd, Rt. Hn. Selwyn (Wirral)

  Ward, Dame Irene

  Dean, Paul

  Longbottom, Charles

  Weatherill, Bernard

  Drayson, G. B.

  Longden, Gilbert

  Whitelaw, William

  du Cann, Rt. Hn. Edward

  Lubbock, Eric

  Wilson, Geoffrey (Truro)

  Eden, Sir John

  Lucas-Tooth, Sir Hugh

  Wise, A. R.

  Emery, Peter

  MacArthur, Ian

  Wood, Rt. Hn. Richard

  Fell, Anthony

  Mackenzie, Alasdair (Ross & Crom'ty)

  Woodhouse, Hn. Christopher

  Fletcher-Cooke, Charles (Darwen)

  Mackie, George Y. (C'ness & S'land)

  Woodnutt, Mark

  Forrest, George

  McNair-Wilson, Patrick

  Younger, Hn. George

  Gammans, Lady

  Maude, Angus E. U.

  Gardner, Edward

  Mawby, Ray

  TELLERS FOR THE AYES:

  Giles, Rear-Admiral Morgan

  Maxwell-Hyslop, R. J.

  Mr. Ian Eraser and Mr. Francis Pym.

  NOES

  Abse, Leo

  Doig, Peter

  Harper, Joseph

  Albu, Austen

  Donnelly, Desmond

  Harrison, Walter (Wakefleld)

  Alldritt, W. H.

  Driberg, Tom

  Hattersley, Ray

  Allen, Scholefield (Crewe)

  Duffy, Dr. A. E. P.

  Hayman, F. H.

  Armstrong, Ernest

  Dunn, James A.

  Heffer, Eric S.

  Atkinson, Norman

  Dunnett, Jack

  Holman, Percy

  Barnett, Joel

  Edwards, Robert (Bilston)

  Homer, John

  Bennett, J. (Glasgow, Bridgeton)

  English, Michael

  Houghton, Rt. Hn. Douglas

  Binns, John

  Ensor, David

  Howarth, Harry (Wellingborough)

  Blackburn, F.

  Evans, loan (Birmingham, Yardley)

  Howarth, Robert L. (Bolton, E.)

  Blenkinsop, Arthur

  Fernyhough, E.

  Howell, Denis (Small Heath)

  Boardman, H.

  Finch, Harold (Bedwellty)

  Howie, W.

  Braddock, Mrs. E. M.

  Fitch, Alan (Wigan)

  Hoy, James

  Brown, R. W. (Shoreditch & Fbury)

  Fletcher, Sir Eric (Islington, E.)

  Hughes, Emrys (S. Ayrshire)

  Buchan, Norman (Renfrewshire, W.)

  Fletcher, Ted (Darlington)

  Hughes, Hector (Aberdeen, N.)

  Buchanan, Richard

  Floud, Bernard

  Hunter, Adam (Dunfermline)

  Carmichael, Neil

  Foot, Michael (Ebbw Vale)

  Hunter, A. E. (Feltham)

  Coleman, Donald

  Freeson, Reginald

  Irvine, A. J. (Edge Hill)

  Corbet, Mrs. Freda

  Garrett, W. E.

  Irving, Sydney (Dartford)

  Crawshaw, Richard

  Garrow, A.

  Jackson, Colin

  Cullen, Mrs. Alice

  Ginsburg, David

  Jeger, George (Goole)

  Dalyell, Tam

  Gourlay, Harry

  Jeger, Mrs. Lena (Hlb'n & St. P'cras, S.)

  Davies, G. Elfed (Rhondda, E.)

  Gregory, Arnold

  Jones, Rt. Hn. Sir Elwyn (W. Ham. S.)

  Davies, S. O. (Merthyr)

  Grey, Charles

  Jones, J. Idwal (Wrexham)

  Delargy, Hugh

  Griffiths, David (Rother Valley)

  Jones, T. W. (Merioneth)

  Dempsey, James

  Hale, Leslie

  Kelley, Richard

  Diamond, John

  Hamilton, James (Bothwell)

  Kerr, Mrs. Anne (R'ter & Chatham)

  Dodds, Norman

  Hamling, William (Woolwich, W.)

  Kerr, Dr. David (W'worth, Central)

  The Committee divided: Ayes 135, Noes 166.

  Lawson, George

  Noel-Baker, Francis (Swindon)

  Solomons, Henry

  Leadbitter, Ted

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Spriggs, Leslie

  Lee, Rt. Hn. Frederick (Newton)

  Norwood, Christopher

  Stewart, Rt. Hn. Michael

  Lee, Miss Jennie (Cannock)

  Oakes, Gordon

  Stross, Sir Barnett (Stoke-on-Trent, C.)

  Lever, L. M. (Ardwick)

  Oram, Albert E. (E. Ham S.)

  Summerskill, Dr. Shirley

  Lewis, Ron (Carlisle)

  Orme, Stanley

  Swain, Thomas

  Lomas, Kenneth

  Page, Derek (King's Lynn)

  Swingler, Stephen

  Loughlin, Charles

  Pavitt, Laurence

  Symonds, J. B.

  McBride, Neil

  Perry, E. G.

  Taverne, Dick

  McCann, J.

  Probert, Arthur

  Thomas, George (Cardiff, W.)

  MacDermot, Niall

  Redhead, Edward

  Thomas, Iorwerth (Rhondda, W.)

  McGuire, Michael

  Rees, Merlyn

  Thornton, Ernest

  Mclnnes, James

  Reynolds, G. W.

  Tinn, James

  MacMillan, Malcolm

  Rhodes, Geoffrey

  Varley, Eric G.

  Mahon, Peter (Preston, S.)

  Richard, Ivor

  Wainwright, Edwin

  Mahon, Simon (Bootle)

  Robertson, John (Paisley)

  Walden, Brian (All Saints)

  Mallalieu, E. L. (Brigg)

  Robinson, Rt. Hn. K. (St. Pancras, N.)

  Walker, Harold (Doncaster)

  Mallalieu, J.P.W.(Huddersfleld, E.)

  Rodgers, William (Stockton)

  Wallace, George

  Manuel, Archie

  Ross, Rt. Hn. William

  Watkins, Tudor

  Mendelson, J. J.

  Rowland, Christopher

  Whitlock, William

  Mikardo, Ian

  Sheldon, Robert

  Wilkins, W. A.

  Millan, Bruce

  Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)

  Williams, Alan (Swansea, W.)

  Miller, Dr. M. S.

  Silkin, John (Deptford)

  Williams, Mrs. Shirley (Hitchin)

  Milne, Edward (Blyth)

  Silkin, S. C. (Camberwell, Dulwich)

  Williams, W. T. (Warrington)

  Morris, Alfred (Wythenshawe)

  Silverman, Sydney (Nelson)

  Willis, George (Edinburgh, E.)

  Morris, Charles (Openshaw)

  Slater, Mrs. Harriet (Stoke, N.)

  Woof, Robert

  Murray, Albert

  Small, William

  TELLERS FOR THE NOES:

  Newens, Stan

  Snow, Julian

  Mr. George Rosers and Mr. Ifor Davios.

  Mr. Cooper: I beg to move, Amendment No. 49, in line 7, at the end to insert "Myrcene".
  The Deputy-Chairman: I think that it would be for the convenience of the Committee to discuss, at the same time, the following Amendments:
  Amendment No. 59, in line 19, at end insert:

  33.01

  …

  …

  Essential oils.

  Amendment No. 64, in line 21, at end insert:

  38.07

  …

  …

  Turpentine and other terpenic solvents produced by the distillation or other treatment of coniferous woods; crude dipentene; sulpehate turpentine; nine oil.

  Amendment No. 65, in line 21, at end insert:

  38.08

  …

  …

  Rosin and resin acids and derivatives thereof; rosin spirit and rosin oils.

  Amendment No. 73, in line 21, at end insert:

  38.06

  …

  …

  Rosin, resin acids and derivatives thereof.

  Mr. Cooper: That will be convenient, Sir Samuel.
  The Committee must now face the fact that, after today's debates on various aspects of the Schedule, the Government are in complete disarray. [Interruption.] Hon. Members opposite complain, but in debate they have been
  640
  completely outgunned. If I had ever been convicted or arraigned for any sort of criminal offence and found myself defended by either of the Ministers who have defended the Government today. I would have considered myself in a very bad state. Neither the Financial Secretary nor the Minister without Portfolio have the slightest idea what we have been debating. They have been concerned simply with the brief given to them and—
  The Deputy-Chairman: Order. The hon. Member must speak to the Amendment.
  Hon. Members: Hear, hear.
  Mr. Cooper: It is surprising to hear cries of "Hear, hear" from hon. Members opposite. Most of them have not been here all day. They are merely Lobby fodder waiting for the bell to ring so that they can come in and vote. Why have they not been here? [Interruption.] I have been here. I have made three speeches today. The debate on which we are embarking really tests sincerity of Government statements about the modernisation of British industry, which was the sort of thing that the Prime Minister talked about during the General Election. This debate provides a main test, and we are asking what are the Government's intentions regarding modernisation—
  Mr. Snow: I am obliged to the hon. Gentleman for giving way. I heard him say that my hon. and right hon.

  641
  Friends on the Treasury Bench were concerned only with their briefs, but earlier today—and I have listened to practically every speech so far—I heard the hon. Gentleman indulge in a quite Freudian reaction by making the slip of saying that the chemical industry had tabled Amendments.
  Mr. Cooper: Sir Samuel, I do not see anything wrong with that. [HON. MEMBERS: "Oh."] The chemical industry is one of our most important, and provides one of the greatest of our exports, and I have not found that hon. Members opposite have been backward in putting forward the views of the trade unions on any particular matter. I suggest that what is sauce for the goose is sauce for the gander.
  We are here dealing with four different types of product—[Interruplion.] If hon. Gentlemen opposite sitting below the Gangway would do me the courtesy of listening, they might even learn something.
  Sir D. Glover: On a point of order, Sir Samuel. I notice that hon. Members outside the Bar are taking part in the debate by interjecting.
  The Deputy-Chairman: Hon. Members outside the Bar must not intervene, and hon. Members within the Chamber should give the hon. Member a quiet hearing.
  Mr. Cooper: This sort of thing often happens at this time of night, and we do not need to be unduly worried about it. I would have hoped that on the Government benches we would have had a modernised party but, to use the words of the Prime Minister, I think that it is still the old penny-farthing party.
  Some years ago, a British chemical company, in conjunction with an American firm, engaged in a degree of research—[Interruption.]
  The Deputy-Chairman: Order. I must ask hon. Gentlemen to allow the hon. Gentleman a hearing.
  Mr. Cooper: The two concerns engaged in a degree of research with the object of trying to eliminate to a very great ex tent the necessity to import essential oils into this country. Essential oils are primarily products which
  642
  have a tropical or semi-tropical origin. We not only get from them the essential oils themselves, but basic materials that comprise them form the basis, not only of the huge perfumery and soap industries but also of confectionery. A very great amount of money is spent on their importation.
  This research was entered into by a British firm and an American company some years ago, in an attempt to isolate from turpentine a product called myrcene. It was found that once this product had been isolated it could then be further synthesised to produce a large range of products which would themselves largely eliminate the use of many of these essential oils which were coming into this country.
  12.30 a.m.
  The research was concluded and a factory was set up in the Government-designated area of Widnes. The plant was built at a cost of more than £2 million and it went on steam about two years ago. I will quote three examples of the effects of the plant going on steam. There are three essential oils large quantities of which this country has previously imported. Oil of bois de rose was being sold in this country in November, 1963, at 24s. per lb. In November, 1964, it was sold at 15s. 9d. per lb. Oil of citronella, which is used largely in the manufacture of perfumery, soap and a wide variety of things of that sort, was being sold in November, 1963, at Its. per lb. Today it is being sold at 5s. per lb. Lemongrass oil in November, 1963, was sold at 14s. per lb., and today it is sold at 8s. 6d. per lb.
  This is a tremendous technological break-through for British industry, and the imposition of this 15 per cent. surcharge will strike a great blow against this development. The Government will recognise that here British industrial technology has made this great advance, and if it can be carried through the cut in our import bill for essential oils over the years will be very considerable.
  Paradoxically, I am going to argue the case for the reduction of the surcharge on essential oils as such, notwithstanding what I have said about myrcene. Essential oils by their very nature cannot be produced in this country. It is impossible to produce them here. As I have

  643
  said, they have a tropical or semi-tropical origin. The flowers, the petals, the seeds, and so on, are not sent to this country for processing into the oils. All these things are done in the country of origin. They have become a vital part in the industry of this country, for confectionery, flour, sugar and perfumery, both as soap and liquid.
  It is very difficult, even on the rebate scheme proposed under the various Clauses, for any company to attempt to claim any rebate for trying to export its goods in foreign markets. The quantities vary according to the type of product which is sold. I hope, therefore, that the Government will recognise that there has been a tremendous technological advance in the development of myrcene, which in the long run will help us to cut down our import bill on essential oils to a large extent, and secondly I hope they will realise that essential oils, notwithstanding all the arguments which have been advanced by the Minister without Portfolio, are vital to the general industry of this country and should come into this country without surcharge.
  The other two parts of the Amendments concern turpentine and rosin. Hon. and right hon. Members must recognise that turpentine and rosin basically have the same origin. They come from a tree in the form of a gum which is distilled. The products of the distillation are, first, turpentine, and secondly rosin. These two products are vital to many industries in this country and it is impossible to obtain them from any growth here. We have neither the climate nor the area in which growth could take place.
  Rosin and resin acid figure to a great extent in the manufacture of paper. Already many of the other raw materials used in the manufacture of paper are exempt under various classification, for example 47.01 and 47.02. It would seem illogical to exempt paper-making materials such as pulp and waste-paper and at the same time keep rosin to be covered by the 15 per cent. surcharge when it is used as a sizing material and has a vital part in the manufacture of paper.
  Schedule 1 includes among exempted goods, under Chapter 13 (all headings)
  644
  "Raw vegetable materials of a kind suitable for use in dyeing or in tanning; lacs; gums, resins and other vegetable saps and extracts."
  This is exactly the classification for ordinary rosin, and it seems utterly illogical to exempt rosin under Chapter 13 and not to exempt it from the general classification in the manufacture of paper, paints, varnishes, lacquers and the like. This is something which the Government must consider.
  I have already made the case for myrcene which is a derivative or synthesis from turpentine, but turpentine itself is vital to many industries and I should have thought that by itself, and because the method of production was covered by the Chancellor's statement in the White Paper, it should be exempt.
  Sir Eric Fletcher: The hon. Member for Ilford, South (Mr. Cooper), in proposing the Amendment, said that it tests the sincerity of the Government about the modernisation of Britain. We accept that challenge. We are great believers in modernisation of Britain and we are anxious to do everything possible to assist and encourage it. My right hon. Friend the Chancellor of the Exchequer, in accordance with his promise in his Second Reading speech, has considered all the representations made to him on extending the exemptions that should be included in the Schedule. The hon. Member for Ilford, South has proposed that there should be added to the Schedule of exemptions essential oils, turpentine, rosin, certain derivatives of rosin, and myrcene.
  I am happy to tell the Committee that the Government are prepared to accept Amendments Nos. 59, 64, 65 and 73, which relate to essential oils, turpentine, rosin and derivatives of rosin. They accept the view that all these articles will assist in the technological developments which are taking place, that they will help in promoting the modernisation of Britain, and that a valid claim for exemption can be made in respect of them on the ground that they are all basic raw materials or closely analogous to basic raw materials.
  I ask the hon. Gentleman not to press his Amendments because, although they are accepted in principle, there is a technical defect in the drafting. Government Amendment No. 62, which also proposes certain additions to the Schedule, shows

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  the preferable form in which an Amendment to give effect to his intentions and the wishes of the Government should be drafted. But I am happy to give the assurance that, between now and Report, the Government will themselves put down Amendments to cover the four articles, essential oils, turpentine, rosin and derivatives of rosin.
  I cannot extend this concession to myrcene, to which different considerations apply. As the Committee will realise, myrcene falls under a different classification, Chapter 29, being found there with a number of other hydrocarbons all of which are subject to the surcharge. The only item under that heading which can properly be excluded is methane, which, of course, is a fuel imported in very large quantities and an essential product. I regret, therefore, that I cannot advise the Committee to accept Amendment No. 49, but I hope that the hon. Gentleman will not press his Amendments, in the light of the assurance I have given in regard to the other items and what will be done between now and the Report stage.
  Mr. Cooper: I am very grateful to the hon. Gentleman for his very generous concession, which is rather more than I expected this Government to be able to make. I have but one question to put. There is some confusion in industry about the method by which the repayment of duty already paid will be effected. Will industrialists who have already paid the duty automatically be reimbursed or have they themselves to apply for repayment?
  Mr. MacDermot: The answer is that it will be repaid automatically where security has been taken—I think that that is the correct way to express it—in anticipation of duty being levied. When the duty is not levied, it will be repaid.
  I take this opportunity to clear up another point which has been referred to several times. I refer to the question about the operation of drawback in respect of various chemical substances. I know that, under the existing drawback system in respect of protective duties, many manufacturers and exporters have had difficulty in securing drawback when the chemicals which they have used are obtained partly from foreign sources and partly from home sources. They have had difficulty in satisfying the Customs as to the amount or proportion, if any,
  646
  of foreign chemicals used in the manufacture, and the drawback system has been criticised as being somewhat rigid.
  I remind the Committee of what I said on Second Reading—perhaps, in the hurly-burly of that occasion it was not fully appreciated—that we have deliberately, on this occasion, not tied the drawback system to the rather rigid system which exists for protective duties, and it is proposed to devise under regulations a far more flexible system. We are inviting any company which has representations to make on this score and which thinks that it should be entitled to drawback to approach the Customs authorities, who intend to apply the system in as understanding and flexible a way as they can. I say that in the hope that it may allay some of the fears that have been expressed in a number of places.
  Mr. Cooper: In view of what I have heard, I beg leave to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  12.45 a.m.
  Sir J. Barlow: I beg to move Amendment 116, in page 14, line 7, at end insert:
  Naphthol AS-G within 29.25 (C).
  The Chairman: It would be for the convenience of the Committee to consider at the same time Amendment No. 117, in line 19, at end insert:

  32.05 (D)

  …

  …

  …

  Dye stuffs.

  Sir J. Barlow: This is really very closely allied to the last Amendment, so I rise with some measure of encouragement. This Amendment refers to Naphthol AS-G, which is very closely linked to rosin. It is used exclusively by textile printers for a particular type of cloth known as Batik sarongs for the West Coast of Africa.
  The Minister will be familiar with some of the problems of the Lancashire textile industry, and the great diminution of textile exports over the last few years. The Batik sarongs trade to Africa is one of the few remaining exports of any value to Lancashire, and this naphthol which is used in this textile printing is not produced in this country. It has to be imported, and for that reason the surcharge is likely seriously to increase competition with other countries owing to increased

  647
  prices. The Dutch are great producers of these Batik sarongs, and if our prices are increased even slightly Lancashire will tend to lose that trade which is one of the few remaining textile exports. For that reason it is very important, and I hope the Minister will accept the Amendment.
  I should also like to mention very briefly the other Amendment in my name, Amendment No. 117, which deals with dyes, also used in the Batik sarongs trade. These dyes are very expensive. They give the gaudy colours which are so popular on the West Coast of Africa. Some of them are produced in this country, and there is a tariff against imports of 33⅓ per cent. from E.E.C. countries, and 13⅓ per cent. from African countries. This proposed 15 per cent. on top of this will be a very serious drawback, because the cost of these dyes is actually heavier than the labour content of the printing and the cloth, which is very considerable.
  For that reason, I hope that the Government will look into this carefully and give a favourable reply, because it affects a vital export industry in Lancashire which we can ill afford to lose.
  Mr. Redhead: I appreciate what was said by the hon. Member for Middleton and Prestwich (Sir J. Barlow) about the use of naphthol AS-G, but this chemical is also used as an intermediary in the manufacture of dyestuffs. In that respect it is only one of many such chemicals and is of a very complex character. In those circumstances, clearly there could be no justification for isolating it for special concession among such chemicals or from the charge which is applied to chemicals in general.
  Turning to Amendment No. 117, the same is true of the synthetic organic dyestuffs, which are also complex chemical products. It is quite impossible to separate them therefore. Having regard to the charge as it falls upon the generality of chemicals, I must resist the Amendment in these two instances. It is true that dyestuffs which are not procurable in the United Kingdom may be imported free of import duty under Treasury direction, but, as I think the Committee recognises, this is also true of other commodities which the Committee
  648
  has already agreed should not be exempted from the temporary surcharge on those grounds as it would give a protective character to the charge.
  In those circumstances, I regret that I am unable to recommend the Committee to accept the Amendment.
  Amendment negatived.
  Amendment made:
  In page 14, line 10, column 1, at end insert:
  Basic slag within 31.03.—[Mr. Redhead.]
  Sir Eric Fletcher: I beg to move, Amendment No. 56, page 14, line 19, at the end to insert:

  32.01

  Tanning extracts of vegetable origin.

  32.04

  Colouring matter of vegetable origin or animal origin.

  All goods within 35.01 except casein, glues

  Casein caseinates and other casein derivatives.

  35.02

  Albumins, albuminates and other albumin derivatives.

  Edible gelatin within 35.03.

  The Temporary Chairman (Dr. A. D. D. Broughton): It would be for the convenience of the Committee to take at the same time:
  Amendment No. 57, in line 19, at the end to insert:

  32.01

  …

  …

  Tanning extracts of vegetable origin.

  Amendment No. 58, in line 19, at the end to insert:

  32.04

  …

  …

  Colouring matters of vegetable and animal origin.

  Amendment No. 60, in line 19, at the end to insert:
  Casein within 35.01
  Amendment No. 61, in line 19, at the at the end to insert:

  35.01

  …

  …

  Rennet casein.

  Sir E. Fletcher: I hope that the Committee will agree that it will be unnecessary to move or discuss those Amendments. In view of the fact that my right hon. Friend is proposing the addition to the Schedule of certain articles mentioned in the Amendment, I ought to explain the reasons for so doing. The Committee realises that the Amendment has been put down as a result of the Government's review of the extent to which the charge should apply, and the review was

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  undertaken, as has been said from the Box earlier, on the basis that only glaring anomalies which were known to be causing hardship should be accepted as candidates for exemption and then only if it were not likely to set up a quite uncontrollable chain reaction. My right hon. Friend is content that each of these articles satisfies both these tests. For example, tanning extracts of vegetable origin are natural materials processed at source. They are generally prepared by extraction with warm water from vegetable material.
  The next item, colouring matter of vegetable origin or animal origin, is again material processed at source. All goods within item 35.01 except casein glues are, similarly, natural materials produced as a result of a quite simple process. Similarly, albumins, albuminates and other derivatives are animal or vegetable proteins in the same category of natural materials processed at source.
  The same arguments apply to edible gelatin, which is produced by treating skins and bones.
  Mr. John Hall: It would be ungracious of me not to acknowledge, with some gratitude. the action of the Government in having included in the Schedule these various commodities, which were put forward by my hon. Friend the Member for Ilford, South (Mr. Cooper) and my right hon. Friend the Member for Bexley (Mr. Heath) and others, including my hon. Friend the Member for Shipley (Mr. Hirst). In particular, the concession on casein will be of value to the synthetic fibre manufacturers. We are grateful for even a small concession of this kind, and I should like to thank the Minister.
  Amendment agreed to.
  Amendment proposed:
  In page 14, line 19, at end insert—

  33.01

  …

  …

  …

  …

  Essential oils.—[Mr. Hirst.]

  Sir Eric Fletcher: If I may explain. I thought that we had reached agreement when we discussed this point on an earlier Amendment. What I understood was that the Government were prepared to accept the Amendment in principle. However, there is a drafting defect in it, and we have given an undertaking that the substance of the Amendment will be put down between now and Report.
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  I understood that on the basis of that undertaking, this Amendment would not be pressed.
  Amendment negatived.
  Mr. Redhead: I beg to move Amendment No. 62, in line 21, at the end to insert:

  Flux calcined diatomite within 38.03.

  38.05

  Tall Oil.

  38.06

  Concentrated sulphite-lye

  Calcined bauxite within 38.19.

  The Temporary Chairman (Dr. A. D. D. Broughton): With this Amendment can also be discussed the following Amendments.
  Amendment No. 63 in line 21, at the end to insert—

  38.05

  …

  …

  …

  …

  …

  Tall oil.

  Amendment No. 72 in line 21, at end insert:

  38.06

  …

  …

  …

  …

  Sulphite lye.

  Amendment No. 74, in line 21, at end insert:

  38.19

  …

  …

  …

  Bauxite, calcined.

  Amendment No. 90, page 17, line 10, column 2, at end insert "calcined bauxite".
  Mr. Redhead: Amendment No. 62 has also been put down by the Government as a result of the review promised by my right hon. Friend the Chancellor during the Second Reading debate. In consequence of the fact that items specified in the Amendment on examination prove to satisfy the conditions named by him in respect of the review, we are happy to propose this Amendment, which, in effect, will meet the point of Amendments: Nos. 63, 72, 74 and 90.
  Mr. John Hall: These concessions were asked for by my hon. Friends the Members for Ilford, South (Mr. Cooper) and Shipley (Mr. Hirst), and I am sure that they will be grateful for the Government's action in giving them what they asked for.
  Amendment agreed to.
  1.0 a.m.
  Mr. John Hall: I beg to move Amendment No. 76, in page 14, line 29, at the end to insert:

  44.01 to 44.18…

  Wood and wood products.

  The Temporary Chairman: I think it will be convenient if with this Amendment, the following are discussed:
  Amendment No. 77, leave out lines 30 and 31 and insert:
  Wood, sawn or planed but not further manufactured and imported plywood within 44.01 to 44.13, 44.15 and 44.28 (C).
  Amendment No. 78, leave out lines 30 and 31 and insert:

  44.01 to 44.18

  Wood and wood products.

  Amendment No. 79, in line 31, at end insert:

  44.15

  …

  …

  Plywood, blockboard, laminated and hardboard.

  Amendment No. 80, in line 34, at end insert:

  48.09

  …

  …

  Building board of wood pulp or of vegetable fibre, whether or not bonded with natural or artificial resins or with similar binders.

  Amendment No. 81, in line 34, at end insert:
  48.09 (A) Flaxboard.
  Amendment No. 83, in line 34, at end insert:

  48.01

  …

  …

  Liner board in reels and semi-chemical fluting in reels.

  Amendment No. 128, in page 15, line 42, at end insert:

  Plaster boards and plates within 68.

  Amendment No. 129, in line 47, at end insert:

  Expanded metal suitable for plaster lath within Section XV.

  Mr. Hall: I particularly want to couple with Amendment No. 76, Amendments 77 and 80, also in the names of my hon. Friends and myself, which cover woods important to the building trade, furniture manufacturing and joinery in the woodworking trades. I call attention to a slight defect in Amendment No. 77, which in the last part refers to 44.28(C). That should be 44.28(B).
  This Amendment seeks to extend the present list of exemptions included in the Schedule which go from 44.01 to 44.12. Within that list are now included in the Schedule such interesting items, which
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  are obviously essential to our economy and which the Government have decided in their wisdom must not be allowed to increase in price. For example, under 44.01 there is fuel wood in logs, billets or faggots. I am sure that we would not want that to be included in the 15 per cent. surcharge. Item 44.10 covers wooden sticks, suitable for the manufacture of walking sticks, whips, golf club shafts and umbrella handles.
  As these are included in the list of items excluded from the surcharge whilst the other items I am seeking to include from 44.13 onwards are excluded, I assume that the Government are of opinion that, while it is not very important that their action in putting on the surcharge will increase the price of furniture, it is essential that we should not increase the cost of playing golf or losing umbrellas. No doubt the Government will be in great need of umbrellas in the months to come.
  Judging by the reactions of many people, there is not general agreement on the view held by the Government. They will have received representations from various trade bodies. The reaction of some of them was immediate. The Timber Trade Federation of the United Kingdom, the National Federation of Building Trade Employers, the British Columbia Lumber Manufacturers' Association, the Plywood Manufacturers of British Columbia, and the British Woodworking Manufacturers' Association have all written to the Board of Trade or, as in the last-named case, to the Ministry of Public Building and Works. The British Furniture Manufacturers' Association went to the top and wrote direct to the "First Secretary and Minister of Uneconomic Affairs," whom I am sorry not to see present.
  I direct my remarks almost exclusively to the effect of the surcharge on the furniture industry. I hope that hon. Members who are particularly interested in the effect on the building industry will deploy their arguments under the headings which apply to that industry.
  I want to confine my remarks to the effect on furniture. There is no doubt that this surcharge will have a serious effect, not only on the furniture industry—and here I must declare some interest, because the principal industry in

  653
  my constituency is the manufacture of furniture—but on intending house, or rather I should say home, purchasers. I like to use the word "home" because it is no use making it possible for people to buy houses unless they can make them into good and comfortable homes.
  The inclusion of these woods will increase not only the price of houses, in some cases considerably, especially where the less traditional methods of erection are used, but the price of furniture. The Committee may like to know that the furniture industry uses a lot of the woods which are not even semi-processed woods under the headings of 14.13 onwards, most of which have to be imported. For example, plywood, which comes under the heading of 44.15, is imported to the extent of virtually 100 per cent. It is almost impossible to get the plywood that is required in this country. The same applies to block-board. About 90 per cent. of the veneers used in the furniture industry have to be imported. About 80 per cent. of the flaxboard that is required has to be imported. The remainder comes from Northern Ireland. The same is not true of chipboard, however. About 25 per cent. of this has to be imported, but nevertheless this is a considerable proportion of the wood used in the manufacture of furniture.
  The cost of materials in furniture manufacture amounts to almost 50 per cent. of the cost of production, and although it is not easy for manufacturers to calculate the effect of this surcharge on their selling prices, it has been estimated at somewhere between 2½ per cent. and 10 per cent. depending on the type of furniture and the proportion of the various imported woods included in that type of furniture. It has been calculated that if the effect of the other Budget proposals are taken into account, we can expect the increase in price to vary between 5 per cent. and 10 per cent. It has been my experience in making inquiries from the various furniture manufacturers in my constituency and elsewhere that already the imposition of the 15 per cent. surcharge has triggered off price increases in many items apart from timber which the industry has to use, and that has had the effect of inflating their prices.
  654
  I come to one aspect of the problem with which the furniture trade is not normally connected, namely, exports. Furniture is not easy to export. It is bulky, and the trade has to compete with various home industries in the countries to which it is trying to export. Costs of transport are high, too. Progress has been made in recent years by knockdown furniture which is able to be packed into a comparatively small compass, and some firms in my constituency have had success in exporting not only to Europe, but also to many of the countries in the Middle and Far East.
  There is little doubt that this surcharge will make it difficult for them to continue, because they are working on very narrow margins. They are facing considerable difficulties, and although we have heard from the Financial Secretary that the drawback system will be made as easy as possible with regard to this surcharge, there is no doubt that so far the industry has not been very successful in getting the drawback on duty paid in the ordinary way. There have been long and protracted negotiations with the Board of Trade which have not come to a successful conclusion. If they have anything like the same sort of trouble in claiming drawback for the surcharge, I can see this having a very considerable effect on their export development.
  The hour is late, and I do not wish to keep the Committee any longer, but I wish to put very briefly the effect of the surcharge on furniture. Hon. Members on both sides of the Committee know that the furniture industry has responded more slowly than other industries in developing more modern production techniques and increasing productivity, but in recent years there has been signs of tremendous progress, and it has been making great strides.
  This surcharge is very discouraging. It will halt this progress and make this development much more difficult than in the past. For those reasons I commend the Amendments to the Committee.
  Mr. Graham Page: I want to direct my remarks to Amendment No. 77, which deals with planed softwood and plywood, which are the raw materials of building, and particularly house building. These materials are used extensively in building and construction work and in the provision of homes. The Minister of

  655
  State will already be familiar with the argument used by the timber trade in support of our Amendments, because no doubt he has already had protests not only from the Timber Trade Federation but also from the Canadian Government.
  The National Federation of Building Trade Employers, in its protest about the surcharge on plywood and planed softwood, has made it clear that the surcharge will be most harmful in respect of the provision of homes and in keeping up the target of home building for next year. Since they came into office the Government have been making excuses in advance for not reaching the target of 400,000 houses next year. I know that, reluctantly, the party opposite fixed that target after the Conservative Party had fixed its figure, and now their excuse is that perhaps that figure may not be reached next year.
  When the surcharge is put on raw materials for building houses they will have another excuse that the target cannot now be reached. If the surcharge succeeds it must result in reducing the volume of imports, and in so doing reduce the number of houses built in the next six or twelve months, especially in industrialised building. It is here that there has been a rapid increase in the use of plywood and planed softwood. It is this type of construction, in which the pace of house building could quicken, which will be hit by the surcharge.
  Mr. Eric S. Heffer: Will the hon. Gentleman describe which types of industrialised building he has in mind?
  Mr. Page: There is the Canadian timber-built house, which can be erected in eight weeks as against the 11 months needed for the traditional house. That is an example of the way in which industrialised and modern building construction is able quickly to produce homes for the people. Many other constructions are also based on the timber trade. All these will be severely hit by this surcharge, and the result will be not only a reduction in the number of houses built but an increase in the cost to house purchasers and local authorities, who are just coming round to using industrialised building.
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  1.15 a.m.
  In face of this, what about the brave words in the Gracious Speech, when the Government said that they were going to modernise the building industry? One of the first things they do is to obstruct the successful industrialisation of that industry. I mentioned the example of the Canadian timber-built house, but it is not only Canada that is concerned with these imports; it is also the E.F.T.A. countries as well.
  We have no substitutes for this plywood and for this planed softwood. The plywood industry in this country meets only 5 per cent. of our demand, so either there is going to be an increase in the cost of houses or a reduced output, or, possibly, both. What is it that the Government want out of this? Is it fewer houses at higher prices? That scarcely fits in with the election manifesto of the party opposite. Or do they think that in the few months that this surcharge is to be imposed we can grow the trees, cut them down and provide the plywood and the planed softwood?
  It is true that the import of plywood has increased by 18 per cent. over the past year. That may be why it was thought fit to place the surcharge on imported plywood. It has increased, of course, because its use has increased in this country in the factory-built house, in the industrialisation and modernisation of the house-building trade. The use of planed softwood has also rapidly increased over the past year, particularly because of its use in the factory-built house.
  In both cases, a steady increase in the use of plywood and planed softwood in industrialised building is absolutely essential in order to reach a target of 400,000 houses next year. Because of this surcharge there will be a reduction in the number of houses built, and they will be built at an increased cost.
  Mr. Austen Albu: Two of my hon. Friends and I have an Amendment on the Order Paper, Amendment No. 78, but I wish to concentrate my remarks on the requirements of the furniture manufacturers for, particularly, plywood, blockboard and veneers which are largely used in the manufacture of furniture. Furniture is always most likely to catch it when there is any difficulty.

  657
  Either the Purchase Tax is raised or restrictions are made more severe, and one way or another the sales of furniture are reduced.
  I do riot think that it is the intention of the Government to raise the cost of furniture, but it is, of course, very difficult to distinguish these materials from unmanufactured raw materials because they are the basic materials for a large part of the industry. I am not prepared to support the other suggestions made by the industry for the exemption of a number of other materials, but I think that there is a case for looking at these materials which form such a large part of the cost in the manufacture of furniture.
  Mr. Turton: For the first time today we have had the support of an hon. Member on the benches opposite for the addition of an exemption to the list. I want to back up what my hon. Friend the Member for Crosby (Mr. Graham Page) said with regard to the very harmful effect which the surcharge will have on the building trade. There is a timber trade firm in my constituency which builds these houses, and it has been a very great shock to it to find its raw material, Canadian plywood, suffering from the 15 per cent. surcharge.
  Surely the advantage of these timber houses is that they are built so much quicker and that they can be built in bad weather. For this surcharge to be imposed at this time seems to me to be very unfortunate indeed. It is regrettable that although we are discussing raw materials used in the building industry, the Minister of Public Building and Works is not here to reply. He received a deputation from the National Federation of Building Trades Employers. He might have taken this opportunity to have been here to listen to the views of hon. Members. Only last week the right hon. Gentleman was complaining about the disorganised state of the industry, yet now the Government are doing something which will disorganise the house building construction industry.
  I am told by the firm in my constituency to which I referred that a 3 per cent. rise in the cost of its houses will result from the surcharge. Some houses will be going up in price by £100 each, a highly undesirable thing from the point of view of all hon. Members. I see the Financial
  658
  Secretary shaking his head in disagreement. I assure him that this has been worked out by the firm which is building these houses. House prices will go up by that amount unless he relieves them of the surcharge. Perhaps he is shaking his head not in disagreement but as a means of telling me that he intends to accept Amendment No. 77. I hope so, for whatever is done in an effort to reduce imports, nothing should be done to prevent the speedy building of houses.
  Mr. Norman Atkinson: I will not follow the remarks of the right hon. Member for Thirsk and Malton (Mr. R. H. Turton) because, to begin with, there was something peculiar about the statistics he used. If he considers that a house will increase in price by £100, that means that there is £3,000 worth of timber in each house. How does he arrive at such figures?
  Mr. Turton: To correct the hon. Gentleman's arithmetic, 15 per cent. on such an all-timbered house would not be £100 but, on the hon. Gentleman's figure, £450.
  Mr. Atkinson: That may be so, but the right hon. Gentleman said 10 per cent.
  Mr. Turton: No. I said 3 per cent.
  Mr. Atkinson: If that percentage represents an increase of £100 per house, that still means that he is arguing that in each house there is £3,000 worth of timber.
  Mr. Turton: No.
  Mr. Atkinson: We can return to this subject at a more reasonable hour.
  Throughout the day the mercenaries on the benches opposite have been trotting out the information supplied to them. For 20 hours they have insisted on reading letters and documents and—
  Mr. Graham Page: On a point of order. Is it Parliamentary language to refer to hon. Members as "mercenaries"?
  The Temporary Chairman (Sir H. Legge-Bourke): That is not a point of order.
  Mr. Atkinson: I will pursue this business of mercenaries because I recognise some vested interests on the benches opposite. If that does not amount to mercenaries, I do not know what does.
  Mr. Torton: On a point of order. Without quarrelling with your Ruling, Sir Harry, surely that explanation of a mercenary—as a person with a vested interest, implying that hon. Members have been paid to raise points—cannot be Parliamentary language.
  The Temporary Chairman: Although I think there are occasions when the word "mercenary" could be used in an unfortunate sense, I did not take the hon. Member to mean it in that sense. If, of course, the hon. Member did mean it in that sense he should certainly withdraw it.
  Mr. Atkinson: Sir Harry, I meant it in the obvious way, which is, apparently, the way in which you have interpreted my remarks.
  My hon. Friend and I are concerned about the furniture industry, which is a very precarious one, and very delicately balanced. Some hon. Members have said that a wind of change should blow through it, but I can say that if there were even a breath of change the industry would catch cold. That has been shown to be true on a number of occasions, when a slight variation in the price of furniture has very quickly been reflected in redundancy. It is on that concern for redundancy that my hon. Friend and I base our appeal. Having said that, forgive the motives of hon. Members opposite.
  Throughout my political life so far I have argued in favour of physical controls. I still believe in them, but I realise that in the present situation the Government have been forced to take immediate and direct action. Time did not allow them to implement physical controls, so they had to impose this levy. I make my position quite clear. As I think that the Government have taken a logical stand, I cannot agree with the argument advanced from the other side of the Chamber.
  Mr. Hirst: If I may say so, I found the speech of the hon. Member for Tottenham (Mr. Atkinson) somewhat confusing—so much so that, for a moment, I thought that he might be responsible for putting the Schedule together.
  Speaking more seriously, I support a number of these Amendments. Hardboard, blockboard, plywood and laminated woods are of vital importance
  660
  to the building industry, as my hon. Friend the Member for Crosby (Mr. Graham Page) has pointed out, and we all know that he follows the subject very closely.
  I must point out the inevitable effect that this surcharge must have on the building programme. Quite obviously, it will mean that the houses will cost more, which is completely opposite to what anyone in this Committee wanted, and the very opposite of what everyone was led to believe by the election propaganda of the party opposite. I do not see that there is anything in that to laugh at, particularly on the part of the Financial Secretary. It is rather a serious matter. If the effect is to increase the cost of houses, the number of houses built will be reduced. Whichever way it goes, it is thoroughly bad social policy—
  Mr. Reginald Freeson: Would the hon. Gentleman agree that houses and flats are being built in London at a cost to the builders of about £4,700, and being sold at £6,000, £7,000 and £8,000, which means that the figure of £100 being thrown around the Chamber could easily be absorbed in the profit margin?
  Mr. Hirst: I cannot answer for any of the houses being built in the hon. Member's constituency, but the economics of this matter are different in my constituency where, I am glad to say, and proud to say, there are private builders building sound parlour houses at £2,500 to £2,800. Perhaps the hon. Gentleman would like to come and live in my constituency.
  1.30 a.m.
  There is another matter about which the joinery industry feels keenly. I have a constituency interest in this, because I have in my constituency the headquarters and the main factory of one of the largest joinery businesses in the country supplying the greatest number of doors and fixtures for houses. What my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) and my hon. Friend the Member for Crosby have said is right. I am surprised that apart from one or two minor burbles from the other side of the Committee there has been so little support for the Amendment when there is this strong feeling in the building

  661
  industry. My right hon. Friend was right to draw attention to the fact that there is no Minister present from the Ministry of Public Building and Works.
  I have in my hand a copy of a letter written to me by the British Woodwork Manufacturers' Association drawing attention to the matter, but as time is getting on I will not read it. [Interruption.]
  Mr. Peter Emery: Hon. Members opposite want my hon. Friend to read the letter.
  Mr. Hirst: Some hon. Members who have not been here very long have got something coming to them if they think they can deal with me in these debates in that manner. When I say I have in my hand a letter, I mean I have a letter in my hand and not a blank sheet of paper. As it has a direct bearing on the Amendment I will read some sections of the letter which are necessary to my argument. The letter says:
  " As you know, the recent import surcharge of 15 per cent. is increasing the costs and prices of our industry providing manufactured woodwork components for the building industry. For example, the costs of hardboard and plywood used by our industry to be manufactured into doors, kitchen storage units and panels …"—
  Hon. Members: The hon. Gentleman is reading.
  Mr. Burden: On a point of order, Sir Harry. Is it not completely in order for my hon. Friend to read from a letter when he has already said that he intended to do so?
  The Temporary Chairman: I would ask the Committee at least to leave the Chair the right to say when something is out of order.
  Mr. Hirst: I can look after myself in this matter, although I am very grateful to you, Sir Harry. I am quite prepared to leave it to the Chair on every occasion, but since I supposed that the rather irresponsible laughter indicated that I was making it up and that I had a blank sheet of paper in my hand, I thought it was as well that hon. Members should know that in fact I had a letter. [Laughter.] It is not the slightest use hon. Members opposite behaving in this fashion. I am quite an experienced hand in these Committee proceedings—[Interruption.]
  The Temporary Chairman: Order. The hour is late and I would ask the Committee to concentrate on wood in this Amendment.
  Mr. Hirst: That is exactly what I should very much like to do, Sir Harry.
  There are one or two other sections of the trade which are concerned, and which are dealt with in certain Amendments. I refer particularly to Amendment No. 83 which deals with
  " liner board in reels and semi-chemical fluting in reels."
  This is far-reaching in its importance. This is the basic raw material in the manufacture of fibre board which is used particularly in packing cases. Our country lacks the kind of timber—I am sure the Board of Trade know this only too well—to support a liner board industry. It does not exist. The industry is, therefore, compelled to buy this raw material from abroad. The only thing which is to a small degree available is a certain amount of waste, but a very small amount indeed. It is a very special form of waste paper and not the normal kind. For various reasons that has to be processed abroad. Returns to the board of Trade show that the stocks of material of that character which we have in this country are falling considerably.
  The manufacture of these two products from imported pulp is therefore absolutely essential. There is no alternative to importing the pulp. Incidentally, the food industry uses about 50 per cent. of this material when it is made into fibre cases. There is no machinery capacity available in this country at present. To secure it would take two or three years, which is quite ridiculous, and the capital cost would be immense, even on a longterm basis.
  The use of this material, therefore, is of vital importance. I gather, for example, that the import surcharge will increase by 10 per cent. the cost of the 30-dozen egg crates of which we use 20 million or more. The surcharge is just the sort of thing which will put up these costs when incidentally the Government will not secure any of the economic advantages which they talk about. There is no alternative to this import. The material must still come in. It cannot be replaced by any possible alternative, except something organised on a war

  663
  economy basis with a long-term objective attached to it.
  This proposal is irresponsible. Some eggheads, without consultation, have got together a Schedule which does not add up to any sense in the subject matters of the whole range of Amendments before us. We want some satisfaction. This matter is not something which can be left unanswered throughout the stages of the Bill.
  Mr. Forbes Hendry: I wish to call attention to Amendments Nos. 128 and 129 standing in the names of some of my hon. Friends and myself.
  These have a subject matter rather different from wood but one of equal importance to the building industry. It is obvious that the party opposite have not the faintest idea of the serious situation which has arisen in the building industry, in the north of Scotland in particular, as a result of the serious shortage of plaster board and plaster lath. This is obvious from the Question which I put to the Chancellor of the Exchequer who gave me the curt answer "No" when I asked that these materials be exempt from the imposition of this surcharge.
  As a result of the splendid progress made by the last Government in house building, and particularly in council house building—[HON. MEMBERS: "Oh".]—and I am talking particularly about the north of Scotland, which is completely unknown territory to the whole Front Bench opposite, there has been a severe shortage of plaster board. The industry which produces the board in this country has made great efforts to increase production. In the six months, April to September, production was increased by 12½ per cent. over the previous six months, or by no less than 19 million lb. Even with that increase in home production there was a shortage which was made up by the import of plaster board from Canada. This more or less filled the gap. Until the present Government took office the delay in delivering plaster board for house-building was comparatively short. As a result of the imposition of the 15 per cent. surcharge, these imports have stopped altogether. In the north-east of Scotland, and in my constituency in particular, the building of council houses has virtually ceased
  664
  because it seems impossible to get supplies of plaster board without waiting seven or nine months. This is a serious situation. If supplies could be imported to make up the gap, the problem would be very much alleviated. The cessation of imports is directly connected with the imposition of the surcharge.
  There is one alternative to plaster board, that is, plaster lath, the subject of Amendment No. 129. The scarcity of plaster board has led to a greater demand for plaster lath, but the expanded metal used for this purpose is subject to the surcharge.
  Perhaps the Government imposed the surcharge blindly, not realising what the effect would be on the building of council houses. It may be that they are not interested in the building of council houses, and I think that one is entitled to draw that conclusion from their their actions. If, however, they are interested, they should include plaster board and plaster lath in the list of exemptions.
  Sir D. Glover: Hon. Members sometimes declare that they have an interest in a subject being discussed. At the outset, I declare that I have no interest in wood manufacture, building or any other industry in this country. However, a lot of people in my constituency hope to have new houses as a result of the building programme instituted by the last Government.
  We have put down these Amendments to try to bring some sense into Socialist so-called planning. The Government say that they imposed the surcharge in order to reduce imports and so save foreign currency. In other words, they want to reduce the total burden on our country's finances. What do they hope to achieve by the surcharge on timber? The hon. Member for Tottenham (Mr. Atkinson), who made a rather confused speech, said that he believed in physical controls. If the party opposite believes in physical controls, the way to deal with the problem is to reduce the housing target from 400,000 houses a year to 340,000, automatically reducing the demand for timber by 15 per cent., but without increasing the cost of a house and the furniture in it by at least £150. I hope that every young married couple going into a new house will realise that

  665
  this Bill will increase the cost of their home and its furniture by £150.
  To show that this is Socialist planning gone mad, I shall quote from a speech made recently by the Minister of Public Building and Works. I am sorry that the right hon. Gentleman is not in his place and his Department is not represented because these are questions which should concern him. On 24th `November last, he said:
  " As I said at the Quantity Surveyors' dinner recently, whatever we have done in the face of the £800 million deficit left to us by our predecessors, whatever the remedy and whatever the steps we have taken, for instance by way of a 15 per cent. surcharge, it does not represent any threat to the building and construction industry."—[OFFICIAL REPORT, 20th November, 1964; Vol. 702, c. 869.]
  Now he goes on in his speech in the House to say that he is planning for an increased production of bricks, to produce more bricks to produce more houses so that the Socialist programme of house building will expand rather than contract. Yet at the same time in another Department they put a 15 per cent. surcharge on the timber that has got to go into these houses.
  1.45 a.m.
  They have got to accept that they are either deliberately increasing the cost to the individual who buys a house by £150 for the timber which goes into it, and another £150 for furniture, or that they expect the surcharge to bite—and the Chancellor said he wants the surcharge to bite and bite quickly—and that they do not expect to reach their housing target for 1965 or 1966.*
  Therefore, I am sure that if hon. and right hon. Gentleman opposite thought out this programme and realised that their own efforts to increase brick production and increase their housing target will inevitably mean that more timber goes in, then they will realise that all this surcharge is doing is not reducing the burden on our exchange, not reducing our imports, but purely and simply putting up the price of every house built in this country during the next 18 months.
  Mr. Redhead: I appreciate that the purpose of the first of this group of Amendments dealing with wood projects is to exclude from the charge wood products which can be regarded as the starting materials for the building, furniture
  *Note: See correction in col. 1220, 7th December, 1964.
  666
  and cabinet making industries. I think that the debate has rather obscured the fact that a considerable portion of the aim of the first Amendment is indeed already in the Schedule. That is to say, exemption has already been provided for the tariff headings 44.01 to 44.12. These are in fact already exempt under the Schedule, and these include—
  Mr. John Hall: I am very grateful to the hon. Gentleman for giving way. I pointed out in moving the Amendment that the headings 44.01 to 44.12 were already covered.
  Mr. Redhead: I appreciate that the hon. Gentleman himself had got that point, but I was a little afraid that the general tenor of the debate thereafter would have created a different impression.
  I think I should bring home the point that the Schedule as it is already includes fuel wood, waste, charcoal, wood in the rough (as felled, split or roughly squared), sleepers, and roughly trimmed wood used for barrels, etc. This is quite an extensive degree of exemption in this field.
  What indeed the Amendments seek to do in this particular regard is to bring in the further headings which would cover wood pulp and vegetable fibre which have undergone, in some cases, a very considerable degree of further processing, and open the question for consideration of these materials as starting materials. Now we recognise that the product of one industry may be the starting material for another, but I can only repeat what has been said so often—that the broad principle of determining exemption from the charge is that items which have undergone more than elementary processing should not be exempted.
  It may be argued, and has been argued quite strongly, that the building industry has a special claim for exemption in this field, and very considerable play has been made of the effect on the cost of housing. I do not want to be distracted into a number of what, in the context of the debate, were irrelevant observations on housing, or to comment upon the astounding claim that the previous Government made wonderful progress particularly in local authority house-building—a claim very difficult to sustain in the light of the figures. We have been given the figure of an additional cost of £100 on a wholly timber-built house.
  Mr. Turton: A timber-framed house.
  Mr. Redhead: In fact, the effect of the charge would be an additional cost of about £30 on a three-bedroomed council house costing £4,500. That figure has already been given in answer to Questions.
  Given the principle which has repeatedly been stated—although it is unacceptable to the Opposition—of the dividing line between manufactured articles and raw materials, it is clear that these materials could not be exempted from the charge without opening the door to a large number of new claims for various commodities for which a similar contention could be made. Nor could it be done without opening the door to further claims about the inadequacy of home supplies, an aspect which has been debated in other connections, or about the importance of the end user. We are sensitive to the arguments used about wood and wood products, and we have already undertaken that this shall be one of the fields which will be included in early consideration of the review of the coverage. But beyond that I cannot go tonight.
  Other Amendments referred to plaster boards and plates and expanded metal suitable for plaster lath within Section XV. Clearly much of the argument which I have advanced about wood holds good in respect of plaster boards, but there is an additional point about expanded metal suitable for plaster lath within Section XV—that this cannot satisfactorily be distinguished from expanded metal used for many other purposes, and I am advised that it would be impossible to define an exemption of this material by reference to its end use.
  It has been said that there is a shortage of these materials in the country which can be met only by importing from abroad and that not to exempt them from the charge will increase the construction costs in the building industry. I am advised that the additional cost in this case cannot of itself be very significant, but in any event the argument about the unobtainability of these supplies in the home market falls under the general argument which has been adduced so often. We cannot accept it as a reason for exemption without introducing a wholly unintended and undesirable impression
  668
  that this charge is of a protectionist character.
  Mr. John Hall: The Committee must welcome the Minister's agreement to consider these Amendments in the near future. I hope that he means that he will review them before the end of the year. I find it very hard to understand precisely why the headings 44.01 to 44.12 are included and others, involving woods far more important to the country, are excluded.
  What is the logic, for example, of including the one I quoted earlier? What is the logic of including the item 44.01, which covers fuel wood in logs, in billets, in twigs and in faggots? What is the logic of including, under item 44.09, hop woods, split poles, poles and pickets? What is the logic of including under 44.10 wooden stakes for the making of umbrella handles? Are these so essential for our industry that the surcharge can be abolished? Are the other headings, which cover wood for building and furniture-making so unimportant? This is not so. I should have thought that the woods which we require for the building industry and the furniture manufacturing industry and the joinery and woodworking industries met at least two of the general principles laid down earlier by the Minister without Portfolio, namely, that they require only elementary processing, and their exclusion from the Schedule causes hardship.
  For example, if one takes the Columbia wood which is imported into this country, planed softwood is merely building timber with a smooth finish, as opposed to rough-sawn timber. The amount of processing is very small. It comes well within the heading of elementary processing, which was the principle laid down by the Minister without Portfolio. Plywood is merely the cutting of thin sheets of wood and glueing them together. The amount of processing is very small there. Certainly they all come within the definition of hardship. The increased charges will cause hardship to people who want to own their own furniture and their own homes.
  In view of the lateness of the hour and the assurance, which I hope that the Minister means, that he will be looking at these Amendments again and will take action before the end of this year, I would

  669
  not advise my hon. Friends to divide the Committee.
  Mr. Peter Emery: I am sorry to continue this debate, but there is one specific matter which has not been dealt with at all. That is, that we accept the Government's intention to attempt to reduce imports, but, in the building of houses, a certain amount of wood is essential. It is so essential that we have heard from the Minister that an increase totalling between £8 million and £10 million will be put as al extra charge, which will have to be borne by people buying houses. He can dismiss it as only £30 a house, but in a three-bedroomed council house—
  Mr. Loughlin: £4,500 in price.
  Mr. Emery: He referred to the council house. If we have to go on arguing on these lines, I am delighted to keep the Committee, but that was not the line which I was trying to take. Let us pursue this matter. In Reading, where we are taking a large amount of overspill from London, we are trying to do everything possible to provide housing at reasonable costs. The greatest campaign which was waged against me—quite unsuccessfully—was about the cost of housing. The Labour Party, it was said, would bring down the cost of housing. Now, for wood, the Government are putting on a charge for the whole building industry amounting to £8 million and £10 million. How will this keep down the cost of housing?
  2.0 a.m.
  Mr. Loughlin: I very much appreciate the simulated indignation of the hon. Member, but may I deal with the specific point on which I attempted to correct him? The illustration given by my hon. Friend was that it would mean an additional £30 on a three-bedroomed house costing £4,500. [HON. MEMBERS: "A council house?"] It does not matter if it is a council house or a privately-built house, if it has three bedrooms and costs £4,500, the additional cost would be £30.
  Mr. Emery: What the hon. Member with his false scorn, which ill-befits him—
  Mr. Loughlin: Simulated indignation.
  Mr. Emery:—in an attempt, I think not achieved, to be rude—
  Mr. Loughlin>: Deliberately rude.
  Mr. Emery: This is typical of the hon. Member. [Interruption]. If hon. Members wish to be rude, I can go on for a long time. [HON. MEMBERS: "Go on".] They should see the pained look on the faces of the occupants of their Front Bench.
  If the Labour Party wants to be branded for putting up the price of building, this is the way to do it. The point I was attempting to make, which I ask the Front Bench to consider in the review, is that the effect in the building industry will be to substitute unplaned and a considerable amount of unfinished wood to be used in circumstances where planed and finished wood should be used. This must mean in certain circumstances—I can list them if the Committee wishes—an increase in shoddiness of building. That is something which neither side of the Committee wants to see. It is most important when considering their review that the Government should realise that there will he substitution for finished wood unfinished woods. That is something which would benefit neither hon. Members opposite nor people wanting better-built houses.
  Amendment negatived.
  Mr. J. M. L. Prior: I beg to move Amendment No. 82, in page 14, line 34, at the end to insert:
  Printing paper and newsprint within 48.01, being paper weighing not more than 220 grammes per square metre which is not either glazed paper or paper manufactured wholly of bleached or unbleached sulphate cellulose fibre.
  I hope that if I am very brief the Government will not think this is a small matter, for in fact it is very important indeed. I shall try to be as reasonable and brief as possible. The purpose of the Amendment is to exclude all printed papers from the operation of the surcharge. As a result of the removal of the surcharge from books and many other kinds of printed matter, we are left with the anomalous situation in which the finished article is exempt but the raw material is subject to the surcharge.
  The background to this case—and I hope that hon. Gentlemen opposite will listen—is that the printing industry went through a difficult period in 1959 following the stoppage of work that summer. Since then it has largely won back a great

  671
  many contracts for the printing of books in particular which it lost to Holland. It has done so because it has put in a lot of new machinery and also because, contrary to some people's opinion, some of the restrictive practices in the industry are on their way out.
  The effect of the surcharge on the raw material is such that it will encourage publishers to go overseas to have their books printed, the reason being that they will not have to pay the surcharge on the printed books when they bring them in, but the manufacturer or printer over here will have to pay the surcharge on the raw material.
  Once the printing goes over to Holland, or to Europe again, it will be very difficult to attract it back to this country after the surcharge is removed. There are two reasons for that. First, if publishers have books printed in Holland or in some other country, that will enable Holland and the other countries to modernise their industries, and that modernisation and re-equipment will continue after the surcharge has come off. Secondly, if a publisher has a book printed abroad, he will go back abroad, to Holland or one of the other countries, to have it reprinted if a reprint becomes necessary.
  The effect of the present situation is that it will increase imports of printed material and books, and in the long run decrease the possibility of exports from this country. In other words, the effect of this higher surcharge on the raw material, when it is not imposed on the finished product, is that it will increase imports and not cut them down. This is a very important matter for the printing industry, and I raise it solely because there are a large number of printing workers in my constituency.
  One of the branches particularly affected is the paperback book industry. I have examples of two printers—not from my constituency, but from near London—who use respectively £70,000 and £50,000 worth of imported paper each year. They will lose some of the printing which they now do if this surcharge is kept on. We all understand the reason why the Government in the end decided to take off the surcharge from books and other printed material, but in taking it off hooks they have created anomalies which they have been so careful to point
  672
  out during the course of other debates today. They have now created an anomaly within the printing industry itself, and the purpose of the Amendment is to put that anomaly right.
  In view of the great efforts which the printing industry has made in recent years to modernise itself and to increase its exports, I hope that we will not be left in the position in which we are at the moment, where we are placing an anomaly on the industry by allowing in the finished product free of surcharge, and putting a surcharge on the raw material.
  Sir Eric Fletcher: I appreciate the very moderate way in which the hon. Member for Lowestoft (Mr. Prior) has moved the Amendment. I think tile Committee will realise that there is indeed an element of anomaly in the position, and it is due to the fact that under the Schedule as it stands books, newspapers, maps, charts, manuscripts, typescripts, stamps, and so on, are all excluded from the charge. They are excluded partly on general cultural grounds, and partly on the grounds of our international obligations to U.N.E.S.C.O.
  It is also true that raw paper-making materials such as pulp and waste paper are excluded from the charge. On the other hand, paper and newsprint are subject to the charge. While it is true that there is this element of anomaly it is inevitable, having regard to the circumstances in which the exemptions are made. The fact must nevertheless be faced that printing paper and newsprint are fully manufactured products—they are all machine-made—and therefore it would be creating a further anomaly in relation to other manufactured products if they were excluded from the charge. I also appreciate the very considerable efforts which the printing industry has made in recent years to modernise itself, and we all wish it well and wish to encourage it in every way. But I do not share the fears of the hon. Member that the mere imposition of this charge on printing paper and newsprint will have the unfortunate effects that he expects. I do not believe that the addition of this charge will lead to a large number of books—if any—being printed overseas.

  673
  We have to recognise that this is a purely temporary charge, and we must look at the matter in the broadest possible way. Having considered all the aspects of the matter, including the views which the hon. Member has put forward, on balance I must tell the Committee that this is not an Amendment which the Government feel able to accept, and I hope for those reasons that the hon. Member will not press the matter.
  Mr. Heath: It is naturally with regret that I have heard what the Minister has said. I should have thought that there were Members on both sides of the Committee who would have listened to his decision with regret. When I wound up the debate on the Address I pointed out that as books were not then exempt, this was a tax on knowledge, and this was one of the things which all Governments, even when faced with the difficulties of Purchase Tax during the war, had avoided. I urged that books and kindred items should be exempt. I was therefore glad to see that when the Bill was published books, newspapers and similar items were exempt from the surcharge.
  I was waiting with great fascination to see what justification the Minister was going to use in this case for not extending the exemption to newsprint and the items which we are referring to in the Amendment, because it seemed that it was a contradiction that the final manufactured product, in the form of a book or newspaper, was exempt, but that the material which goes into it has to pay the surcharge, which is the exact reverse of the usual position.
  The Minister says that newsprint and the paper described in the Amendment are manufactured articles. This brings us back to my original argument, in debating pharmaceutical products, which is that so many of these problems arise from the Government's self-imposed definition of a raw material. In any industry, and in manufacturing any product, the raw material of that industry permits of a considerable number of definitions, and there is no doubt that in the case of books and newspapers the raw material is the newsprint and the paper described in the Amendment. Therefore, I am afraid that the Government have got themselves into a difficult position—which the Minister has tried to
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  explain as moderately and persuasively as he can—because of the attitude adopted towards the definition of a raw material.
  I naturally regret the conclusion to which the hon. Gentleman has now come. We have heard from my hon. Friend the various consequences of this charge. The Minister thinks it will not be very great, and that we will not send things abroad to be printed and turned into books. That remains to be seen. I think it is an undesirable tendency that this should go on because of the imposition of an artificial surcharge. Naturally, I regret it and would have preferred that the Government should have accepted this Amendment, for the anomalies that might have been created by removing this anomaly would be small compared with the benefits conferred by its removal.
  2.15 a.m.
  There is no doubt at all about the view of the newspapers on this matter. I will, if I may, quote a speech made by one of the most distinguished members of the newspaper industry as reported in the Daily Telegraph of 19th November last. It is as follows:
  "The Government's 15 per cent. surcharge applied to newsprint was described last night as 'a tax on knowledge'."
  this was at a dinner of the Printers' Pension Corporation—
  "The surcharge was a staggering blow to newspapers. It could not be to protect the newsprint industry because the industry could not produce the amount of newsprint newspapers used. According to the Government, the tax was for imported finished goods, not raw materials. Surely newsprint was a raw material? 'You can't sell the public a roll of newsprint, but we can't do without it'."
  Those were the words of Sir Max Aitken, Chairman of the Beaverbrook Newspapers, and I think that for the first time in my life I find myself in complete agreement with him. However, owing to the late hour at which I am making this statement, I doubt whether he will realise it.
  I do not think that there is more to be said on the matter. Constantly I marvel at the apparent determination with which this Government are bent on self-destruction. They have tonight insisted on imposing taxes on the people's health, housing and now on their knowledge. As we enter into the forty-seventh day of

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  this Government we are seeing them impose a tax on knowledge, and certainly the Press and the people of this country will judge for themselves.
  Amendment negatived.
  Mr. Redhead: I beg to move Amendment No. 87, in page 15, line 43, column 1, to leave out "71.02" and to insert "71.01".
  I think that it might be convenient Dr. King, to take Amendment No. 88 with this one.
  The Chairman: If that is the wish of the Committee.
  Mr. Redhead: The effect of the two Amendments together is to correct an anomaly that occurs in the Schedule by bringing into line with the precious and semi-precious stones and metals, which have been exempted from the surcharge, unmounted and unworked pearls which are obviously as natural as the materials which have already been exempted and would tidy this up.
  Mr. du Cann: I shall certainly be very brief, Dr. King. I thought that we were going to discuss all three Amendments together and I was looking forward to asking the Minister of State why we put pearls before pigs. However, I cannot, unfortunately, make that joke now.
  I wish to go back for a moment to the original debate which we had when my hon. Friend the Member for Wokingham (Mr. van Straubenzee), in a most able speech, spoke about the difficulties in which the horticultural industry will now find itself. The Minister without Portfolio will particularly remember that we were talking about rose hushes, and will remember especially that he adduced as one of his arguments against accepting that Amendment the fact that rose bushes were luxuries.
  It seems incongruous that we should now be talking about pearls, because pearls, whatever their state—worked or unworked—are quite obviously luxuries. There is no objection to the Amendment, but I would remind the Minister that, surely, if the argument were appropriate in regard to this Amendment it ought to have been equally appropriate and justifiable in the case of my hon. Friend's Amendment.
  Amendment agreed to.
  Further Amendment made: In page 15, line 43, column 2, at beginning insert "Pearls".—[Mr. Redhead.]
  Sir Eric Fletcher: I beg to move Amendment No. 89, in line 47, at the end to insert:

  73.01

  …

  …

  Pig iron, cast iron and spiegeleisen, in pigs, blocks, lumps and similar forms.

  The Amendment is designed to exclude those items from the charge. The reason for the Amendment is that the various forms of pig iron were originally included in the charge as manufactured products, but the degree of processing is regarded as fairly elementary and the Government feel that it would be inconsistent with their general policy if these items were left subject to the charge. We propose, therefore, that they be excluded.
  Mr. Cole: Without wishing to delay the Committee, I must reiterate what my right hon. Friend the Member for Taunton (Mr. du Cann) said when speaking to the last Amendment, for this action on the part of the Government is quite extraordinary. We are being asked to include in the Schedule pig iron, cast iron and spiegeleisen, though I doubt whether cast iron can be regarded as something requiring a minor process.
  This is indeed an extraordinary Schedule. Is not cast iron capable of being used for various purposes without being processed? Despite this, it is now being excluded from charge voluntarily by the Government, although the Government have refused to exclude many items which should be excluded from the charge and which my hon. Friends have been bringing to their attention throughout the day. I hope that the Government realise how inconsistent they are being.
  Amendment agreed to.
  Mr. Mark Woodnutt: I beg to move Amendment No. 91, in page 16, line 21, at the end to insert:

  84.47

  …

  …

  Machine-tools for working wood.

  The Chairman: It might be convenient for the Committee to also discuss Amendment No. 92, in line 21, at the end to insert:

  84.45

  …

  …

  Machine-tools for working metal.

  Mr. Woodnutt: In addressing myself to Amendment No. 91, I wish particularly to refer to Amendment No. 92, which deals with machine tools for working metal, because the arguments apply equally to both types of machine tools.
  I wish, first, to declare an interest. I am the export director of the Charles Churchill Group, but that fact should add emphasis to what I say because my group manufactures machine tools, is a large ex porter and has a large home market. The group must, therefore, face competition from imported machine tools. Despite this, we are completely opposed to the addition of the 15 per cent. surcharge. In saying that I am expressing not merely my view and that of the group of which I am part but the view of the entire British machine tool industry. This industry has always welcomed overseas competition. It has always been aware of the dangers of stagnation which arise when an industry has the protection of tariffs.
  This policy was re-enunciated in 1945 in a report by the British Machine Tool Trade Association to the Minister of Supply. In furtherance of this policy, in 1959 the industry applied successfully, through the British Machine Tool Trade Association, for a reduction in the basic tariff on machine tools from 17½ per cent. to 10 per cent. Until the imposition of the surcharge, machine tools were the only type of machinery to which that lower basic rate applied.
  I absolutely accept the Government's statement that it is not their intention to set up this surcharge as a protective tariff. Nevertheless, protection will be its effect. Many hard things have been said about the British machine tool industry in this House, and outside, over the past few years. Some of them may have been justified—[HON. MEMBERS: "Hear, hear."]—yes, I know—but hon. Members go just a little too far, and forget the very good firms that are breaking all export records in the machine tool industry.
  The point is that the spur to the improvement of our standards of design, quality and performance is provided by wholesome competition from overseas. Of course, we do not like it if we lose business to foreign competitors, but it
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  does make us pull our socks up and improve our standards, and that, in turn, improves our prospects in overseas markets. The Chancellor's proposal increases the basic tariff on imported machine tools to 25 per cent. That means that, in most cases, the healthy spur of foreign competition will disappear. That must be bad for the industry and for the country.
  There are other reasons for maintaining an international flow of machine tools, and very few of them imply shortcomings in the home industry. The Chancellor recognises the danger of putting this surcharge on raw materials, because he realises that if he does so it will put up the costs of production and prices, and damage our export trade, but machine tools are only one stage removed from raw materials. They are not consumer goods—they are capital goods, necessary for the production of finished goods.
  What the Chancellor is suggesting will have one of two results. It will either divert buyers to the home market—that, I know, is his intention, but it will have the bad results I have already mentioned—or, in cases where purchases of overseas machines are essential, it will stop industrialists from re-equipping because they will not pay the higher prices. They will therefore not modernise by installing new machinery, which will keep up costs—or else they will buy at the inflated cost which will, in turn, increase costs of production. So, whichever way this surcharge works, it must put up the cost of production of finished products. That cannot be beneficial to anybody.
  But possibly the greatest reason for the machine tool industry to object is the danger of retaliation by other countries. Whatever hon. Gentlemen opposite may say, we are competitive abroad, we do sell machines of an extremely high quality, and we have good and growing export markets. In 1963, our export of machine tools was worth £39 million, or 34 per cent. of our total manufacture. We imported £26 million worth of machine tools. That surplus of £13 million is the highest surplus the industry has ever achieved. This year it is going even higher. If we put on this surcharge and other countries retaliate, we put these exports in jeopardy, and that cannot be right.

  679
  It is also suggested that the surcharge should be on imported parts of what are otherwise British machines. This again would put up costs and prices. It is all very well saying that we should not have bought any parts from foreign countries in British machines, but very often when we are selling abroad the importer will insist that certain parts are of foreign manufacture. If this surcharge goes on these parts, as it will, it will put up the cost of production and we shall have to put up our prices in the export markets and it will put our export markets in jeopardy.
  2.30 a.m.
  I hope that the Minister will think about this again, and if he feels that he cannot do anything tonight I hope that at least he will be able to assure me that he will receive a deputation from the machine tool trades industry to discuss these real problems with which it is faced.
  Mr. Redhead: The Committee will readily recognise, notwithstanding the arguments adduced by the hon. Gentleman, that to make an exception in the general range of machinery and mechanical appliances subject to this charge would be wholly foreign to the concept of charging all fully manufactured goods. I appreciate the hon. Gentleman's argument that in certain cases we are particularly dependent for the supply of specialised types of machine tools on foreign suppliers. The hon. Gentleman has also urged that this will have an impact upon our exporting position. But I suggest that there is no serious reason to suppose that a United Kingdom manufacturer will allow his competitive position to be lost by reason of the 15 per cent. charge, when one takes into account the fact that investment and depreciation allowances bring the net total to about 44½ per cent.
  In these circumstances, I am bound to contend that there is not a strong case for accepting this Amendment, and certainly it would be inconsistent both with the area of the charge and with decisions previously taken.
  Mr. Snow: I am glad to hear my hon. Friend the Minister of State, Board of Trade make those remarks because some of the utterances of the hon. Member for
  680
  the Isle of Wight (Mr. Woodnutt) need some correction.
  I am not sure that it is a good thing to depreciate the efforts of some of the machine tool manufacturers, although taking the industry as a whole there is nothing very much to be proud of either in the exporting of these products or in the prices to the consumers. I have been doing a bit of homework on this subject during the debates on other Amendments in which I was not particularly interested, and I hold in my hand the Machineries Annual Buyers Guide, 1964. This contains the names of a vast number of machine tool manufacturers and the specialised products that they produce.
  One can only think that the industry must be in an extraordinary plight, either in badly organised production or that it virtually ignores all export demands. I do not think this is the occasion on which to talk about exports at great length, but it is not uninteresting to note that between 1963 and 1964, taking the first 10 months in those two years, our exports were virtually stagnant, and that as far as imports are concerned the position is degenerating seriously.
  Mr. Woodnutt: Could the hon. Gentleman say exactly what he means by saying that our exports are stagnant? Would he like to give me the figures from 1947?
  Mr. Snow: I would refer the hon. Gentleman to pages 295 and 296 of the Trade and Navigation Returns. He can read the figures for himself. As to the import position in the first 10 months of 1963 and 1964, whereas in 1963 we imported approximately £21 million worth, in 1964 we imported approximately £30 million worth. This is a degenerating position and I was very glad to hear my hon. Friend make the case he did. It seems to me that there is a strong case here for encouraging our producers to supply the requirements of British industry. This continual importation is a luxury which we can ill afford.
  Mr. Stanley Orme: The point which my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) has just made is very important. If the surcharge does nothing else, it highlights the inefficiency of the machine tool industry in general in a country one of whose basic industries is engineering. It is a 19th century conception of the

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  machine tool industry in the 20th century. It is an absolute disgrace that many of the machine tools which have to be imported should not be manufactured here.
  I raised this question with the Prime Minister only the other day. I hope that in future we shall be able through the Department of Technology established by the Government to set up publicly-owned sectors of experimentation and development, particularly in machine tools, and as a result give a lead and at the same time provide the tools which British industry so vitally needs.
  Mr. Woodnutt: We have got away somewhat from the Amendment but I feel that I must speak up for the machine tool industry. Hon. Members opposite are doing a good deal of damage to the industry and they are not justified in what they are saying. Since 1947 exports of machine tools by British manufacturers have quadrupled. Our exports last year exceeded our imports by no less than £13 million. When hon. Members opposite say that this is a stagnated industry I should like to give them the opportunity of coming with me to some of the research and development units set up by individual private enterprise groups throughout the country. They would see for themselves the vast amount which these firms are spending on bringing out new machines and keeping Britain in the forefront of world machine tool manufacture.
  I do not know with what authority or with what experience hon. Members opposite speak, but I am engaged in this industry. If hon. Members had been at the machine tool exhibition at Olympia in July they would have seen British machines which are better than any produced anywhere in the world.
  The Chairman: I have allowed a little to be said on both sides about the machine tool industry but I hope that we shall get back to the Amendment now.
  Mr. Woodnutt: As for exports, two years ago in Japan no fewer than 10 British groups exhibited machines. They went flat out to increase our exports, and they have done so. It is—
  The Chairman: Order. I have already allowed some latitude, but I must ask
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  the hon. Member to relate anything further he has to say to the Amendment.
  Dame Irene Ward: May I ask the hon. Member for Salford, West (Mr. Orme) what response he had from the Prime Minister to his suggestion of a new form of nationalisation in this field?
  Mr. Ian Mikardo: I had not the least intention of intervening, but, as hon. Members know, I can resist everything but provocation, and I have been greatly provoked by several of the speeches of hon. Members opposite, notably the one just made by the hon. Member for the Isle of Wight (Mr. Woodnutt). As you have pointed out, Dr. King, this debate is not about the machine tool industry and its merits or demerits. It is about a certain tax proposal. But I hope that I may be allowed to say, as the hon. Member went on for so long, that all these arguments one way and the other were fully disposed of by a highly authoritative, completely objective and most expert survey of the industry made a few years ago by the Department of Scientific and Industrial Research.
  Mr. Woodnutt: That was a few years ago.
  Mr. Mikardo: And there has been very little change since. If I had been a man running any part of the machine tool industry in Britain, I should, after reading that report, have tied a capstan lathe round my neck and chucked myself off Westminster Bridge.
  In urging exemption for imported machine tools, the hon. Member for the Isle of Wight touched our hearts with the beautiful picture he drew of this stouthearted industry welcoming competition from abroad because it gives it great stimulus. We ought not to be subjected—I do not want to use too harsh words—to that sort of hypocrisy. Reference to the directory of the machine tool trade association will show that there are a lot more firms in it making money out of buying and selling machine tools, mostly foreign machine tools, than out of manufacturing them. It is this fact which is the motivation of the tender solicitude expressed by the hon. Gentleman.
  Mr. Woodnutt: May I ask whether there was an interest which the hon. Gentleman ought to have disclosed?
  Mr. Mikardo: I am happy to answer that. Absolutely none whatever. You would know that, Dr. King, and you have known me long enough to know that, if there had been such an interest, I should have disclosed it without any prompting.
  The Chairman: Order. I hope that hon. Members will not call the Chair in aid for or against any argument.
  Amendment negatived.
  Mr. Burden: I beg to move Amendment No. 97, in page 17, line 17, at the end to add:

  Part 2

  …

  …

  Cotton grey cloth imported for processing and for finishing in the United Kingdom.

  The hon. Member for Tottenham (Mr. Atkinson) made an important disclosure in his short speech when he said, with reference to a previous Amendment, that slight changes in price can bring about redundancy. He expressed a fear for the particular industry which he then had in mind. Having regard to what was said by right hon. and hon. Gentlemen opposite at the time of the election about keeping down prices and ensuring that there would be no increase in unemployment, one wonders where this Bill is leading. We were not greatly surprised when, during the earlier hours of the debate, when there were far fewer hon. Members opposite present than are here now, there was stony-faced silence on the Government side during a lot of the argument, and it was clear that hon. Gentlemen were seriously perturbed by some of the revelations which were made.
  I should like if I may to make one short reference to the Minister from the Board of Trade, whom I know well and have fought in a General Election. I have great admiration for him and I realise that he might have thought I was making a personal reference—
  2.45 a.m.
  The Chairman: Order. I should be grateful if the hon. Gentleman would come to his Amendment.
  Mr. Burden: I want now to refer to the question of cotton grey cloth. I have noticed that the hon. Gentleman the Member for Gloucestershire, West (Mr. Loughlin) has from a recumbent position been referring to a great many things. If he wishes to intervene I shall be very glad to give way to him.
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  I would refer to the position of cotton grey cloth, which is of very considerable interest to the cotton textile industry in this country, and I should like to point out to the hon. Gentleman who is to reply to this debate that it is the first weaving of the yarn from which cotton fabrics and a vast assortment of wearing apparel—[Interruption.] If the hon. Gentleman wishes to intervene I will gladly give way.
  The Chairman: Order. I hope the Committee will listen to the speech which is being made, and I hope the hon. Gentleman who is making it will not invite interruptions.
  Mr. Burden: Dr. King, I was not inviting anything, but there have been remarks from the other side and I can go on a very, very long time.
  A great number of goods—wearing apparel and household goods—emerge from cotton grey cloth, goods which are bought in the shops by the women of this country, and by the men too—towels, sheets, household goods, clothing and goods of such descriptions—and no wide stretch of the imagination is required to see how many of these articles are associated with the daily needs of the families of this country.
  In the first six months of this year, no less than 857 million square yards of cotton grey cloth were required, and I think one can reasonably assess that in the second six months that can be doubled. It means that just over 1,714 million square yards of cotton grey cloth are required for the industry of this country. Of this about 38 per cent.—654 million square yards—must be imported if we are to fill our home and export requirements. These figures reflect the heavy reliance placed in this country on meeting our requirements from overseas sources, and the Cotton Board itself has said that in 1963 cotton grey cloth was imported from India, Hong Kong, Pakistan, China, Portugal, Japan, the Irish Republic and Canada. Indeed, from this imported grey cloth—and this should surely interest hon. Gentlemen opposite—no less than 90 per cent. of the industrial clothing used in this country was manufactured, and most of the cloth that was imported—
  Mr. Loughlin: On a point of order, Dr. King. Is it not out of order for an hon. Member of this House to read a

  685
  speech in Committee in this fashion? He can hardly keep his eyes away from his script. If he is going to read a speech, would it not be desirable that he should read it slowly so that we can understand it?
  The Chairman: Order. The order of the House is that hon. Members may not read speeches but they may use copious notes.
  Mr. Burden: At the end of making my speech from notes I shall be delighted to go on for half-an-hour without notes. If hon. Members wish, I shall be happy to detain them for much longer.
  The cloth imported from China, Japan and the Irish Republic is all re-exported after being processed.
  Mr. Hugh Delargy: Where?
  Mr. Burden: To a great many countries overseas.
  Mr. Delargy: The hon. Member is making the point that these articles are re-exported. He ought to tell the Committee to which countries they are exported.
  Mr. Burden: If the hon. Gentleman is interested, I suggest that he gets in touch with the Cotton Board, from which I obtained this information. Some of the exports go to African countries. [Laughter.] It is clear that hon. Members opposite must be kept here another hour. I am sorry but I shall have to make a very long speech.
  The average cost of the imported grey cloth is 14d. per yard and the average cost of the cotton grey cloth manufactured in this country is 18d. per yard, a difference of about 20 per cent., which represents a considerable advantage in the final cost of the article produced to British housewives and others and which assists us in re-exporting much of this processed cloth which otherwise we should not export. The British mills could neither make many of the types of grey cloth which are required nor could they in any circumstances produce the quantity of grey cloth required within the next year.
  It seems to me that when this surcharge was introduced the Government had no intention to cut back the cotton grey
  686
  cloth brought into this country for re-export or processed for the essential requirements of industry in this country and the provision of the household goods necessary for the well-being of the general trade and industry and the families of this country. If the 15 per cent. surcharge is retained it will mean that over a very wide range of articles there will inevitably be a considerable increase in costs in the months ahead. [Laughter.] Some hon. Members opposite who are showing such extremely bad manners have been in the House for a very short time, and it may well be that when they have been here a little longer they will learn good manners—which they are not showing at the moment. I think you would agree, Dr. King, that when a party is in opposition, and the Government require to get their business through quickly, if hon. Members on the Government benches behave in a bad way, the Opposition can keep them here for many hours, so that they have great difficulty in getting their business through.
  In answer to a Question which I put down the Chancellor of the Exchequer stated that he would allow drawback on cotton grey cloth. Of course, this is an extremely difficult thing to do in the cotton trade, of which I have some experience, and in which I declare an interest. [HON. MEMBERS: "Ah."] Hon. Gentlemen opposite are most extraordinary, because now it seems that if anyone has knowledge of an industry about which he is speaking, and about which he has some experience, in some way there is something unpleasant about it. I would remind hon. Gentlemen opposite that they are connected with the trade unions, whose interests they are—[Interruption].
  The Chairman: The hon. Gentleman is perfectly in order in declaring his interest. I hope that he will now deal with the Amendment.
  Mr. MacDermot: I am not sure whether the hon. Gentleman was present when I intervened at an earlier stage to say that it is proposed to have a more flexible system of drawback for this commodity than for the protective commodities. It is not anticipated that there will be any of the difficulties which he is anticipating and fearing in making a drawback such as this work.
  Mr. Burden: I am glad to hear that undertaking, but that was not exactly what was said in the reply I received. It included the words "where cotton grey cloth can be recognised". The right hon. Gentleman will appreciate that this cloth is manufactured into a great many different types of articles. The same piece or consignment could well, by the time it is finished, have passed through three or four different processes and bear no resemblance to the original cloth. It could have been printed cotton, towels or sheets. It could be extremely difficult for the Customs authorities to recognise that it had originally been imported. The amount of rebate which would be obtainable by the original importer of the cloth would have to be reclaimed and passed on to the exporter so that it would give benefit at the point of re-export.
  These are tremendously difficult matters, and I am glad to be told that the Government realise the problems, because if they were going to carry this out eventually at all, it would mean that they would not only have to have a big army of Customs officials, but those Customs officials would find it almost impossible to carry out this job. It is my experience that there are these difficulties—
  Mr. Diamond Mr. Diamond indicated assent.
  Mr. Burden: The hon. Gentleman shakes his head. There is another point which I would bring to the notice of the hon. Gentleman the Financial Secretary in relation to this, and that is that unless there is rapid action by the Customs authorities in dealing with this problem, there could be considerable delays in the disposal of the goods at the point of manufacture. This could lead to very serious problems in dispatching the goods and in getting them out to the customers on time.
  3.0 a.m.
  As a result of this action by the Government, the impost of 15 per cent. will help not at all in cutting back imports of cotton grey cloth to the mills of Lancashire or anywhere else. There will still be a shortage and it will have to be imported. Converters and processors have already made it clear to me that they have no intention whatever of discontinuing
  688
  imports, because they must have them. Many of these imports are necessary to the economic well-being of the country and for re-export. If the impost means that prices of many articles will rise that clearly is against the best interests of the country. There would be no reduction in the amount of grey cloth imported. It would seem sensible for the Government to accept the position and immediately to remove the surcharge from cotton grey cloth.
  In any case, it can be carried on for only a short time, we hope for only a few months. Many people seem to regard this matter as if there were some measure of virtue in the surcharges. There is no virtue in them. They will not protect British industry where there is no replacement in this country and they will increase prices in the shops. They will make no contribution whatever to the balance of payments. I therefore ask the right hon. Gentleman to reconsider the matter.
  Mr. Loughlin: I am rather sorry that the hon. Member has not developed his case in the way in which he said he would. Will he tell us whether the suppliers of his brief—I understand them to be the Cotton Board—have made any estimate of the reduction in imports of cotton grey cloth consequent upon the introduction of the 15 per cent. surcharge? Will he say, having made that estimate, what actual effect it will have on the production of cotton goods in this country?
  Mr. Burden: The hon. Member has shown by his intervention and the fact that he has not been here—
  Mr. Loughlin: I have been here all the time.
  Mr. Burden: —his utter stupidity and lack of knowledge of anything connected with the industry. It so happens—
  Mr. Tudor Watkins: Take your hands out of your pockets.
  Mr. Burden: It so happens that neither the Cotton Board nor anyone else provided a brief, but that because of my knowledge of the industry I am well informed on the matter. I was therefore able to deploy the case. When the

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  hon. Member for Gloucestershire, West has as much knowledge of any industry as I have of this industry, he may be able to speak with a little more accuracy and knowledge than he has exercised tonight.
  Mr. Loughlin Mr. Loughlin rose—
  The Chairman: Order.
  Mr. Loughlin: On a point of order. It is permissible for an hon. Member who wishes to address the Committee to speak—
  The Chairman: Order. The Question is that those words be there added.
  Mr. Loughlin: I am sorry, Dr. King, but it is so long since the hon. Gentleman moved the Amendment that I had forgotten that the Question had not been proposed.
  I am sorry, too, that the hon. Gentleman seemed to resent my putting a question to him before he sat down. I wanted to assist him, because on five occasions he threatened to make a long speech. When I raised the question of reading speeches in the Committee, he said that he could go on for hours.
  I do not know whether his speech was supplied by the Cotton Board, but when he departed from his brief, I exercised my well-known ingenuity—and heaven knows it is necessary to expend a considerable degree of energy to use one's ingenuity at five minutes past three in the morning—in an effort to put a question to him which would enable him to continue for at least another hour. Having put my question to the hon. Gentleman, he was so basely ungrateful as to accuse me of having an ulterior motive in putting my question.
  If a case is deployed for the suspension of this charge in respect of certain goods, and it is argued that the retention of the surcharge will result in a reduction in imports of a commodity which cannot be found here—it appears that the football match is over and the crowd is leaving—surely it is important that the Committee should be told precisely what the effect will be, if an estimate has been made of the effect?
  I should have thought that that was important to enable the Committee properly to consider the Amendment, because the hon. Gentleman may have
  690
  found that by his brilliant persuasion and ad libbing—heaven knows, he had 43 pages of notes—he has persuaded some of us on this side of the Committee to revolt against the Government and join him in the Division Lobby—provided, of course, that he has the courage to call a Division at the end of the debate.
  I am disappointed with the hon. Gentleman. I feel deeply hurt that after my wonderful effort to do him a good turn he should turn round and throw cold water in my face.
  Sir Eric Fletcher: The Committee has accepted the principle of the surcharge, and I think that all it is necessary for me to say to the hon. Member for Gillingham (Mr. Burden) is that it must by this time be obvious to everybody who has listened to the debate that, for reasons which I need not repeat, it would be impossible for the Government to accept the Amendment. It would be inconsistent with the general principle of the scheme to do so. It would have obvious repercussions. Acceptance of the Amendment would be fatal to the whole scheme, and I must therefore ask the Committee to reject it.
  Mr. Delargy: I have often listened to the hon. Member for Gillingham (Mr. Burden). Normally, he speaks without notes. Normally, he is interesting. Normally, he speaks grammatically. He observes all the rules. But tonight I am sure that he was not making his own speech, because he can speak far better than that. The person who prepared his brief should be given some tests in grammar and rhetoric. It was quite disgraceful, and it did no service to the hon. Member, who is usually quite intelligent.
  Mr. Burden: On a point of order. Has this anything to do with the Amendment, Sir Samuel?
  The Deputy-Chairman: I was beginning to wonder what it had to do with the Amendment. I hope that the hon. Member will come to the terms of the Amendment.
  Mr. Delargy: I am surprised that the hon. Member asks what this has to do with the Amendment, because I did not know what his speech had to do with it. He and I are experts in the matter of knowing nothing about the Amendment.

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  I do not know what the Amendment is; I do not think that he does. It says:
  "Schedule 1, page 17, line 17, at end add:

  Part 2

  …

  …

  Cotton grey cloth for processing and for finishing in the United Kingdom."

  I do not remember the hon. Member's referring to that. I want to ask him one question. He bored us for a long time—although not so long as he said he would. Will he vote for the Amendment?
  Amendment negatived.
  Question proposed, That this Schedule, as amended, be the First Schedule to the Bill.
  Mr. Peter Emery: I will attempt to keep the Committee for only two minutes.
  Mr. Delargy: Take ten minutes—the same number as your majority.
  Mr. Emery: In the consideration of the whole Schedule there are two specific points which it has not been possible to bring out. This is the only opportunity to do so. There has been the continuous statement from the Government that they will attempt to ensure that the price of food does not rise. In the matter of wrapped paper—the greaseproof paper which is used by the food industry—there is a case for reconsideration with a view to exemption. The paper is used to a great extent for packaging food, and this charge may bring a definite rise in prices in certain sections of the food industry. When the Government review the matter will they look at that specific point? Will they give an assurance to that effect?
  Secondly, there is the question of the production of molybdenum bearing steel. On 4th November the Board of Trade made a specific tariff reduction in respect of molybdenum trioxide. [Interruption.] This question is of great importance to some sections of the steel industry. I have no interest in the subject, but I think that many steel firms in the constituencies of some hon. Members opposite are very interested in it. On 4th November the Board of Trade saw fit to grant exemption from duty in order to encourage the use of molybdenum trioxide. Will the Government consider the case of ferro molybdenum with a view to similar
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  exemption? Many people consider that an error has been made, and that ferro molybdenum, which does exactly the same job for the steel industry as molybdenum trioxide, ought also to be excluded. I do not ask for an assurance, other than that the Government will definitely undertake to look at this matter and make certain that a mistake has not been made.
  3.15 a.m.
  Mr. Cole: I have a serious point to make on which I should like information. I hope that the answer will be in the affirmative—it may be—but for the avoidance of doubt I should like the Minister of State when he replies to tell me. On page 14, the Schedule refers to raw hides and skins. There seems to be some doubt about the matter.
  I am speaking on behalf of a firm in my constituency whose export record in the highest year was 74·7 of its products, and in no year was it less than 36 per cent. The firm deals in the treating of reptile and crocodile skin and ostrich leathers. I am sure that the Government do not expect to see these creatures swimming up the Thames and know that these hides and skins have to be imported.
  All I am asking for is the Minister's assurance that the definition in the Schedule, which is a broad one, does include these skins which for purposes of maintenance and to prevent them from becoming too brittle have to be encrusted or hide-tanned at the point of origin. When they reach this country the rough tanning and the other process are largely stripped off and they are then made into various articles.
  The question I wish to ask is simply this. Does this broad definition of raw hides and skins include the category of articles to which I have referred? This is of the greatest importance to this firm which expects its total export sales this year to be around £200,000. On the other hand, because of the application of the preservative, are these materials taken out of the realm of this Schedule?
  If the definition does, I am perfectly happy, and so is the firm. I should like to suggest that this has nothing to do with the definitions that we have had tonight, but is merely a matter of the interpretation of raw materials coming into this country to be worked. Because of the application of the preservative, are these

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  materials considered to be manufactured articles? I should very much appreciate a reply tonight. It is a technical point.
  Mr. Derek Page: I was very happy to hear my right hon. Friend the Financial Secretary explain earlier in the evening that the rates of drawback for the 15 per cent. levy would be different from those for ordinary duties. Many of my friends in the chemical industry, in which I have an interest, are still very concerned and believe it possible that the levy might push up the cost of their exports. Would my hon. Friend make it clear that the drawback will be applicable to chemicals which are changed chemically in the process?
  Mr. MacDermot: May I first say to the hon. Member for Reading (Mr. Peter Emery) that we will, of course, be glad to look at the specific points to which he referred, and I give the same answer to the hon. Member for Bedfordshire, South (Mr. Cole). If he will be good enough to send me the letter which he had in his hand when he was speaking I shall be very glad to look into the matter.
  I would repeat the invitation to hon. Members to urge any firms which have specific points in the matter—and no doubt they will—to take them up with their local Customs officials, and, if they think that the matter has not been fully considered, to refer it to Customs headquarters or through hon. Members to me, when I will look at any points raised. We want to make the scheme work as reasonably as possible.
  In answer to my hon. Friend the Member for King's Lynn (Mr. Derek Page), I can quite explicitly assure him on that point. Where imported chemicals are used in chemical manufacture they will, of course, at times undergo chemical processes which will change their chemical nature. This will not disqualify them for drawback, but it is important to remember that in this, as in all cases where drawback is to be applied for, proper evidence shall be produced and proper records kept so as to enable the applicant to establish his case to the satisfaction of the Customs authorities. If that is clearly understood, I think that exporters will find that they
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  will get real co-operation on the matter of drawback.
  Question put and agreed to.
  Schedule, as amended, agreed to.
  Clauses 5 and 6 ordered to stand part of the Bill.

  Schedule 2.—(RELIEF FROM EMPORARY CUSTOMS DUTY.)
  Mr. MacDermot: I beg to move Amendment No. 124, in page 18, line 12, at the end to insert:
  Goods used in building, repairing or servicing aircraft or for tests or experiments
  2.—(1) The Commissioners may remit or repay duty in respect of goods—

  (a) if satisfied that it is intended to use them as components or parts of any aircraft of a maximum total weight exceeding 18,000 pounds in the course of building, repairing, refitting, maintaining or servicing the aircraft; or

  (b) if and so far as the relief appears to the Commissioners to be necessary or expedient with a view to conforming with an international agreement relating to the importation of materials, parts or components to be subjected to tests or experiments in the course of designing or developing a type of aircraft of a maximum total weight exceeding 18,000 pounds.

  but subject to such conditions and restrictions as the Commissioners may think fit to impose for the purpose of securing that duty is paid if the goods are used in a way not qualifying for remission or repayment of duty under this paragraph.
  (2) A maximum total weight for the purposes of this paragraph is that authorised in the certificate of airworthiness in force in respect of the aircraft or, if there is no such certificate in force, is that ascertained in such manner as the Commissioners may direct.
  This is one of the Amendments I referred to yesterday as being one of those which the Government had tabled to meet, as far as we could, the request made to us to apply some of the provisions in the Fourth Schedule of the Import Duties Act to this duty.
  The Amendment will enable the Customs to remit or repay the temporary charge on imported goods if it is satisfied that it is intended to use them as components or parts of exempt aircraft or if the goods are covered by an international agreement relating to the importation of materials, parts or components for test or research in the course of designing or developing an exempt aircraft. This is a natural and logical corollary to the exemption for large aircraft.
  Mr. du Cann: This is, I am sure, an excellent Amendment, although there is one point which may have some substance and which I hope the hon. and learned Gentleman will look into. It concerns small aircraft. A limit, by weight, is involved and I hope that—naturally not at this late hour but soon—he will satisfy himself that the limit is the right one; that the building, repairing or servicing of smaller aircraft will in no way be jeopardised by the fact that this limit exists.
  The whole Committee will agree that the smaller aircraft is extremely important, not only for domestic purposes, but also for the export trade, and so on. I would be grateful if the hon. and learned Gentleman would give his usual careful attention to this matter between now and Report.
  Mr. MacDermot: We have considered the matter and have tried to go as far as we reasonably can. We must start with the limitation that the exemption for aircraft is, and must be, limited to large aircraft because they can be defensible as being aircraft which are engaged on international routes and trade. The definition of "heavy aircraft," for this purpose, has been fixed with a generously low weight limit. The result is that it will cover all types, down to the largest of the twin motor helicopters and the biggest of the twin jet executive aircraft, but it will not cover the vast majority of executive aircraft and parts, which will still remain chargeable, like private and club aircraft.
  Mr. Peter Emery: Is the Minister aware of the great complication which will arise because components for some of the larger aircraft are also used in exactly the same way for some smaller aircraft? In other words, certain types of nut which have to be used, and which have to be bought in America—[Laughter.] Hon. Members opposite must realise that we are trying to proceed with serious points, and might let the Committee consider them.
  There are certain components that are interchangeable between different aircraft. It is suggested in the aircraft industry that a certain form of bookkeeping and a certain manner of control, which is not now in existence, for dealing with this form of equipment
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  would make it quite practicable to apply what I think the Government want to apply. I hope that the Government will look into this question of the interchangeability of components so that they can be quite certain they cannot help the industry a little further.
  Mr. du Cann: I must press the Financial Secretary just a little further on this matter. He was good enough to instance certain types of aircraft which he correctly described as international, in the sense, as I think he meant it, that they are customarily used for making trips abroad. He quite rightly instanced helicopters and the new type of twin jets, but certain aircraft flying abroad on charter cover types that are well below what I might call as the upper limit set down here. It is perfectly easy to charter very small aircraft of the single-engine and twin-engine type, which are very much below this weight limit.
  It is plain from the very fact that the Government have tabled this Amendment that they have no wish to impede in any way, or cause in any way difficulty to an industry that is thoroughly justifiable and desirable in every way in the national interest. I hope that the Financial Secretary will appreciate that we take this matter very seriously, which is why I am now pressing him on the subject. Perhaps, between now and Report, he will look again at the definition with a view to satisfying himself that the situation is as satisfactory as he now appears to think it is. I am quite convinced that the subject merits further investigation.
  Mr. MacDermot: I will certainly look at it again but I cannot hold out any great hope because, from the look I have already had, I think that the definition has been drawn up on a generously low weight limit.
  Amendment agreed to.
  Mr. MacDermot: I beg to move Amendment No. 99, in page 18, line 18, after "goods", to insert "(a)".
  Perhaps, Sir Samuel, it might be for the convenience of the Committee to discuss also Amendments Nos. 100, 101 and 102.
  The Deputy-Chairman: Yes, if that is the wish of the Committee.
  Mr. MacDermot: The effect of the Amendments is to allow deferment of the duty point to the point of clearance from abroad in certain cases where Customs are satisfied that the goods, or the major portion of them, after being imported and placed in bonded warehouse in the course of trade or business are subsequently re-exported. The Amendments are put down to meet the difficulties facing the British fur trade and Oriental carpet trade. Those engaged in the business, conduct a trade in this country in which the goods in which they deal are all imported—or virtually all are imported—and a very high percentage of them are re-exported.
  It is impossible for these people at the time of importation to specify which particular goods will later be re-exported, and they have represented to us, in a way that we have found compelling, that it would put very great barriers in the way of their trade if they had to pay the charge on the whole of the goods at the time of import, and later claim drawback.
  The intention of the Amendments is to make a special exception of that trade for this purpose. It is entirely within the spirit of the provision which is already in subsection (7) of Clause 5, but it would not be practicable for those in the two trades to take advantage of that subsection as drawn.
  Amendment agreed to.
  Further Amendments made: In page 18, line 20, at end insert:
  "or
  (b) are goods which are being warehoused in the course of a trade or business in which the major part of the goods of the kind in question which are imported in the course of the trade or business are re-exported".
  In line 21, after "under", insert "paragraph (a) of".
  In line 30, at end insert:
  (3) Goods warehoused without payment of duty under sub-paragraph (1) (b) of this paragraph shall not be removed from warehouse, or otherwise removed from the control of the Commissioners, for home use except after the duty chargeable has been paid or secured to the satisfaction of the Commissioners.—[Mr. MacDermot.]
  3.30 a.m.
  Mr. MacDermot: I beg to move Amendment No. 103, in page 19, line 30, at the end to insert:
  Articles for scientific research, etc.
  5.—(1) Articles intended to be used in scientific research, or for a purpose connected with the advancement of any branch of learning or art or with the promotion of any sport, and not intended to be sold, or to be used for any purpose which is substantially a commercial purpose, shall qualify for relief from duty under section 3 of this Act in accordance with this paragraph.
  (2) In relation to articles of the description in sub-paragraph (1) above (which is the same as the description in paragraph 3 of Schedule 4 to the Import Duties Act 1958 (goods qualifying for exemption under Treasury directions)) section 6 of that Act (power to exempt particular importations of certain goods) shall have effect as if any reference to any import duty (that is any duty under section 1 of that Act) included a reference to duty under section 3 of this Act.
  Goods specially designed for the education. scientific or cultural advancement of the blind
  6.—(1) The Import Duty Reliefs (No. 4) Order 1958 (goods specially designed for the education, scientific or cultural advancement of the blind) shall apply in relation to duty under section 3 of this Act as it applies in relation to duty under section 1 of the Import Duties Act 1958.
  (2) References in section 10 of the Import Duties Act 1958 (offences in connection with applications for relief) to relief under section 5 of that Act, or subsection (1) of that section, shall include references to relief given by virtue of this paragraph.
  This is the second of the Amendments to give effect to the undertaking to which I referred last night, and it will extend to the charge the reliefs given to the non-commercial importation of articles used in scientific research or in the advancement of any branch of learning, art or sport and to welfare articles for the blind which are at present contained in the Import Duties Act, 1958.
  I explained the purpose of these Amendments yesterday, and unless the Committee wish, I do not propose to take up time in doing it again now.
  Mr. du Cann: As I said earlier in the discussion about aircraft, we remember very well the debate that we had last evening on the subject of the Import Duties Act, 1958, and without deploying for a second time all the arguments that were used on that occasion, I would mention that I remember, in particular, we took the view—I am putting it shortly—that it would be right for the kind of exemptions given on the payment of duty under Treasury direction under that Act to be extended exactly to

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  the surcharge. In other words, exemptions would similarly be given from payment of surcharge in those specific categories.
  The Financial Secretary made a considered and careful reply, and I said that I was looking forward to reading it in the cold light of day—
  Mr. MacDermot: Dawn.
  Mr. du Cann: In fact, it is not possible. First, I was not up at dawn, and I dare say that few other Members were. Also the debate took place after half-past ten at night, and we have not seen the HANSARD report.
  May I, therefore, ask the Financial Secretary this question? Do I understand that these Amendments are as far as the Government are prepared to go? If that is so, our view is that they ought to go further and I hope the Financial Secretary has that point in mind. I realise that these Amendments which we have lately been discussing were tabled some time ago and it may be that the hon. and learned Gentleman has other Amendments in mind. I hope so.
  May I ask the hon. and learned Gentleman to reconsider, and in more detail, at the conclusion of the debate the discussions that we had last night, which we take very seriously? We believe that the points that we put forward were indeed valuable and valid. If the hon. and learned Gentleman feels that he is unwilling or unable to meet us in precisely the way we would wish, I must say that we should wish to take the opportunity of raising the matter again at a later stage.
  Mr. MacDermot: Whatever may be the light when the words in our debate do appear in print, I will certainly look at them again. But I should make it clear that we have considered the Fourth Schedule of the 1958 Act carefully in relation to this charge, and our present view is that this is as far as we can go. Unless there is something much more persuasive in what the hon. Gentleman said last night than I appreciated at the time, I cannot hold out any great hopes for him.
  Amendment agreed to.
  Schedule, as amended, agreed to.

  Clause 7.—(PAYMENT OF REBATES.)
  Dame Irene Ward: I beg to move Amendment No. 104, in page 8, line 2, to leave out "ship or".
  The Deputy-Chairman: With this Amendment we can discuss Amendments No. 105 and No. 106.
  Dame Irene Ward: I almost apologise for embarking on these Amendments at this hour of the morning. However, they relate to export rebate and they refer specifically to ship repairing, which, hon. Members will realise, is a very important industry, and is at present subject to great pressure and international competition.
  I want, first, to put briefly the background propositions in relation to the Amendments. The first is that those ship-repairers' councils which speak as representatives of the industry are seriously perturbed that the Clause alters the continuity of policy which the industry has had for many years. In other words, ship repairing has always been regarded as an export industry. As the Clause seems to completely alter this continuity of policy, those connected with the industry naturally take great exception to it.
  Secondly, those employed in the industry and those who are responsible for it are greatly dismayed that the Clause appears to be discriminatory against the ship-repairing industry. I represent a constituency which is concerned with ship repairing and I refer in the Amendments only to that industry. I am not arguing the case for the aircraft industry which is also concerned in the provisions of Clause 7(4).
  Ship repairers are seriously dismayed that powers in the Clause relating to export rebates are discriminatory against the industry, and in their interest I have been asked to raise the matter. It would serve the purpose of my Amendments if I gave the basis for my argument that the Clause seems to mean an alteration in policy directed towards the ship-repairing industry. I therefore want to quote from a letter from the Dry Dock Owners and Repairers' Central Council, which puts the position exactly as it has been for many decades.
  The letter says that
  " All ship repair work on sea-going ships is export work. This was recognised at the time of serious material shortages in 1946."

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  Fortunately, in the argument which I am deploying tonight I am dealing with the attitude of Her Majesty's Government at the time when they were His Majesty's Government in 1945. I am, therefore, not entering a controversy about the Socialist or Conservative approach to ship repairing. I am glad of this because as this was the Government's policy in 1945 it seems all the more remarkable that we should find this change of policy in the Bill.
  The letter goes on:
  "This was recognised at the time of serious material shortages in 1946, when the Admiralty (then the industry's sponsoring Department) instructed Regional Officers to have regard to the very important part which the industry played in the export drive. The official Admiralty Instruction said:
  'In view of the fundamental importance of these industries. Merchant Navy and merchant building repairs and reconversions should be regarded as themselves of prime importance as contributing to the export drive.'
  In 1947, the Admiralty officially advised the Shipbuilding Conference that all ship building was henceforth to be treated as export work, without distinguishing between work for the British flag and work for foreign account. White Papers published in 1947 (Economic Survey for 1947) and 1948 (Capital Investment in 1948) both make the same point, and in all these circumstances ship building has always been interpreted as including ship repairing."
  I am sure, therefore, that I shall receive a sympathetic response from the Government. It would be very helpful to the ship-repairing industry if the Government spokesman would be good enough to explain this apparent difference in the treatment of ship repairing as an exporting industry. Both sides of the Committee attach great importance to ship repairing and to the part which shipbuilding, ship repairing and the Merchant Navy play in our country's economy. I hope that arrangements will be made to treat ship repairing as an export industry, as it has been in the past, so that it may obtain the benefit of the export rebate.
  Hon. and right hon Members should realise, having regard to the competitiveness of our industry and the international competition which we face, that any additional money which comes in through ship repairing will be of benefit not only to the industry itself, but to the country's economy.
  Mr. Redhead: The hon. Lady the Member for Tynemouth (Dame Irene
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  Ward) will appreciate that this is an exceedingly complex and technical matter, and is particularly difficult to deal with at this hour of the morning. If I do not go over the whole field of technicalities, I hope that she will not think me discourteous. I shall try to relate what I have to say to what seem to me to be the overwhelming difficulties of her proposal.
  The first of her Amendments expresses the desire to include ships' stores among goods eligible for the export rebate, although the hon. Lady devoted most of her remarks to the second leg of her proposition, that the rebate should be allowed in respect of goods used in the repairing and refitting of ships in the United Kingdom. She acknowledged that, logically, any concession in this respect would have to be extended to aircraft stores and repairs, and this would add further complications.
  We have considered both aspects of the question of stores very carefully, but we see serious practical difficulties and risks in attempting to apply the export rebate to stores. Unconsumed stores, as the hon. Lady probably knows, are frequently relanded in this country and are returned and consumed in the home market. For this purpose, a very detailed account of the stores is required by the Customs, and when they have been relieved of duty the duty is collected before they are released for home consumption.
  Since the export rebate will be claimed and paid quarterly, automatic repayment of the rebate on goods relanded would clearly be impossible, since there would be no certain way of knowing at that time whether rebate had been or would be paid. In this respect, these rebates depart from the existing drawback machinery.
  3.45 a.m.
  The hon. Lady seemed to think that there was some change of policy in regard to goods used in ship repair. I think that she was mistaken. Goods taken into shipbuilding yards for building or refitting ships are relieved by Sections 5 and 9 of the Import Duties Act, 1958. They are not relieved of other Customs duties, nor are they automatically relieved of Purchase Tax, though the shipowner may, by becoming a registered trader for the purpose of the tax itself, receive them free of Purchase Tax.

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  What I want to make clear is that the export rebates that will be repaid are not in respect of protective duties, but belong with the charges on which registered shipbuilding yards as such do not at present obtain statutory relief. In these circumstances, I hope that the hon. Lady will appreciate that there is no intention of any change of policy.
  I acknowlege quite readily that there is a particularly attractive case in principle for allowing the rebate on goods specifically intended for the repair of foreign ships in British shipyards but the difficulty is that the present Customs arrangements for the control of shipbuilding yards make no comprehensive distinction between goods supplied to foreign ships, on the one hand, and goods supplied to British ships, on the other.
  To set up such a control would be a complication very unwelcome to the shipyards themselves, and also to the Customs, whose staff will be fully extended in the early stages of the scheme. In any event, it would appear that the Amendments in their present form would probably fail to achieve the object which the hon. Lady has in mind in that there would not be any sale of the goods as such to a person resident or incorporated outside the United Kingdom.
  Now, essentially, the whole export rebate scheme is linked to export sales, but the real difficulty here is one of mechanics. Ships' stores and goods used for ship-repair work honestly cannot be fitted into the scheme without a considerable degree of complication. I would add that notwithstanding this, the rebate will be paid on ships and aircraft built here to meet genuine export orders.
  I have very deliberately, in view of the time, abbreviated my reply to the hon. Lady. If that reply does not fully satisfy her, I am sure she will accept my assurance that the matter has been very fully considered and that it is the practical difficulties which dictate this reply to her. If she would like more detail on the technical aspect and would care to write to me, I will ensure that she has a fuller explanation.
  Dame Irene Ward: In thanking the Minister for that reply, which, of course, is very disappointing, I myself am
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  obviously in no position to go into all the technical details. But it does seem to me that because of the difficulties of the machinery, which I think really was the nub of what the hon. Gentleman was saying, the ship-repairing industry has got to be sacrificed. The export rebate which might go to the industry has got to be sacrificed because the Treasury cannot find a suitable machinery so as to be fair to the ship repairers.
  In other words, those working in ship repairing are being made to pay for a very complicated Bill because it appears impossible to find adequate machinery to give them what they always had in the past. The Minister says that there has been no change, but he is wrong, because foreign ships built or repaired in this country, whether for foreign or for British owners, were always regarded as contributing to exports. The Minister has not answered that point.
  I have tried to be as well informed as possible. I know that the Department—I do not know which Department will deal with it—is to meet the representatives of the shipbuilders and the ship repairers on Friday. The Minister need not give me an answer now on the technicalities, but he must apply his mind to giving an answer to those who speak for the industry. Will he give me an assurance that between now and Friday he will put the brains of his Department to work so that there may be a satisfactory discussion with those representing the industry on Friday?
  It has been pointed out that it is difficult to find an interpretation for an export ship. Perhaps after the discussions on Friday, if the Minister works over the weekend he will be able to put down an Amendment for Report on Monday which will meet the case of the ship repairers. I hope that he will give me an assurance that he will do that. He has all the Department at his disposal whereas I have only my own brains with which to find a solution.
  Mr. Redhead Mr. Redhead rose—
  Mr. Loughlin Mr. Loughlin rose—
  Hon. Members: Oh.
  Mr. Loughlin Mr. Loughlin I do not know why my hon. Friends say "Oh". It is only ten minutes to four.
  I hope that my hon. Friend the Minister, who so eagerly jumped to the Dispatch Box, will give the hon. Lady no further assurance, because she is not quite in keeping with the normal conduct this morning. She says that we on this side of the Committee are sacrificing the shipbuilding industry. That is the burden of her complaint. She is so concerned about it that she is prepared to plead for assurances and to do no more about it. If she, with all her well-known fighting qualities, feels that we are sacrificing the industry which she represents, her duty is to take her hon. and right hon. Friends into the Lobby against the Government.
  Mr. Redhead: Courtesy demands a reply to the latter part of the hon. Lady's interjection, with due respect to my hon. Friend the Member for Gloucestershire, West (Mr. Loughlin). Any representations from the authoritative organisations concerned with this matter which are made at official level will be most carefully considered and every attention will be given to those representations and to any propositions which they make.
  Amendment negatived.
  Mr. Hirst: I beg to move Amendment No. 107, in page 8, to leave out line 20.
  This Amendment deals with a short but a technical point, so I hope that the Committee will bear with me. If I have it right, and I hope that I have, the export rebate scheme provides that rebate shall normally be payable on fulfilment of three conditions: first, that the goods have been produced or manufactured in England; secondly, that they have been exported; and, thirdly, that they have been sold or hired to a foreigner on application, though not necessarily at the time of the export.
  I should be very grateful if those hon. Gentlemen on the Government Front Bench who want to talk would do so outside. I am talking at the moment.
  The Bill actually requires, in Clause 7 (6, a, (i)), that the goods should be sold
  "… to a person not ordinarily resident, or, in the case of a body corporate, not incorporated in the United Kingdom,"
  the test obviously being that residence is reasonable, and incorporation is not. That is the point which I want to put to the Committee quite briefly. It is a paradox. A company may well be incorporated
  706
  in one place, and owned, managed or controlled in another, and the present rules will have artificial results in such cases.
  If one sells the goods to a company which operates and is owned and controlled entirely outside the United Kingdom, it will, nevertheless, not qualify for the rebate if the company is incorporated here. On the other hand, the sale of export goods to a company which operates entirely within the United Kingdom will qualify for rebate if the company was incorporated outside it. I hope that everybody was able to follow that very substantial difference. My Amendment seeks to substitute the much more reasonable test of residence, which avoids the anomalies in tax law. I hope that that point has been considered.
  I am sorry to bring such a troublesome Amendment before the Committee, but it has been on the Notice Paper for some time. I hope that the Treasury has given consideration to this rather technical point.
  Sir Eric Fletcher: As the hon. Member for Shipley (Mr. Hirst) said, this is a short but not an easy point. Careful consideration has been given to it, and I am not at all sure that the solution which the hon. Member suggests will have the effect which he intends or desires. He is perfectly right in pointing out that if a company is incorporated abroad, but carries on business here, it would be anomalous for goods exported to such a company to have the benefit of the rebate. The alternatives are twofold—to define the company in such a way either by reference to its place of incorporation, or to its place of residence. There are in some instances objections to either course.
  4.0 a.m.
  One thing which is essential is that the company should be identified with complete certainty. As the hon. Member will realise, there is an almost infinite variety of possible transactions which could be entered into. This rebate scheme is a new introduction into our fiscal law. I can assure the hon. Member that while I cannot advise the Committee to accept this Amendment we are not unfamiliar with the kind of difficulty which may arise. It is the kind of situation which the Government will watch carefully. We shall give it further

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  thought between now and Report, and if we can find an alternative form of words which makes the position even clearer than it is now I am sure that my right hon. Friend will put down an Amendment for that stage. I cannot give a definite assurance to that effect, but we appreciate that the point is one of substance which requires further thought, which will be given to it.
  Mr. Hirst: I am most grateful to the hon. Gentleman for that approach and consideration. In view of the assurance, I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Mr. Heath: I beg to move Amendment No. 114, in page 8, line 35, to leave out from "business" to "and" in line 37.
  Three points arise on this Amendment. If the Minister without Portfolio will deal with them, I shall be grateful. The first occurs in subsection (6,b):
  "business carried on by the applicant or any company directly or indirectly controlled by him".
  In the Bill there is no definition of
  "directly or indirectly controlled by him".
  This could raise some ambiguity. The Amendment would delete the phrase entirely for two other reasons. Even if the Government do not accept the following reasons it may be that they will look at the definition of
  "company directly or indirectly controlled by him".
  The second point arises where a manufacturing company has a subsidiary which is an exporting company and exports to its trading company which is abroad. We understand that it would not be eligible for export incentive, so this appears to be a case where it is justified. If our interpretation of the subsection is correct and the Government agree that this is a case where incentive is justified, while perhaps not accepting this form of words, they could deal with the matter at a later stage.
  The third case is that of goods exported to a British registered company operating abroad and using the goods for its own use. The question is whether it should have the rebate. That would appear not to be covered by this
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  form of words. I understand that the Minister may not be able to give his views on these points at this moment, but I shall be glad if he takes them into account and makes some arrangement about the wording, perhaps at the next stage of the Bill.
  Sir Eric Fletcher: I gladly respond to what the right hon. Member said about this Amendment and the spirit in which he said it. It is not an easy matter. I am sure that he will appreciate that the object of the Government is to give the fullest possible benefit by way of this rebate to all exporters who are genuinely entitled to receive it.
  This is a somewhat complicated matter of finding with absolute precision who will benefit from it. It is a matter which has given concern to the Federation of British Industries. In answer to one of the three points the right hon. Member mentioned, he will appreciate that there are cases in which a group of companies are so set up that they have a subsidiary which is a manufacturing company and another which is not. There may be cases where, under the Clause as it stands, they would not get the benefit of the rebate, but it would be open to them to rearrange their internal affairs in such a way as to get the benefit. They will not necessarily be penalised and it would not be impossible for them to make the necessary adjustments in their commercial transactions to bring themselves within the terms of the rebate.
  I appreciate that there are other considerations arising out of the Amendment. We are familiar with the point, and I can give the right hon. Gentleman the assurance for which he asks, that we will give the matter further consideration between now and the Report stage.
  Mr. Heath: In those circumstances, I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Amendment made: In page 9, line 9, leave out "relates" and insert "relate". —[Sir Eric Fletcher.]
  Clause, as amended, ordered to stand part of the Bill.
  Clause 8 ordered to stand part of the Bill.

  Clause 9.—(POWERS OF COMMISSIONERS, INTERPRETATION &C.)
  Mr. MacDermot: I beg to move, Amendment No. 110, in page 12, line 13, at the end to add:
  (8) For the avoidance of doubt it is hereby declared that references to rebate in section 9 of the Finance Act 1961 do not include references to rebate under section 7 of this Act.
  This is purely an Amendment to clarify interpretation and to make it clear that the regulator provisions in the 1961 Finance Act do not apply to export rebates under the Bill. If it should be necessary at any time to make changes in the level of the rebate, that can be done by Order under Clause 7(10).
  Amendment agreed to.
  Clause, as amended, ordered to stand part of the Bill.

  Schedule 3.—(EXPORT REBATES: PRO VISIONS FOR DETERMINING EXPORT VALUE.)
  Mr. MacDermot: I beg to move, Amendment No. 111, in page 22, line 39, to leave out from beginning to "and" and to insert "Paragraph 4 (2) and (3) (b)".
  This Amendment is needed to ensure that, where a value has to be determined for goods which are hired out after they have been exported, the expenses relating to the hiring may be assumed to have been borne by the owner of the goods and so he included in the export value. This will bring this calculation into line with other provisions in the Bill relating to hiring or sale and ensure that there is parity of treatment for them all.
  Amendment agreed to.
  Mr. MacDermot: I beg to move, Amendment No. 112, in page 22, line 47, at the end to insert:
  (2) The foregoing sub-paragraph shall not have effect and any amount falling to be determined under this Schedule in relation to the rebate payable to any person shall be that fixed by the Commissioners, unless, within three months from the time when the Commissioners' final determination of that amount is communicated to that person, or such longer time as they may allow, a notice requiring a reference under that sub-paragraph has been served on the Commissioners.
  The object of this Amendment is to prevent undue delay in settling valuation disputes. It does so by limiting the period during which disputes can be referred to
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  a referee to a period of three months from the date on which the final determination of value is notified by the Customs unless they allow an extension. If no reference is required in that period, the disputed amount would be as fixed by the Customs. This provision is similar to provisions in the fields of duty and Purchase Tax.
  Amendment agreed to.
  Schedule, as amended, agreed to.
  Clause 10 ordered to stand part of the Bill.
  Schedule 4 agreed to.
  Bill reported, with Amendments; as amended, to be considered Tomorrow and to be printed. [Bill 39].

  BUSINESS OF THE HOUSE (FINANCE BILL)
  Motion made, and Question proposed,
  That the Third Reading of the Finance Bill may be taken immediately after the consideration of the Bill notwithstanding the practice of the House as to the interval between the stages of such a Bill.—[Mr. Diamond.]
  4.10 a.m.
  Mr. Norman Cole: I wonder whether you can give the House some guidance, Mr. Deputy-Speaker. It is now ten minutes past four o'clock. The Report stage and Third Reading of the Finance Bill are due to be taken together late on Monday. Can you give the House any guidance as to the printing of the Bill, as amended. Some hon. Members would like to see it in the meantime.
  Mr. Deputy-Speaker (Dr. Horace King): That is not a matter for me.
  Question put and agreed to.

WAYS AND MEANS
[1st December]
WAYS AND MEANS

  SEVERN BRIDGE TOLLS
  Resolution reported,

  1. That the Minister of Transport (hereinafter referred to as "the Minister") shall be authorised, in accordance with orders to be made by him, to levy tolls in respect of vehicles using the carriageways comprised in those parts of a new road constructed, or in the course of being constructed, by the Minister which cross

  711
  the Rivers Severn and Wye by bridges or constitute the approaches to such bridges.

  2. That it is expedient to provide—

  (a) for imposing restrictions and other requirements in respect of vehicles stopping or remaining at rest on the said carriageways, and for securing the removal of such vehicles and the imposition of charges in respect of their removal;

  (b) for securing the operation (either by the Minister or by other persons) of a service of removing such vehicles from the said carriageways;

  (c) for extending, in relation to the said carriageways, the powers of prohibiting or restricting the use of roads, and, in particular, of regulating the use of special roads, conferred by the enactments relating to road traffic; and

  (d) for imposing other prohibitions and restrictions in relation to the parts of the new road which are referred to in paragraph 1 of this Resolution and in relation to structures, works and apparatus on, under or over those parts of that road or connected therewith or with the regulation of traffic thereon or with the levying of tolls as mentioned in that paragraph.

  3. That, in any case where by reason of any accident or other emergency vehicles which would otherwise use the said carriageways are authorised to use the cycle track or the footway comprised in those parts of the new road which are referred to in paragraph 1 of this Resolution, the Minister shall be authorised to levy tolls in respect of the use of the said cycle track or the said footway by those vehicles; and, for the purposes of any such case, paragraph 2 of this Resolution shall have effect in relation to the said cycle track or the said footway as it has effect in relation to the said carriageways.

  4. That it is expedient to provide for the extinguishment of any franchise to operate a ferry across the River Severn in the vicinity of the said new road and for the payment by the Minister of compensation in respect of any such ferry which is discontinued in consequence of the provision of that road.

  5. That tolls levied as mentioned in paragraphs 1 and 3 of this Resolution, and any sums received by the Minister in connection with the removal of vehicles as mentioned in paragraph 2 (or in that paragraph as extended by paragraph 3) of this Resolution shall be paid into the Exchequer.

  6. That it is expedient to provide for other matters incidental or supplementary to the matters specified in the preceding paragraphs of this Resolution.

  Resolution read a Second time;
  Question, That this House doth agree with the Committee in the said Resolution, put forthwith, pursuant to Standing Order No. 90 (Ways and Means Motions and Resolutions), and agreed to.
  Bill ordered to be brought in upon the said Resolution by the Chairman of Ways and Means, the Chancellor of the Exchequer,
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  Sir Frank Soskice, Mr. James Griffiths, Mr. Thomas Fraser, Mr. Niall MacDermot, and Mr. Stephen Swingler.

  SEVERN BRIDGE TOLLS
  Bill to empower the Minister of Transport to levy tolls in respect of the use of a new road which crosses the Rivers Severn and Wye; to enable that Minister, in relation to that new road, to impose prohibitions, restrictions and other requirements for the purpose of preventing obstruction and for the protection of property and otherwise; to provide for the extinguishment of any franchise to operate a ferry across the River Severn in the vicinity of the new road, and to enable compensation to be paid to persons operating any such ferry; and for purposes connected with the matters aforesaid, presented accordingly and read the First time; to be read a Second time Tomorrow and to be printed. [Bill 38.]

  CONSOLIDATION, &c., BILLS
  So much of the Lords Message [25th November] relating to the appointment of a Committee on Consolidation Bills, Statute Law Revision Bills and Bills prepared pursuant to the Consolidation of Enactments (Procedure) Act 1949, to be considered forthwith.—[Mr. Gourlay.]
  Lords Message considered accordingly.
  Select Committe of Eight Members appointed to join with the Committee appointed by the Lords to consider all Consolidation Bills, Statute Law Revision Bills and Bills prepared pursuant to the Consolidation of Enactments (Procedure) Act 1949 in the present Session:
  Any Memoranda laid pursuant to the Consolidation of Enactments (Procedure) Act 1949 and any representations made with respect thereto to be referred to the Committee:
  Mr. Leo Abse, Mr. Ronald Bell, Mr. Anthony Buck, Mr. Charles Doughty, Mr. Charles Fletcher-Cooke, Mr. A. J. Irvine, Sir Barnett Janner and Mr. Paget.
  Power to send for persons, papers and records; and to sit notwithstanding any Adjournment of the House:
  Three to be the Quorum.—[Mr. Gourlay.]
  Message to the Lords to acquaint them with such of the said Orders as are necessary to be communicated to their Lordships.

  DISABLED PERSONS (VEHICLES)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Howie.]
  4.15 a.m.
  Mr. C. M. Woodhouse: My somewhat ludicrous appearance with this sling round my arm this morning obliges me to begin by disclaiming a personal interest in the subject that I wish to raise. The subject is one of much more serious interest to much more deserving people.
  I wish to raise the matter of the desirability of enlarging the categories of the disabled who should be entitled to be supplied by the National Health Service with a small car capable of carrying a passenger as well as the disabled driver in place of the single-seater invalid tricycle, whether petrol-driven or electrically-propelled, which is now the standard issue in most cases.
  I would like to invite the comments on this subject of the new Minister, on whose appointment I should like to congratulate his Department as well as himself. I feel confident that he will give the same careful consideration to my representations as I used to do to representations when he was standing on this side of the House and I was sitting where he now sits.
  I know that many hon. Members are interested in this subject, but I think it appropriate that I should raise it, both because the most suitable type of vehicle, which is the B.M.C. Mini Minor, specially adapted, is made in my constituency and also because a considerable number of disabled people who have written to me about this problem live in my constituency. That, in turn, is no doubt because of the superlative medical services which are available there.
  I could, therefore, quote a great many examples to illustrate the need for a more generous policy in supplying small two-seater cars instead of single-seater tricycles, and all the cases that one might quote would be somewhat different because every disabled case is, in some way, unique. But all are alike in their need for adequate transport in order to lead a near normal life, so I shall confine myself to one example only, an example
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  already known to the Minister from correspondence, the case of Mr. Peter MacBryan, in my constituency.
  I emphasise that I do not raise this matter as a party issue, or to initiate party auction in generosity. I made the same points as I make now to the hon. Gentleman's predecessor and had a negative answer, so I am well aware, having been a Minister at the time when I last broached the matter, that the issue is not one between political parties but rather between humanity and finance, or, put in more concrete terms, between the Ministry of Health and the Treasury.
  My hope is that the new Minister may be more successful than was his predecessor in dealing with the Treasury. I will only add a slight expression of surprise that although the new Minister when, in opposition, wrote quite sympathetically and encouragingly in reply to my constituent, on the other hand, when he came into office, his reply to my last letter about Mr. MacBryan's case was very similar to that of his predecessor, though only, if anything, a little more abrupt.
  The general case for supplying suitably adapted small cars for the disabled is very well set out in a pamphlet published last year and called "The Case for Supplying Suitably Adapted Small Cars to the Disabled," published by the Joint Committee on Mobility for the Disabled, and the grounds it brings forward are three. The first is social, that a disabled person should not be condemned to ride alone, especially if he or she is married. The second ground is mechanical. It is the unreliability of the standard tricycle and the difficulties of repairing it and maintaining it. The third is that of cost. Detailed figures are given in this pamphlet to show that the adapted Mini Minor costs less than £100 more than a tricycle, that it lasts longer and that it is hardly any dearer to run.
  Those are the general grounds, to which I will only add evidence drawn from the specific case of Mr. MacBryan. He suffers from haemophilia. He suffered severe physical shock as a result of an air raid when a small child. Subsequently, he had to have both his legs amputated. Unfortunately for him, the

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  medical evidence was such that the amputations could not be directly attributed to the air raid, so he has no entitlement to a pension.
  Mr. MacByran is fortunate, however, in being able to work for his living and, more fortunately still, has a wife who is well qualified to take care of him. But they never travel together, because he is entitled to only an invalid tricycle and when they go out together his wife must travel separately, by bus. Needless to say, they cannot afford a car of their own, so they cannot benefit from the provision by which the Health Service would pay for its adaptation.
  The hardship involved in such a case needs no elaboration, but it is aggravated by other circumstances. Since a tricycle moves less evenly on the road than a four-wheel car, Mr. MacBryan is subject to jolts which could easily cause a haemorrhage. I have already mentioned that he suffers from haemophilia. Further, his tricycle is liable to breakdown and the servicing facilities in Oxford are inadequate. He informs me that he once had five breakdowns in four weeks just after his tricycle had been serviced. He also describes a grim experience when he was stranded alone on the road for four hours.
  There is an even more serious example, though this was not told to me by Mr. MacBryan. Another disabled person in the Oxford area once had his tricycle catch fire while on the road. It was completely burned out. It may be argued that a car is no less liable to such an accident, but in a car a disabled driver would not be alone and without help, as this man was in his tricycle.
  No one who has met and talked with these tragically disabled people can feel anything but admiration for the efforts that they make to overcome their handicaps and live a normal life. I could give many more examples, but the Minister is familiar with them and I am equally familiar with his predecessor's replies. For this reason I ask the new Minister to approach the matter with a fresh mind.
  I would like the hon. Gentleman to answer some specific questions. First, I am told that it is still the practice in this matter to give preference to war
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  disabled men. That was no doubt right when facilities were in short supply, but is it still right, 20 years after the war? The unfairness of this discrimination was emphasised to me during the General Election by a man who is himself a war disabled ex-Service man. It seems to him, as it seems to me, that the time has come when we should adopt the criterion of need rather than that of the circumstances in which the disability originally occurred.
  Secondly, is it really so that to extend the right to cars instead of tricycles to include cases like that of Mr. MacBryan would require legislation? A considerable extension was made by the previous Minister of Health last July, without legislation. What, then, are the present limits of the Minister's powers, and have the present statutory limits now been reached? In other words, are there no more cases which could be brought within the scope of the existing powers to provide cars without fresh legislation?
  Thirdly, I have been told more than once that this is a matter of priorities and that the priorities are being reexamined. What progress, therefore, has been made in this process of re-examination, and how far down the scale of priority would cases like that of Mr. MacBryan come? Could the Minister, for instance, give some examples of cases having a higher priority than Mr. MacBryan's, although not yet qualified for an adapted two-seater motor car?
  My fourth question, which arises from the matter of priorities, is the question of cost. Everyone would agree that, while there are undoubtedly many hard cases, it would be desirable, ideally, not simply to put them in an order of priority, but eventually to meet all of them, at any rate, wherever the eventual line might be drawn between those whom one would have to call the deserving and the undeserving, because I have no doubt that cases in any way comparable with Mr. MacBryan's would fall on the side of the deserving. If that were accepted, what would the cost of such extension be?
  There is a corollary to that. Does the Minister accept or reject the calculations put forward in the pamphlet to which I have already referred and published by the Joint Committee on Mobility for the Disabled? The figures given in that

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  pamphlet suggest that, taking into account both the capital and the running costs over the lifetime of a vehicle, there is not a great deal of economy—I do not want to exaggerate this, and will not put it any more strongly than that—in preferring a tricycle to an adapted Mini Minor from the point of view of cost.
  Those are the questions to which many disabled people, and their sympathisers throughout the country seek answers. I hope that the Minister's reply will not simply be that the facilities provided in this country for the transport of the disabled are already the best in the world. That I know to be true, but I regard it as no reason why they should not be better still.
  4.28 a.m.
  Mr. Terence L. Higgins: I have received a very large number of letters on this subject from people in my constituency and elsewhere, and I support my hon. Friend the Member for Oxford (Mr. Woodhouse) in everything that he has said and in the questions that he has asked. There is a lack of data on the subject, and it is very important for us to ascertain the exact comparative costs of providing invalid tricycles, including the costs of the special establishments needed to repair them, as against the small cars at present provided for the war disabled.
  Could the Minister tell us what efforts are being made to develop a two-seater invalid tricycle in place of the present single-seater? One sees a large number of two-seater tricycles on the roads driven by non-invalids, and that raises the question of whether it is not possible to provide two-seater tricycles at precisely the same cost as the single-seaters. If that could be done, it would enable us to provide, at no extra cost, against the loneliness and other hardships that my hon. Friend has stressed.
  4.29 a.m.
  The Minister of Health (Mr. Kenneth Robinson): I must thank the hon. Member for Oxford (Mr. Woodhouse) for taking the opportunity, even at this hour of the morning, of raising the subject of transport for the disabled. It commands great sympathy amongst hon. Members and throughout the country, and particularly in the hearts of those who, because of family circumstances or their jobs, are associated with the disabled and the
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  problems that face them in their daily activities.
  The hon. Member for Oxford is one of those who feel very deeply on this subject. He has presented his argument with great sincerity, and with the commendable purpose of getting more done for these unfortunate persons whose cause he has championed. I should also like to thank him for the kind personal remarks he made about me in my appointment.
  I will try to answer the specific questions that the hon. Gentleman put to me, and also the question of the hon. Member for Worthing (Mr. Higgins), who supported him. I do not want to take up a lot of the time of the House in detailing the criteria under which applications from disabled persons for powered cars are judged. They have been mentioned in the House on many previous occasions.
  Briefly, there are three categories of eligibility. First, there are those with amputations of both legs, at least one of which is above the knee; secondly, those who suffer from paraplegia or some other defect of the locomotor system which has resulted in the total, or almost total, loss of the use of the legs so that they are to all intents and purposes unable to walk; thirdly, those who are less severely disabled, but who need a vehicle to get to and from their work because their walking ability is very limited. The war pensioner who is eligible in any of these categories may receive a small four-seater motor car.
  There are nearly 4,000 pensioners in England and Wales who are driving cars provided by my Department. The correspondingly disabled National Health Service patient receives a single-seater invalid tricycle and there are at present over 14,000 of these machines in use. This is the main point at issue in the debate, the fact that one man gets a different type of vehicle from that provided for another who may well be his next-door neighbour, simply because the one was disabled while serving in the Armed Forces and the other was not.
  The hon. Member asked why it was that nearly 20 years after the end of the war there should still be this distinction in favour of the war pensioner. He will agree, I know, that successive Governments since 1945 have held the view that those disabled in the service of their country have a special claim to

  719
  our sympathies and should enjoy a traditional preference in the social services of the country. I do not think that the House will dissent from this view. But if that view is accepted, it is difficult to argue that the mere passage of years should diminish the right of the disabled ex-Service man to special consideration when decisions are being taken, as we have to take them, about the resources that are available for those who need assistance. I accept that the hon. Member for Oxford was not suggesting that the privileges of war pensioners should be themselves diminished, but, rather, that those privileges, and, in particular, the opportunity to have a car instead of a tricycle, should be extended to others.
  The hon. Gentleman asked to what extent legislation entered into this problem. Motor cars are provided for war pensioners under the very wide powers contained in the Royal Warrants, but the provision for Health Service patients derives from powers contained in Section 3(1,b) of the 1946 Act which enables me to provide
  "medical, nursing and other services required at or for the purposes of hospitals."
  The view taken by the legal department of the Ministry of Health is, briefly, this. With perhaps some straining of the wording of the Section, it can be held that a tricycle has a connection with hospital treatment and that its provision can be deemed a hospital purpose, that it can be regarded as an appliance for a disabled man receiving hospital services, akin to an artificial limb or a pair of crutches. But a car cannot be regarded in this light. It would be in substance a welfare service not limited to the medical needs or the treatment of the patient himself. It would provide, as the hon. Member clearly said, not merely transport for the patient, but for his family and friends as well. We have already gone a little way beyond the power available under the present legislation.
  Since last July cars are being provided for civilians injured as a result of enemy action in the last war and for those married couples where both partners are eligible for invalid tricycles and are prepared to surrender their tricycles. The supply of motor cars in those instances is outside out statutory powers and is possible only as a result of special
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  authority. I am sure that it would not be right to make any more general provision of motor cars under authority of this sort, and it would first be necessary to ask Parliament whether such a service should be provided.
  The main question is how far the provision of cars for the disabled generally is a development which is desirable and what priority should be attached to it. I do not think that there is anything between us here. The development would be costly. I cannot disclose precise figures because, as hon. Members will appreciate, it is not the practice to disclose prices paid in Government contracts, but I can give some facts.
  It is not the margin between the price of the tricycle and the price of the motor car which is the important factor here. There are at present over 14,000 tricycles in use in England and Wales. If it were a matter merely of replacing each one of these machines with a motor car, that perhaps might not be regarded as too high a price to pay in order to secure this improvement in the services which we provide. But we know that the cost would be very much greater than that. We have gone very carefully into this in the Ministry and we believe that the number of cars which we should require would not be 14,000 but very much nearer 50,000.
  The difference is made up of those who for one reason or another use one of our tricycles and also those who are so seriously disabled that they themselves are unable to control a tricycle but could easily nominate someone to drive a car for them. On the basis of 50,000 cars we have calculated that the additional cost over the lifetime of the cars would be about £37 million. Before we can commit ourselves to a continuing expenditure of this order we must have regard to all the other claims on our resources.
  The hon. Member for Oxford very honourably fulfilled his undertaking not to treat this as a party matter, but I am sure that he will think it fair if I remind him that the Government of which he was a member felt unable to do this even at a time when we were told that the economy had never been stronger.
  In these matters we have to consider priorities. I hope that I do not have to apologise for using this word again. It

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  is not just the claims of other disabled people over those of Mr. MacBryan. I have the greatest sympathy with his case and I am very sorry if he felt that my letter to him since I became Minister was in any way abrupt. I assure him that I have every sympathy with his case. It is not only the claims of other people over his type of case, but the claims of other aspects of the Health Service. We have to consider the building and equipping of new hospitals and rebuilding and re-equipping existing hospitals which are out-of-date.
  We have to consider the provision of more and better accommodation for the mentally sub-normal, and the abolition of the prescription charges so that we can once again provide a Health Service free to the patient at the time of need. These and many other developments are what we have to consider side by side with the provision of motor cars so that we may make the best use of what money is available for the Health Service.
  I do not subscribe to all the criticism, much of which is, I think, unfounded, which is often levelled against the invalid tricycle. It is a vehicle specially designed for the disabled, and for that reason it is much more adaptable than an ordinary motor car. We believe that,
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  properly driven and maintained, the tricycle will give good and reliable service and it does fulfil a real need for many of the disabled. I do not think that Mr. MacBryan's experience is typical. Of course, there are difficulties, but, by and large, it is now a reliable vehicle.
  Nevertheless, I can understand the desire to have a motor car instead of a tricycle. In this case, however, as in so many others, we must adjust our wishes and sympathies to our means. We are very much aware of the needs and wishes of the disabled, who are a special concern of the Health Service, but at present we cannot commit ourselves to any extension of the service provided for them.
  When the provision of vehicles for those additional categories recently announced has been fully implemented, I shall be looking at the whole broad question of the provision of vehicles, but I must make clear that any review can take place only against the background of priorities generally, and I mean priorities both within and without the National Health Service.
  Question put and agreed to.
  Adjourned accordingly at nineteen minutes to Five o'clock a.m.