HC Deb 02 December 1964 vol 703 cc594-694

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, 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 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.

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 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 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 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.

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 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 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 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 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 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 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 (Sheffield, Heeley)

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.
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 (Hertford)

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 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 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. 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 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 (Thirsk and Malton)

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 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 (Basingstoke)

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 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 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 (Chislehurst)

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.

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 (Isle of Thanet)

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, 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 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 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 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 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 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, 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 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 (Nelson and Colne)

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 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 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 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 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.

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 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. 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 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 (Birmingham, Yardley)

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 (Devon, North)

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 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 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- 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.
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 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. 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 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 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) 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 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, 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 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 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 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.

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 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 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.

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 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 (Liverpool, Walton)

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.

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 (Edmonton)

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. 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 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 (Tottenham)

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


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 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 (Willesden, East)

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 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 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 (Aberdeenshire, West)

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 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 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. 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 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 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 (Lowestoft)

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 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 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.

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 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 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 (Isle of Wight)

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 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.

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 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 (Salford, West)

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 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 the hon. Member to relate anything further he has to say to the Amendment.

Dame Irene Ward (Tynemouth)

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 (Poplar)

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.

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 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 (Thurrock)


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 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 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 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 (Brecon and Radnor)

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 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 rose

The Chairman


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 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. 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 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 materials considered to be manufactured articles? I should very much appreciate a reply tonight. It is a technical point.

Mr. Derek Page (King's Lynn)

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 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.