§ 3.37 p.m.
§ Mr. W. R. van Straubenzee (Wokingham)
I beg to move Amendment No. 24, in page 13, line 13, at the end to insert:
06.02 … Other live plants, including trees, shrubs, bushes and roots; buds, eyes and stems for grafting and budding: cuttings and slips: Mushroom spawn.
§ The Chairman
I think that it would be to the convenience of the Committee if we took, with this Amendment, Amendment No. 93, in Schedule 1, page 17, line 10, at the end to insert:
06.02 … Mushroom spawn.
§ Mr. van Straubenzee
I make no apology for saying that I have a strong constituency interest in this Amendment in that, as the Committee will know, many of the leading horticulturists are situated in east Berkshire. The effect of this Amendment is to bring into the Schedule certain raw materials which are at the moment omitted from it.
The Government's statement of 26th October, relating to the 15 per cent. surcharge, made it clear that the surcharge would not apply to basic raw materials for industry and, as far as possible, as I understand it, the Schedule as drawn carries the Government's intentions into effect in that respect, although there are later—if you call them, Dr. King—certain Amendments to the Schedule to bring in certain raw materials which, perhaps inadvertently, have so far been left out.
The principle that raw materials should be exempted from the surcharge has also been extended to horticulturists. I could give the example of seeds for sowing which are exempted from the surcharge by the terms of the Schedule as it is at present drawn. The point I wish to make is that the principle has already been conceded that with horticulturists, as with others, it is reasonable for what I 470 will loosely call their raw material to be eexempted for the 15 per cent. surcharge. By one of the provisions of the Schedule, seeds for sowing used by horticulturists are proposed to be exempted from the 15 per cent. surcharge. I suggest to the Committee, therefore, that the principle has been conceded to horticulturists, and I do not complain about the application of that principle.
I would draw the Committee's attention, however, to the fact that the effect of Schedule 1, as at present drawn and unless it were to be amended at least partially in the way which I now suggest, would be that all the headings under Chapter 6 of the Customs and Excise tariff chapters will be taxed. I submit that by including the whole of Chapter 6 we are including some raw materials used by horticulturists, and I use the phrase "raw materials" broadly, because, plainly, the process of horticulture is of a kind different from an industrial process.
They are entirely contained in Subheading 06.02 to Chapter 6 and that is why, as the Committee will observe, I have limited my Amendment to 06.02. I do not seek to argue that the whole of Chapter 6 should be exempt. I am concentrating my attention on a subsection only and 06.02. for example, includes buds, eyes and stems for grafting and budding, and what are known as cuttings and slips. It also includes important and defined descriptions of rose stocks.
The point which I think the Committee may not have fully appreciated, and which possibly hon. Members opposite have not had an opportunity fully of appreciating, is that almost all roses grown in this country commercially are budded on imported stocks. These stocks, I am told, are overwhelmingly raised by the Dutch. The Dutch, as a nation, have cornered the market, world-wide, in the raising of these imported stocks. They are blessed with a suitable soil for this purpose. Through their energy and initiative they have developed large-scale production and they are very efficient producers of these rose stocks. I am told that they also grow large quantities of fruit stocks.
Ornamental nursery stocks also have very specialist production. I am told that if one visits the production units in Holland one will find that there are specialist individual plots concentrating extensively 471 on individual types of ornamental nursery stocks. It is from them that we import a great deal to this country. There are, for example, 25 of a particular kind, and it would be totally uneconomic to propagate these stocks individually in this country. The result is that, with the strong backing of very specialist research, the Dutch have this market on which we rely. I am advised that there is in the United Kingdom no nurseryman who can offer anything approaching such a wide range of plants to the trade.
It might interest the Committee to know that, according to figures provided for me, in the calendar year 1963 we imported just short of 50 million rose stocks valued at £453.000. I dare say that when the Minister without Portfolio replies he will be tempted to argue to the Committee that what I have been talking about does not fairly qualify as raw material within the terms of the Government's statement. If he is so tempted, I ask him to have regard to the process which follows when these imports take place.
I am told that the budding process takes place in June-July and that the rose trees, for example, which derive from that process are not saleable for a period of about 15 months. In other words, the point which I make is that the stock which is imported is not by itself saleable goods. It remains a process which takes approximately 15 months to develop and to that extent I am, therefore, suggesting to the hon. Gentleman that to the horticulturist this is a raw material of his trade. I am told that all the catalogues are already printed, and 95 per cent. of the orders of at least one nationally known firm in my constituency were placed before the General Election, let alone before the imposition of the surcharge. The whole process is closely analogous to the raw materials used in industry.
It is quite possible that the Minister will also seek to say to me that even if I persuaded him on my point about raw materials, as I hope I have, nevertheless the Amendment as drawn goes wider even than that. Although it is a limited Amendment and deals only with a small part of the chapter, I concede to the Minister that as drawn it brings 472 in one or two items which are wide of my definition of raw materials. I will tell him exactly how that arose.
As he knows, we had very little time to draw Amendments between the time when the Bill was received by us and the time when the Committee stage began. The Minister has been an Opposition back-bencher and I venture to think that the time will come when he will be again in opposition, though next time a Front Bencher. He knows the traps of drafting which can easily beset a back bencher so that an Amendment, perfectly properly, is not called by the Chair.
The Government, on the other hand, have at their disposal all the artifice and skill of Parliamentary draftsmen. If the Minister were to say that he would concentrate in an Amendment on subheads of the subheading which I have chosen, I would be prepared to accept that if, by so doing, we were to exempt the raw materials of the horticultural industry. Indeed, so anxious was I to make this point clear that I put it in a letter to the Financial Secretary so that he might be in no doubt about it.
To summarise, the points I make are these. First, it is not the Government's intention that the 15 per cent. surcharge shall apply to raw materials. Secondly, they have conceded the principle to horticulture already. I gave the example of seeds for sowing. Thirdly, they have, nevertheless, perhaps through inadvertence because of the highly detailed nature of the subsections of the headings in this lengthy document, included the raw materials of this most important trade. Horticulturists cannot sell directly that which they import, but for them it is a raw material upon which they work and which they subsequently sell as far as 15 months ahead.
I hope, therefore, that, if the Minister accepts that there is genuine substance in my argument, and if he bears in mind the technical point on the drafting of the Amendment which I have made clear to him, he will be able to accept the principle of the Amendment.
§ Mr. Terence L. Higgins (Worthing)
I support what has been said by my hon. Friend the Member for Wokingham (Mr. van Straubenzee), and I urge acceptance of Amendment No. 93, to include mush- 473 room spawn. We have constantly been told by Government spokesmen that the object of the Bill is not protection but the improvement of our balance of payments. It seems reasonable, therefore, to exclude from it items which can properly be regarded as raw materials. My hon. Friend has made abundantly clear that the items covered by his Amendment and mine should rightly be regarded as raw materials.
The international Customs classification is a most useful document, but it would be quite wrong to apply it dogmatically in the present context rather than make exceptions when the chapter headings need to be broken down into their component parts. Moreover, it is vital, when considering the balance of payments and the effect of the surcharge, to remember that some of these items which are essential raw materials for horticulture will have to bear the surcharge whereas some of the products which they will be used to produce, which are largely food—mushrooms, for instance—will not bear the surcharge.
Logically, therefore, if one puts the surcharge on raw materials but does not put it on the import of foodstuffs produced by such raw materials, the effect on the balance of payments must be adverse rather than favourable. I believe that the exclusion of these items must he the result of oversight, and we ought to look again at the Customs list to provide for their inclusion in the Schedule of exemptions.
§ Sir Cyril Osborne (Louth)
May I make a plea especially on behalf of rose growers? [An HON. MEMBER: "No."] I intend to make it, whether my hon. Friend likes it or not.
§ Sir C. Osborne
I put this point to the Government not in any aggressive way. One of my neighbours, who is a great rose grower, rang me up on Sunday in a terrible state of anxiety to tell me that his trade imports briars mostly at about this time of the year. He sells vast quantities of roses in the Canadian market and earns many valuable dollars for us, but he has to sell them in competition with other European producers who will not have to pay the 15 per cent. Surcharge 474 on their imports. He asked me to make this point on his behalf and on behalf of the trade generally, and I do so in support of the Amendment.
§ The Minister without Portfolio (Sir Eric Fletcher)
The hon. Member for Wokingham (Mr. Van Straubenzee) put his case for the Amendment with great restraint and persuasiveness, and I have no doubt that, during the series of debates which we shall have on the Amendments to the Schedule, we shall hear, as we have heard on this one, a number of arguments indicating the hardship which will arise if particular items are not exempted. It may be convenient, therefore, if I explain at the outset the general principles on which my right hon. Friend the Chancellor has acted both in drawing up the Schedule and, since it was drawn up, in putting down certain Amendments which we shall be considering a little later.
The Committee will realise that, with the best will in the world, it is difficult to draw a logical or hard and fast line in many cases between what should be subject to charge and what should be exempt. The hon. Member for Wokingham was quite correct in saying that the basic principle was that we should exclude foodstuffs, raw materials, and certain crudely processed materials. I recognise that the products of one industry are the raw materials of another, and, therefore, in using the term "raw material" we are not using a term which is capable of precise definition. Nevertheless, as we go along, we shall find that my right hon. Friend has endeavoured to secure the maximum of justice in the exemptions which were either originally in the Bill or are now to be added.
As my right hon. Friend said on Second Reading, there were no generally accepted rules which could be applied precisely and consistently over the whole field, and it was for that reason that he said that he would, after Second Reading, consider a small group of items which, on the strict application, should be added to the Schedule. It may help hon. Members if I explain the conditions which had to be satisfied to justify my right hon. Friend in making the additions which we find on the Notice Paper.
Those conditions are, first, that the items represent anomanes in the sense that they are either materials which have 475 undergone only elementary processes or are foodstuffs and should have been included originally in the exemption list; secondly, they are items in respect of which there is evidence that levying the charge is causing hardship; and, thirdly, they are items the exemption of which would not, in the Government's view, endanger the whole fabric of the scheme by starting a chain reaction through creating a series of other anomalies.
The Schedule is inherently and necessarily based upon the Customs Tariff of 1959. Incidentally, this is the first Measure in which statutory recognition is given to the existence of this tariff. The tariff was based upon an international convention at Brussels and has great international convenience because there is now brought into existence a tariff in which practically every article one can think of is listed and classified in a commonly agreed and accepted uniform code. If the Committee is interested, the statutory authority for it is contained in Statutory Instrument No. 403 of 1961, the Import Duties (General) (No. 3) Order, 1961, made under the Import Duties Act, 1958. As some hon. Members know, most people, for convenience, refer to the bound volume, which, notwithstanding various additions made to it since 1959, is always known as the Customs Tariff, 1959.
This tariff classifies all goods under various headings. The Committee will see that in Schedule 1, consistent with the principle enunciated by the Chancellor, all articles in Chapters 1 to 5 and in Chapters 7 to 21 and 23 are exempted. The reason is that they are all either foodstuffs or raw materials or in the nature of foodstuffs or raw materials.
§ Miss J. M. Quennell (Petersfield)
I notice that, under Chapter 4, natural honey is properly exempted, but I am puzzled to know whether this means that synthetic honeys which are imported but which are also foodstuffs will be subject to the charge.
§ The Chairman
Order. For the convenience of the Committee, I am allowing the Minister, on this first Amendment, to enumerate the considerations which he is applying to the various Amendments, but we must not have a general debate on those matters now.
§ Sir E. Fletcher
Chapter 6 deals with vegetable products, and, consistent with their general approach to this problem, the Government have excluded from the exemptions all the items in Chapter 6 because they are neither foodstuffs nor raw materials. It would be stretching language to describe any, or at least many, of the items in Chapter 6 as raw materials. They start with bulbs, tuberous roots, crowns, rhizomes, dormant, in growth or in flower; and they include cut flowers, foliage, and so forth. One could not regard any of them in the ordinary sense of the word as raw materials.
§ Mr. John Hall (Wycombe)
In what way are these any less raw materials than, say, natural grown woods under Chapter 44.01–12?
§ Sir E. Fletcher
I think that we shall get into difficulties if we try to draw analogies with woods and wood products at this stage. No doubt, there will be arguments as to where the line should be drawn in that section when we come to it.
§ Sir Kenneth Pickthorn (Carlton)
I am sorry to be awkward but it is a little awkward for us having the three categories, so to speak, not written. What about roses, particularly new species of roses? Neighbours and constituents of mine live on the very wholesale sale of roses, especially new varieties. Are they their raw materials?
§ Sir E. Fletcher
The hon. Member can argue that point when we come to it. I was submitting to the Committee that in the sense in which the Chancellor has tried to draw a line of demarcation it is not realistic to treat flowers—cut flowers or bulbs or seeds—as raw materials.
One of the basic reasons why I could not advise the Committee to accept the Amendment is that it would be very difficult to separate mushroom spawn from the variety of bulbs and flowers contained in Chapter 6. It is essential that the Committee should look at all the items contained in 06.02 as a whole. The hon. Member for Wokingham conceded that, with respect to some of the items listed in his Amendment, he would find it difficult to treat them as raw materials—and I do not intend to make any debating point on that. I prefer 477 to stress the substance of the reason why my right hon. Friend thinks that it would be contrary to his intention in imposing the surcharge in general if he were to make exemptions of this kind.
Hon. Members will realise that unless the surcharge applied to a fairly wide field it would be necessary to increase the rate of the surcharge on other goods in order to achieve the same revenue result. If they look at this class of goods as a whole, most people will consider that these horticultural products, in so far as they are imported into the country, are luxury goods rather than necessities.
The hon. Member for Louth (Sir C. Osborne) spoke of hardship to a rose grower in his constituency who imported some of these briars for re-export. But when his constituent re-exports them he will get a drawback. If it is found on entry that he is importing them for re-export, the whole of the surcharge will be remitted and he will have to make no payment at all.
§ Mr. Keith Stainton (Sudbury and Woodbridge)
Does the hon. Member appreciate the inevitably long time-lag which occurs in growing on these root stocks? For roses it is at least 15 months and more often than not 18 months. For ornamental trees and shrubs, which are large dollar earners, the period can be three, four or five years.
§ Sir E. Fletcher
I have considered that, and the hon. Member will be able to make the point later in the Clause in the Bill which deals with drawback, if he wishes. The Bill has been designed to give every importer who imports anything liable to this surcharge, which may, either in the imported form or following some process, subsequently be re-exported, the maximum advantage in getting rebate when he re-exports or remission of duty on importation—subject to his being able to show that the article is subsequently to be exported in one form or another.
For those reasons—both from the way in which the provisions have been drawn up and from the fact that none of these articles can be considered either a foodstuff or a raw material—I cannot advise the Committee to accept the Amendment. I can, however, give the assurance 478 that when the Chancellor reviews the content of the Schedule in the spring he will bear in mind representations which have been made in these discussions. As the Committee appreciated last night, there are powers under Clause 3 for the Chancellor to make additions to the Schedule at any stage by an Order in Council.
§ 4.15 p.m.
§ Mr. James Scott-Hopkins (Cornwall, North)
I found the Minister's reply most disappointing and I am sorry that he has rejected the Amendment. In view of comments yesterday, however, I am glad to see the Parliamentary Secretary to the Ministry of Agriculture on the Front Bench.
As hon. Members realise, this is a matter of great importance to parts of the horticultural industry. As was explained yesterday, horticulture is not in a position to get any benefit from any Price Review adjustments which may be made next year. This is a straight impost on the industry or on its customers.
I was rather confused by the Minister's arguments. I understand why the Chancellor excluded Chapter 6. At first blush it seemed that most of the products in Chapter 6 were not the kind of raw materials which my hon. Friend the Member for Wokingham (Mr. van Straubenzee) mentioned when he made his excellent speech. But on further examination it becomes apparent that some parts of the chapter—06.02(A) and (B)—include the very materials which the grower needs if he is to be able to carry on his horticultural business. A very small proportion are grown in this country and a large number are imported. They are basic raw materials for him.
As I suspected, the argument on this Amendment, and probably on many others, will centre around what is a raw material. I expected that the Minister would use that as a basis for opposing the Amendment. He said that these are not raw materials. But I beg him to look at the matter again, because, in the light of what my hon. Friends have said, it is clear that these are basic raw materials. It is on these that the later product is grown which is sold to the public. Quite often it is a very long time before the grower gets any return—often it is many 479 months. My hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) pointed out that it may be as long as 15 months.
The Minister was not correct in his answer to my hon. Friend the Member for Louth (Sir C. Osborne). My hon. Friend did not say that the briars which were imported would subsequently be re-exported to Canada. It is a product from those briars which will be re-exported. The situation is that the horticulturist may have to pay an impost but may get no drawback later—or, if he gets a drawback, it may be several months after he has paid the surcharge on the product. I ask the Minister to look very closely at this matter again. In his heart of hearts he knows that, as my hon. Friend the Member for Wokingham said, this is a basic raw material. I do not think that there is much between the Committee on this fact.
But the Minister stated at a subsidiary reason for not accepting the Amendment That it was difficult to make a distinction in Chapter 6. I respectfully submit that this need not be so. There is no reason whatever why we should not include in the Schedule a particular reference to subheadings of Chapter 6—06.02(A) and (B). I will not take issue with the Minister on the other part of Chapter 6 when he said that some things could not be included because they would not qualify as raw materials.
The hon. Gentleman mentioned cut flowers. But he is arguing falsely when he says that it is impossible to isolate a particular subheading in Chapter 6, and I ask him to look at the matter again. It may be that the drafting of the Amendment needs further clarification, but at least he could give us an assurance that he agrees with us in respect of all raw materials and that he will put down an Amendment later to meet the point made by my hon. Friend.
I found the Minister's arguments quite extraordinary when they were related to the comments of my hon. Friend the Member for Worthing (Mr. Higgins) about mushroom spawn. He outlined the principles on which the surcharge has been laid down and said that food was excluded from any impost. Mushrooms are, therefore, excluded. Mushroom spawn, from which mushrooms will be produced in this country, will suffer the surcharge 480 and will be in competition with mushrooms imported without the 15 per cent. surcharge. The mushrooms produced in this way will have to be sold against unfair competition. This cannot be the basis of a fair argument. Last night much comment was made by Ministers about fairness. I thought that my hon. Friend the Member for Worthing had a very fair point. These provisions are unfair to those horticulturists who import mushroom spawn and then sell the mushrooms on the open market in competition with imported mushrooms. The Minister says that he cannot isolate this item in the chapter but I think that it can be done.
The Minister then fell back on the argument that if he began to exclude various products it would mean a higher incidence than 15 per cent. over the rest of the field. This is a most unfortunate argument for him to put forward. Surely the whole argument throughout the debate, since the Chancellor's announcement, has been that the 15 per cent. surcharge was aimed at correcting the balance of payments position. We on this side of the Committee do not accept the problem in the same degree as the Minister has put it. Nevertheless, that has been the argument. The Minister is now saying that exempting small items such as these, adding up to a not appreciable total, will affect the amount of money being received from the surcharge to such an extent that the rate will have to be increased over the rest of the field. In other words, he would want more money from the surcharge.
But this was not the reason given by the Chancellor for imposing the surcharge. He said that he imposed it to stop imports from coming into this country. His hon. Friend today states that he wants to collect more money from the 15 per cent. import surcharge and that if he exempts some items he will have to consider raising the level of surcharge on other items. I submit to the Committee that the argument is false, or, at least, contradictory, and that the Minister cannot have it both ways.
I beg the Minister to look once more at this Amendment. If it is possible, and I fully believe that it is and would like to advise the Committee that I think it can be done, we should put in Chapter 6 those items which are raw materials 481 on equal terms with foodstuffs. If the Minister could put down an Amendment at a later stage, then I think we shall have fairness for that part of the horticultural industry which would otherwise be unfairly hit.
§ Mr. John Hall
I think that the Committee will agree that we have had a rather disappointing reply from the Minister. This is no personal reflection on the Minister without Portfolio; he did the best he could with a very bad case. The Amendment was moved very persuasively by my hon. Friend the Member for Wokingham (Mr. van Straubenzee) and supported very well by my hon. Friend the Member for Worthing (Mr. Higgins), who made a good case for the inclusion of mushroom spawn. The problem that always faces us, and will face us throughout the whole of our debates is: when is a raw material not a raw material? Nothing could be more raw as a raw material than mushroom spawn. I fail to understand why we cannot include mushroom spawn with many of the other items which have been mentioned.
The point deployed by the Minister, that it was impossible to exclude these items because they were all under one heading, just does not hold water. Many of these goods come under the headings of exceptions which the Minister enunciated this afternoon. I should have thought that it would be quite simple to include them under the exemptions. There are two points, which are of great interest to the Committee and on which we want further information. The Minister has made clear the principles that are guiding the Chancellor in deciding what additional materials shall be included in the list of exemptions, and the principles which guided the further Amendments put down on behalf of the Chancellor. They deal with, generally, raw materials that have undergone processing, or foodstuffs, or in cases of hardship, or where the inclusion would endanger the whole fabric of the scheme.
I ask the Minister to make clear whether any material which we are asking should be exempted has to comply with each one of these principles.
§ Sir Eric Fletcher indicated assent.
§ Mr. Hall
482 The other point to which my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) very properly drew attention was the statement by the Minister about revenue. He said that if the exemption which my hon. Friends are seeking is allowed it will be necessary to increase the surcharge on other items in order to raise the same amount of revenue. What is the real object of this exercise? Is it to raise revenue, or is it merely to discourage imports?
We have been led to believe the whole time that the purpose of this was to discourage imports, that it was quite incidental and, perhaps rather unfortunate and would cause hardship, and that the Government did not want it, but that it was just one way of achieving their objective of limiting imports. What are the Government trying to do? If they are trying to raise revenue by means of this surcharge, then the surcharge will not be for a few months, but for 12 months or two years, because a source of revenue of this kind is a very valuable source. I think that the Government will be very reluctant to let go once they have imposed it. Could we have a little guidance on this?
§ Sir Eric Fletcher
I think that the hon. Member misunderstood. My argument was that if one extends the exemption and therefore narrows the field on which the surcharge is to operate, to any considerable extent, the same result in reducing our balance of payments would not be achieved unless the rate of surcharge was increased.
§ Sir Eric Fletcher
I am sure that the hon. Member does not want to misrepresent me. What I said in my opening remarks was intended to apply both to this Amendment and to the series of Amendments which we shall be discussing later. If Amendments for every case in which individual Members are interested were accepted and, therefore, there was a large number of additional exemptions put on to the Schedule, it would obviously not achieve the balance 483 of payments correction which my right hon. Friend the Chancellor of the Exchequer is aiming at achieving. Therefore, if the exclusion is increased, to achieve the same result the rate of the surcharge would have to be increased.
§ Mr. Hall
I do not want to develop the argument to cover the whole of these Schedules. I thought that it would have been the Government's intention to look at their Schedule from the point of view of its effect on the industrial and productive efficiency of the country and also its effect on the export potential. We have already heard of the damage that is being done to our export potential in roses and rose trees. I personally view this with a good deal of regret. I would have preferred roses to be included in the list, as I am very fond of roses and live in a house called "Rosebank", which is very appropriately named.
I hope, nevertheless, that the Minister will take the earliest opportunity of looking at this again, because there is a great deal of feeling about it, and my hon. Friends spoke on the Amendment with a good deal of feeling. They have been asked to do so by people who will be considerably affected by the surcharge. We hope that the Minister will think about this again and bring something forward on Report.
§ Mr. J. B. Godber (Grantham)
It is a long time since I intervened in a debate concerned with horticulture or agriculture, and I do so with some hesitation. But I wish to add a word to the pleas of my hon. Friends for three reasons. First, I am, and have always been, connected with horticulture and I know something of these problems, though I am not directly connected with any particular matters in this Amendment. Secondly, I have had the strongest representations in my constituency about the actual harm that will come to some of my constituents. Thirdly, having listened to the Minister, I must admit that I was very deeply disappointed.
I recognise, of course, that this is a complicated matter, and not readily understandable to many hon. Members, but it seemed to me that he had not grasped some of the salient points. I ask him to consider again the cogent points put by my hon. Friend the Member 484 for Cornwall, North (Mr. Scott-Hopkins) and by other of my hon. Friends.
There are special circumstances here. I thought that the Minister had not grasped the point when he talked about these things being luxuries rather than necessities. They may be luxuries to the ultimate consumer, but to the people who are concerned with this Amendment they are vital to their livelihood. They are an important matter. When I heard the Minister say that it might be possible to look at this again in the spring, I thought that this was the sort of thing that would send any nurseryman "through the roof". All the items under Chapter 6 are seasonal items and the need is to buy them now. To change this provision in the spring would be useless. That would give an unfair advantage to those competitors in other countries with whom those of our nurserymen who are exporting are in direct competition.
There are special features here which deserve further consideration. When the Minister said that these items are neither foodstuffs nor raw materials he was exemplifying in one phrase the difficulty which confronts the House of Commons whenever it considers matters relating to horticulture. Horticulture gets left out of many of the advantages which accrue to agriculture. There are so many occasions when horticulture deserves the same treatment as agriculture. Merely to say that these articles are not foodstuffs does not seem to be satisfactory. The point about saying that they are not raw materials was so adequately dealt with by my hon. Friend the Member for Cornwall, North that there is no need for me to reiterate it.
Without wishing to labour the matter further, I can only hope that the Minister will consider the matter again. There is manifest injustice here.
§ 4.30 p.m.
§ Mr. Raymond Gower (Barry)
I shall not keep the Committee for more than a few moments, but I think that other points emerge from this discussion. The Minister seemed to imply that he could not treat this matter on its merits and that if he made a concession—for instance, for mushroom spawn, which would have no real effect on the main objective which the Chancellor has in mind—that might lead to other concessions. He therefore could not treat each 485 case on its real merits. I thought that that was not a valid point which he could sustain.
On the question of what is a raw material the hon. Gentleman's objective judgment—he was posing this as a general treatment for all these matters—was whether it was a raw material, in the view of the Chancellor, or a raw material which could not be regarded as the supplying of one industry by another. Surely there is an objective test which could be applied. Surely it could be found and ascertained whether a particular industry depends on a particular product as a raw material. That should not be difficult.
I reiterate with some force what was said by my right hon. Friend the Member for Grantham (Mr. Godber). The hardship in a particular industry is a material question. The Minister appeared to disregard this completely. He seemed to be concerned only about whether the article was an essential or a luxury. He should take account of the effect on the industry concerned, in this case the horticultural industry, and the real hardship if these tests are employed far too rigidly.
§ Mr. van Straubenzee
I must add my voice in regret at what the Minister said to us in reply to the Amendment. Every Government, of every kind, is immensely strengthened when it is served by a solicitor. Therefore, I was more hopeful than some when the hon. Gentleman came to his office. I hoped that a commonsense approach would be applied to these matters.
By incorporating in the Bill references to the tariff, I think that he was rightly incorporating a very exact method of identifying every kind of material. I freely confess that until I got my nose inside this problem I had not read through the fascinating document the hon. Gentleman now has before him. By the same token, he has to his hand a method of selecting very exactly. He is not being asked to exercise a massive piece of machinery. To give an example, we are discussing items under the heading 0602. I concede with absolute frankness that, taken by itself, 0602 does not provide a very suitable weapon, but will the 486 hon. Gentleman look at subheading (a) under 0602?
It would be perfectly reasonable to accept that provision. Then there would be no problem or difficulty about drafting. Under that heading there are the words:buds, eyes and stems for grafting and budding, cuttings and slips".They are raw materials of the horticultural industry. By his own argument because he is incorporating this document he has to his hand a weapon of precision. He need not be anxious that this would be something which would go over the whole range.
I beg him to be most careful about using the word "luxury" in regard to this Amendment. These things are the livelihood, in some cases, of people in a small way of business. Of course, I accept that he did not mean to import "luxury" in that sense, but it is liable to be understood in that sense outside this Committee and that would be very unfortunate.
§ Mr. John Page (Harrow, West)
When the question of luxuries was mentioned, I wondered whether the hon. Gentleman had noticed that on Second Reading the Chancellor said that there would be an exemption ofcertain important items, namely, food, feedingstuffs, fuel, unmanufactured raw materials and unmanufactured tobacco."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1096.]I wonder whether these luxuries are more or less luxuries than unmanufactured tobacco.
§ Mr. van Straubenzee
That is a matter of opinion. I recall that later we are to except pearls from the 15 per cent. surcharge. I hope that in the light of the consultations which, I dare say, have taken place, and the very cogent arguments put for this case, the hon. Gentleman will feel that, on consideration, he can look at the matter again.
§ Sir Eric Fletcher
I have listened carefully to the speeches made by the hon. Member for Cornwall, North (Mr. Scott-Hopkins) and the second speech of the hon. Member for Wokingham (Mr. van Straubenzee) and I realise that very 487 sincere convictions are held by hon. Members who have spoken on this subject. My right hon. Friend the Minister of Agriculture has also received representations from horticultural interests and we are aware of the great concern felt by persons who will be affected by the surcharge in so far as it operates under Chapter 6.
I do not want there to be any misunderstanding of what I said about luxuries. I was drawing a distinction between vegetable products mentioned in Chapter 6 and foodstuffs mentioned in the associated chapters. The hon. Member for Wokingham suggested that there was an instrument here which could enable my right hon. Friend to discriminate between different articles. I agree, but that would take time. One of the difficulties is that, for reasons with which the Committee is familiar, this surcharge has to be imposed as an immediate operation. It is, admittedly, a somewhat blunt instrument. Given no limit on the time, it would be possible for the Customs, which is a very expert Department, to analyse all these articles and to see to which of them—and which of them alone—the arguments which hon. Members have addressed apply.
It is conceded that they apply to some and not to others. For instance, the case for mushroom spawn seems a much stronger one than that for trees, which are in the same category. It is well known that some of these products are imported for the purpose of retail trade and others for the purpose of the horticultural industry. Some can be identified as horticultural products. All that can be done precisely, but it cannot be done very quickly.
I regret that it is impossible for me to give an assurance that between now and Report it would be possible for any Department to undertake the complicated task of saying whether—if, for example, mushroom spawn were exempted—that would involve repercussions, which would mean the exemption of other articles without which injustice would be caused to other persons.
What I hope will satisfy hon. Members is that if this Amendment is withdrawn I can assure the Committee that 488 when my right hon. Friend reviews, as he has promised to do, the operation of the surcharge with a view to lifting it in respect of commodities where it would be reasonable and proper to reduce it, I feel sure that the case of mushroom spawn would have a high priority. It is not possible at this stage, or before the Bill is passed, with the greatest good will in the world, to undertake the Herculean task of dissecting every chapter and saying just where the dividing line should be drawn. The only proper course for the Committee to take is to allow the Schedule to pass in this form, without the Amendment, with the assurance that as soon as the surcharge is reviewed by my right hon. Friend sympathetic consideration will be given to the representations which have been made during the course of this debate.
§ Mr. Scott-Hopkins
I find the argument of the hon. Gentleman quite extraordinary, and rather pathetic, too. He is saying, "Please, I cannot do this. You are right, but we have not got the time". This is a most astonishing thing for the hon. Gentleman to say.
We have been through Chapter 6 with a fine toothcomb, and other chapters, too. The number of Amendments is indicative of what we have done. We are providing an instrument whereby this can be done. The hon. Gentleman confesses that he wants to help us, and to show fairness to the agricultural industry. We are showing him how this can be done, and it is no argument for him to say, "Please, we cannot do it because we have not got time to do it, and we might be unfair to somebody at a later date".
Does not the hon. Gentleman realise that this is a seasonal question? If it is put off until some review, at some time in the future, by his right hon. Friend, this will be totally unacceptable not only to horticulturists but to my right hon. and hon. Friends. I must ask the hon. Gentleman to reconsider the matter in the short time that we have available, and to come to a decision so that these Amendments can be added to the list of exemptions. I hope that the hon. Gentleman will do this, and that we shall not hear any more of this pathetic business, "We have not got the time".
§ Question put, That those words be there inserted:—
|Division No. 21.]||AYES||[4.42 p.m.|
|Agnew, Commander Sir Peter||Gammans, Lady||Mills, Stratton (Belfast, N.)|
|Alison, Michael (Barkston Ash)||Gardner, Edward||Miscampbell, Norman|
|Allason, James (Hemel Hempstead)||Gibson-Watt, David||Mitchell, David|
|Amery, Rt. Hn. Julian||Giles, Rear-Admiral Morgan||Monro, Hector|
|Astor, John||Glover, Sir Douglas||More, Jasper|
|Atkins, Humphrey||Glyn, Sir Richard||Morgan, W. G.|
|Awdry, Daniel||Goodhart, Philip||Mott-Radclyffe, Sir Charles|
|Baker, W. H. K.||Goodhew, Victor||Murton, Oscar|
|Balniel, Lord||Gower, Raymond||Neave, Airey|
|Barlow, Sir John||Grant, Anthony||Nicholls, Sir Harmar|
|Batsford, Brian||Griffiths, Eldon (Bury St. Edmunds)||Noble, Rt. Hn. Michael|
|Beamish, Col. Sir Tufton||Griffiths, Peter (Smethwick)||Nugent, Rt. Hn. Sir Richard|
|Bennett, Sir Frederic (Torquay)||Gurden, Harold||Onslow, Cranley|
|Bennett, Dr. Reginald (Gos & Fhm)||Hall, John (Wycombe)||Orr, Capt. L. P. S.|
|Berry, Hn. Anthony||Hall-Davis, A. G. F.||Osborn, John (Hallam)|
|Biffen, John||Hamilton, Marquess of (Fermanagh)||Osborne, Sir Cyril (Louth)|
|Biggs-Davison, John||Harris, Frederic (Croydon, N. W.)||Page, John (Harrow, W.)|
|Bingham, R. M.||Harris, Reader (Heston)||Page, R. Graham (Crosby)|
|Black, Sir Cyril||Harrison, Brian (Maldon)||Pearson, Sir Frank (Clitheroe)|
|Blaker, Peter||Harrison, Col. Sir Harwood (Eye)||Percival, Ian|
|Bossom, Hn. Clive||Harvey, John (Walthamstow, E.)||Peyton, John|
|Box, Donald||Hastings, Stephen||Pike, Miss Mervyn|
|Boyd-Carpenter, Rt. Hn. J.||Hawkins, Paul||Pitt, Dame Edith|
|Boyle, Rt. Hn. Sir Edward||Hay, John||Pounder, Rafton|
|Braine, Bernard||Heald, Rt. Hn. Sir Lionel||Prior, J. M. L.|
|Brewis, John||Heath, Rt. Hn. Edward||Quennell, Miss J. M.|
|Brinton, Sir Tatton||Hendry, Forbes||Rawlinson, Rt. Hn. Sir Peter|
|Bromley-Davenport,Lt.-Col.Sir Walter||Higgins, Terence L.||Redmayne, Rt. Hn. Sir Martin|
|Brooke, Rt. Hn. Henry||Hiley, Joseph||Renton, Rt. Hn. Sir David|
|Brown, Sir Edward (Bath)||Hill, J. E. B. (S. Norfolk)||Ridsdale, Julian|
|Bruce-Gardyne, J.||Hirst, Geoffrey||Roots, William|
|Bryan, Paul||Hogg, Rt. Hn. Quintin||Royle, Anthony|
|Buchanan-Smith, Alick||Hordern, Peter||Russell, Sir Ronald|
|Bullus, Wing Commander Sir Eric||Hornby, Richard||Scott-Hopkins, James|
|Burden, F. A.||Howard, Hn. G. R. (St. Ives)||Sharples, Richard|
|Butcher, Sir Herbert||Howe, Geoffrey (Bebington)||Shepherd, William|
|Butler,Rt.Hn. R.A.(Saffron Walden)||Hunt, John (Bromley)||Sinclair, Sir George|
|Campbell, Gordon||Hutchison, Michael Clark||Spearman, Sir Alexander|
|Cary, Sir Robert||Irvine, Bryant Godman (Rye)||Stainton, Keith|
|Channon, H. P. G.||Jenkin, Patrick (Woodford)||Summers, Sir Spencer|
|Chataway, Christopher||Jennings, J. C.||Taylor, Edward M. (G'gow,Cathcart)|
|Chichester-Clark, R.||Jopling, Michael||Taylor, Frank (Moss Side)|
|Clark, Henry (Antrim, N.)||Kerby, Capt. Henry||Temple, John M.|
|Clark, William (Nottingham, S.)||Kershaw, Anthony||Thatcher, Mrs. Margaret|
|Cooke, Robert||Kilfedder, James A.||Thomas, Sir Leslie (Canterbury)|
|Cooper, A. E.||Kimball, Marcus||Thompson, Sir Richard (Croydon,S.)|
|Cooper-Key, Sir Neill||King, Evelyn (Dorset, S.)||Thorneycroft, Rt. Hn. Peter|
|Cordle, John||Kitson, Timothy||Tiley, Arthur (Bradford, W.)|
|Costain, A. P.||Lagden, Godfrey||Tilney, John (Wavertree)|
|Courtney, Cdr. Anthony||Lancaster, Col. C. G.||Turton, Rt. Hn. R. H.|
|Crawley, Aldan||Langford-Holt, Sir John||Tweedsmuir, Lady|
|Crosthwaite-Eyre, Col. Sir Oliver||Litchfield, Capt. John||van Straubenzee, W. R.|
|Cunningham, Sir Knox||Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)||Vaughan-Morgan, Rt. Hn. Sir John|
|Dalkeith, Earl of||Lloyd, Ian (P'tsm'th, Langstone)||Vickers, Dame Joan|
|Dance, James||Lloyd, Rt. Hn. Selwyn (Wirral)||Walder, David (High Peak)|
|Davies, Dr. Wyndham (Perry Barr)||Longbottom, Charles||Walker, Peter (Worcester)|
|d'Avigdor-Goldsmid, Sir Henry||Longden, Gilbert||Wall, Patrick|
|Dean, Paul||Loveys, Walter H.||Walters, Dennis|
|Dodds-Parker, Douglas||Lucas, Sir Jocelyn||Ward, Dame Irene|
|Donaldson, Cmdr. C. E. M.||Lucas-Tooth, Sir Hugh||Weatherill, Bernard|
|Doughty, Charles||McAdden, Sir Stephen||Whitelaw, William|
|Douglas-Home, Rt. Hn. Sir Alec||MacArthur, Ian||Williams, Sir Rolf Dudley (Exeter)|
|Drayson, G. B.||MacIeod, Rt. Hn. Iain||Wills, Sir Gerald (Bridgwater)|
|du Cann, Rt. Hn. Edward||McNair-Wilson, Patrick||Wilson, Geoffrey (Truro)|
|Eden, Sir John||Maginnis, John E.||Wise, A. R.|
|Fell, Anthony||Maitland, Sir John||Wolrige-Gordon, Patrick|
|Fisher, Nigel||Marten, Neil||Wood, Rt. Hn. Richard|
|Fletcher-Cooke, Charles (Darwen)||Mathew, Robert||Woodhouse, Hn. Christopher|
|Fletcher-Cooke, Sir John (S'pton)||Maude, Angus E. U.||Woodnutt, Mark|
|Forrest, George||Maxwell-Hyslop, R. J.||Yates, William (The Wrekin)|
|Foster, Sir John||Maydon, Lt.-Cmdr. S. L. C.||Younger, Hn. George|
|Fraser, Ian (Plymouth, Sutton)||Meyer, Sir Anthony|
|Galbraith, T. G. D.||Mills, Peter (Torrington)||TELLERS FOR THE AYES:|
|Mr. McLaren and Mr. Pym.|
§ The Committee divided: Ayes 217, Noes 264.
|Abse, Leo||Griffiths, David (Rother Valley)||Milne, Edward (Blyth)|
|Albu, Austen||Griffiths, Rt. Hn. James (Llanelly)||Molloy, William|
|Allaun, Frank (Salford, E.)||Grimond, Rt. Hn. J.||Monslow, Walter|
|Alldritt, W. H.||Hale, Leslie||Morris, Alfred (Wythenshawe)|
|Allen, Scholefield (Crewe)||Hamilton, James (Bothwell)||Morris, Charles (Openshaw)|
|Armstrong, Ernest||Hamilton, William (West Fife)||Morris, John (Aberavon)|
|Atkinson, Norman||Hamling, William (Woolwich, W.)||Mulley, Rt. Hn. Frederick (SheffieldPk)|
|Bacon, Miss Alice||Harper, Joseph||Murray, Albert|
|Bagier, Cordon A. T.||Harrison, Walter (Wakefleld)||Neal, Harold|
|Barnett, Joel||Hart, Mrs. Judith||Newens, Stan|
|Baxter, William||Hattersley, Ray||Noel-Baker, Francis (Swindon)|
|Beaney, Alan||Hayman, F. H.||Norwood, Christopher|
|Bellenger, Rt. Hn. F. J.||Hazell, Bert||Oakes, Gordon|
|Bence, Cyril||Heffer, Eric S.||Ogden, Eric|
|Bennett, J. (Glasgow, Bridgeton)||Henderson, Rt. Hn. Arthur||O'Malley, Brian|
|Bessell, Peter||Herbison, Rt. Hn. Margaret||Oram, Albert E. (E. Ham S.)|
|Binns, John||Hobden, Dennis (Brighton, K'town)||Orbach, Maurice|
|Blackburn, F.||Holman, Percy||Orme, Stanley|
|Blenkinsop, Arthur||Horner, John||Oswald, Thomas|
|Boardman, H.||Houghton, Rt. Hn. Douglas||Owen, Will|
|Boston, T. G.||Howarth, Harry (Wellingborough)||Padley, Walter|
|Bottomley, Rt. Hn. Arthur||Howarth, Robert L. (Bolton, E.)||Page, Derek (King's Lynn)|
|Bowden, Rt. Hn. H. W. (Leics S.W.)||Howell, Denis (Small Heath)||Paget, R. T.|
|Bowen, Roderic (Cardigan)||Howie, W.||Pannell, Rt. Hn. Charles|
|Bowles, Frank||Hoy, James||Pargiter, G. A.|
|Boyden, James||Hughes, Cledwyn (Anglesey)||Park, Trevor (Derbyshire, S.E.)|
|Braddock, Mrs. E. M.||Hughes, Emrys (S. Ayrshire)||Pavitt, Laurence|
|Bray, Dr. Jeremy||Hughes, Hector (Aberdeen, N.)||Pearson, Arthur (Pontypridd)|
|Brown, Hugh D. (Glasgow, Provan)||Hunter, Adam (Dunfermline)||Pentland, Norman|
|Brown, R. W. (Shoreditch & Fbury)||Hunter, A. E. (Feltham)||Perry, E. G.|
|Buchan, Norman (Renfrewshire, W.)||Irvine, A. J. (Edge Hill)||Popplewell, Ernest|
|Buchanan, Richard||Irving, Sydney (Dartford)||Prentice, R. E.|
|Butler, Herbert (Hackney, C.)||Jackson, Colin||Probert, Arthur|
|Butler, Mrs. Joyce (Wood Green)||Janner, Sir Barnett||Pursey, Cmdr. Harry|
|Carmichael, Neil||Jeger, George (Goole)||Rankin, John|
|Carter-Jones, Lewis||Jeger, Mrs. Lena (H'b'n & St.P'cras, S.)||Reynolds, G. W.|
|Coleman, Donald||Jenkins, Hugh (Putney)||Rhodes, Geoffrey|
|Corbet, Mrs. Freda||Johnston, Russell (Inverness)||Roberts, Albert (Normanton)|
|Crawshaw, Richard||Jones, Dan (Burnley)||Roberts, Goronwy (Caernarvon)|
|Cronin, John||Jones, J. Idwal (Wrexham)||Robertson, John (Paisley)|
|Crossman, Rt. Hn. R. H. S.||Jones, T. W. (Merioneth)||Robinson, Rt. Hn. K. (St. Pancras, N.)|
|Cullen, Mrs. Alice||Kelley, Richard||Rogers, George (Kensington, N.)|
|Dalyell, Tam||Kenyon, Clifford||Ross, Rt. Hn. William|
|Darling, George||Kerr, Mrs. Anne (R'ter & Chatham)||Rowland, Christopher|
|Davies, G. Elfed (Rhondda, E.)||Kerr, Dr. David (W'worth, Central)||Sheldon, Robert|
|Davies, Harold (Leek)||Lawson, George||Shinwell, Rt. Hn. E.|
|Davies, Ifor (Gower)||Leadbitter, Ted||Shore, Peter (Stepney)|
|Davies, S. O. (Merthyr)||Ledger, Ron||Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)|
|de Freitas, Sir Geoffrey||Lee, Rt. Hn. Frederick (Newton)||Short, Mrs. Renée (W'hampton, N.E.)|
|Delargy, Hugh||Lever, Harold (Cheetham)||Silkin, John (Deptford)|
|Dempsey, James||Lever, L. M. (Ardwick)||Silverman, Julius (Aston)|
|Diamond, John||Lewis, Ron (Carlisle)||Silverman, Sydney (Nelson)|
|Dodds, Norman||Lipton, Marcus||Skeffington, Arthur|
|Doig, Peter||Lomas, Kenneth||Slater, Joseph (Sedgefield)|
|Donnelly, Desmond||Loughlin, Charles||Small, William|
|Driberg, Tom||Lubbock, Eric||Smith, Ellis (Stoke, S.)|
|Duffy, Dr. A. E. P.||McBride, Neil||Snow, Julian|
|Dunn, James A.||McCann, J.||Solomons, Henry|
|Dunnett, Jack||MacColl, James||Sorensen, R. W.|
|Edwards, Rt. Hn. Ness (Caerphilly)||MacDermot, Niall||Spriggs, Leslie|
|English, Michael||McGuire, Michael||Stewart, Rt. Hn. Michael|
|Ennals, David||McInnes, James||Stonehouse, John|
|Ensor, David||McKay, Mrs. Margaret||Stones, William|
|Evans, Albert (Islington, S.W.)||Mackenzie, Alasdair (Ross&Crom'ty)||Strauss, Rt. Hn. G. R. (Vauxhall)|
|Evans, Ioan (Birmingham, Yardley)||Mackie, John (Enfield, E.)||Stross, Sir Barnett (Stoke-on-Trent, C.)|
|Fernyhough, E.||McLeavy, Frank||Summerskill, Dr. Shirley|
|Finch, Harold (Bedwellty)||MacMillan, Malcolm||Swain, Thomas|
|Fitch, Alan (Wigan)||MacPherson, Malcolm||Symonde, J. B.|
|Fletcher, Sir Eric (Islington, E.)||Mahon, Peter (Preston, S.)||Taverne, Dick|
|Fletcher, Ted (Darlington)||Mahon, Simon (Bootle)||Taylor, Bernard (Mansfield)|
|Floud, Bernard||Mallalieu, E. L. (Brigg)||Thomas, George (Cardiff, W.)|
|Foley, Maurice||Mallalieu, J.P.W.(Huddersfield, E.)||Thomas, Iorwerth (Rhondda, W.)|
|Foot, Sir Dingle (Ipswich)||Manuel, Archie||Thomson, George (Dundee, E.)|
|Foot, Michael (Ebbw Vale)||Mapp, Charles||Thornton, Ernest|
|Ford, Ben||Marsh, Richard||Thorpe, Jeremy|
|Freeson, Reginald||Mason, Roy||Tinn, James|
|Galpern, Sir Myer||Mavhew, Christopher||Tuck, Raphael|
|Garrett, W. E.||Mellish, Robert||Urwin, T. W.|
|Garrow, A.||Mendelson, J. J.||Varley, Eric C.|
|Ginsburg, David||Mikardo, Ian||Wainwright, Edwin|
|Gourlay, Harry||Millan, Bruce||Walden, Brian (All Saints)|
|Gregory, Arnold||Miller, Dr. M. S.||Walker, Harold (Doncaster)|
|Wallace, George||Willey, Rt. Hn. Frederick||Woodburn, Rt. Hn. A.|
|Warbey, William||Williams, Alan (Swansea, W.)||Woof, Robert|
|Watkins, Tudor||Williams, Mrs. Shirley (Hitchin)||Wyatt, Woodrow|
|Weitzman, David||Willis, George (Edinburgh, E.)||Zilliacus, K.|
|White, Mrs. Eirene||Wilson, Rt. Hn. Harold (Huyton)|
|Whitlock, William||Wilson, William (Coventry, S.)||TELLERS FOR THE NOES:|
|Wilkins, W. A.||Winterbottom, R. E.||Mr. Grey and Mrs. Slater.|
§ Dr. Reginald Bennett (Gosport and Fareham)
I beg to move, Amendment No. 25, in page 13, line 45, at end to insert:
I am seeking to exempt from the provisions of this deplorable surcharge the items mentioned in the Amendment. In this field the surcharge has perhaps been more unfortunate and ill-judged than in any other field to which it applies. At the outset, I ought to declare by interest, as a member of the management committee of a co-operative dealing in these matters. From what I have been able to discover from the people working in the trade, the application of this surcharge is one of the most ill-thought-out, hasty—as has already been admitted by the Minister without Portfolio—and regrettable pieces of legislation that has ever been inflicted upon this country.
22.05 … Wine of fresh grapes (including grape must with fermentation arrested by the addition of alcohol). 22.06 … Vermouths and other wines of fresh grapes flavoured with aromatic extracts. 22.07 … Other fermented beverages (for example cider, perry and mead). 22.09 … Spirits (other than those of heading No. 22.08); liqueurs and other spirituous beverages; compound alcoholic preparations (known as "concentrated extracts") for the manufacture of beverages.
It was a panic move, and it hit this trade with such suddenness that for 10 days after the infliction of the surcharge it was impossible to obtain from any Customs officer any explanation of what it meant. For a fortnight after the surcharge was imposed it was quite impossible—and I believe that it still is—to find out on what basis this surcharge is to be levied on these products, because it is so difficult—as can be understood, if I go into a little detail—to discover whether the 15 per cent. increase in duty, ad valorem, is to apply to the original value and the original purchase price of the wine, or the wine plus keeping costs, or the wine plus freight, or the wine plus freight and insurance which has been paid by the time it comes to this country.
494 It is almost impossible to disentangle the insurance element when wine merchants and co-operatives such as the one of which I am a member have a general, broad insurance policy covering the whole of the trading which they do. I see sympathetic expressions from some hon. Members on the Front Bench opposite. I hope that they will be shared by their colleagues in that quarter from which benefit may come. I gather from our managers and others in the trade that in some cases it may be five years or more before the argument can be settled, one way or the other, at what point value is taken on wines and spirits which are to be subject to this ad valorem surcharge. We have been accustomed to duties increases, but this is the one type of impost that is proving disastrous to administer.
Over the last few years, unfortunately, we have had 10 per cent. increases in the duty on two occasions, according to the regulator. Now we are to have a 15 per cent. increase, although if we use our slide rules a little more carefully than the Prime Minister does we find that two tens and a fifteen do not add up precisely to 35, because one is an ad valorem surcharge on the original cost. Nevertheless, we have to pay approximately one-third more on landing wine in this country over what we paid a few years ago. This is a tremendous punishment to inflict upon a trade which has done nobody very much harm.
The effect of this imposition has been that cargoes are jammed in the docks, and agents are begging those who deal with them not to go on ringing up and asking what the surcharges are to be before they take the goods out, because the agents do not know the answers and cannot get them. The trade is now at a standstill, and there is not one firm in London which has not been seriously dis-organised by the imposition of this surcharge. Those are strong reasons why this trade should be exempted.
Furthermore, it is common ground among all of us of whatever party, that if this surcharge—put on suddenly in the way it has been put on—is allowed to 495 continue we shall lay ourselves open to retaliation, without apology, by any country which feels that it wants to do something to score off us. I am afraid that this will very badly hit our whisky business, on which the country's economy largely depends. We are very vulnerable if we insist on maintaining the surcharge.
Questions have been asked whether goods are luxuries or necessities. If the Prime Minister's tobacco can be exempted from the surcharge, surely the beverages enjoyed by some of his supporters may equally qualify for exemption.
§ 5.0 p.m.
§ Lieut.-Colonel Sir Walter Bromley-Davenport (Knutsford)
It is not often that I speak on non-controversial matters, but I feel that the Amendment put orward by my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) will find universal agreement. Although it can be argued that people can do without wines and spirits, the answer to that argument is comparatively simple. Wine in moderation is recommended by the medical profession and the same may be said for spirits. The same cannot be said for tobacco. We have all been warned of the dangers of smoking, but tobacco is exempted from the surcharge. We feel it is unfair that wines and spirits should be singled out for this extra taxation.
The duties on imported wines are already far higher than on practically any other commodity. For instance, the duty on the imports of a large range of spirits and liqueurs are already 400 per cent., and on wines the average is about 70 per cent. Surely the wine trade pays enough already. Indeed, it seems to pay more than its fair share of the increases in taxation. As was said by my hon. Friend, in 1961 the duties were increased by 10 per cent. This was consolidated in April, 1962, although other trades were then exempted from the effect of the regulator. In April, 1964, there was a further increase of 10 per cent., and on top of that now comes this 15 per cent. surcharge. In many cases this works out at more per bottle than the two previous increases.
The amount of foreign currency spent on wines is not excessive. The larger part of the retail price is made up of duty and other charges. Most of the wine 496 comes either from Commonwealth countries or from countries which have a good trade balance with this country. The imposition of this duty is bound to have a most unfortunate repercussion in the exporting countries. They may well find themselves forced into retaliatory action of some kind against British whisky exports, and so on.
The effect of the surcharge is particularly unfortunate on trades such as the port wine trade which has already found it particularly difficult, because of the high duty, to retain its pre-war import level. The trade began to look up after the reduction of the duty from 50s. to 25s. a gallon in 1958 and 1960. But the two additional 10 per cent. increases and the new 15 per cent. surcharge will mean a serious setback. It is hoped that if one day there are reductions, wines and spirits will be regarded as a priority case for exemption from the duty and that this will be done at the earliest possible opportunity.
We have attended deputations to Chancellors of the Exchequer in past years asking for this duty to be reduced and we have always found that one argument which bears the greatest force with Chancellors is the law of diminishing returns. This may well operate again. People who will suffer are the customers as well as the trade. My final point is even more uncontroversial than anything I have said already. I seriously submit to the Committee that everyone in this country wants as much wine and spirits as they can possibly drink in order to survive the reign of hate and incompetence of Her Majesty's Government.
§ Mr. John Biggs-Davison (Chigwell)
My hon. and gallant Friend the Member for Knutsford (Sir W. Bromley-Davenport) has made a felicitously non-controversial speech. I believe that this Amendment, which I am happy to support, is non-controversial in the sense that it carries the sympathy of nearly every hon. Member in the Committee. I hope that we shall find that the Treasury Bench is also sympathetic and accommodating and will accede at least in some measure to what we desire. After all, they may make some friends that way, and, goodness knows, the Government need some friends.
497 I regret very much that I have no interest to declare in the trade affected by this Amendment, unless it is the interest of being a modest consumer. My hon. and gallant Friend the Member for Knutsford gave high literary and other authority for the consumption of wine in moderation. I would add that there is high scriptural authority for this. There may be some hon. Members who think, "Well, what does this matter? Why should not this impost be imposed on wine and spirits because, after all, they are inessentials and luxuries"?
I would say that wines and spirits today, whatever may have been the case a generation or so ago, are no longer luxuries of the rich. Wines and spirits, with beer, enter into the retail price index. This was said by the present Chancellor of the Exchequer during a Committee stage debate on the Finance Bill in June of this year in the last Parliament.
I think that we should have a very clear answer from the Treasury Bench, why wines and spirits should be treated differently so far as surcharge is concerned from, say, tea, cocoa, coffee or tobacco, which is certainly far more injurious than any wines or spirits. As my hon. Friends have pointed out, the duties on imported wines and spirits are already out of proportion. On a large range of imported spirits and liquors the duty is already 400 per cent. or more c.i.f. landed costs.
I wish to take the question a little wider than the narrow implications. I wish to consider the effect of the surcharge on sherry and port as it will affect our trading relations with Spain and Portugal. It may make sense to impose a surcharge in order to reduce imports of these wines from these countries, were they bad trading partners and not willing to buy our goods. Surely the object of the surcharge is to bring our exports and imports into better balance. After all, as my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) has suggested, the result of levying a surcharge on these imported wines and spirits from Commonwealth, European and friendly countries may be that whisky, for example, will be discriminated against. Surely the whole object of the surcharge will be vitiated.
What is the good of restricting imports if we make it impossible for our trading partners to buy our goods? Spain and 498 Portugal are exceedingly good trading partners and theirs are expanding markets. I think that I am right in saying that we have a favourable balance of trade with both these countries. In 1963, our exports to Spain amounted to £60.3 million and exceeded our imports from Spain by nearly £7 million. Similarly, we have a favourable balance of trade with Portugal. Her Majesty's Government have done a great deal of damage to our trade with those two countries, largely to gratify Left-wing, antediluvian, self-righteous and ideological prejudices.
§ The Chairman
The hon. Member must confine himself to the Amendment, which is about wines and liqueurs.
§ Mr. Biggs-Davison
I wish to point out to the Committee that to levy this 15 per cent. surcharge on sherry and port, imported respectively from Spain and Portugal, is likely further to damage our trade with these countries to which the Government, by their policies, have already done great damage.
Therefore, I appeal to the Government, as an effort to undo some of the harm which they have done in this respect, to accept the Amendment so ably moved by my hon. Friend the Member for Gosport and Fareham.
§ Sir H. d'Avigdor-Goldsmid (Walsall, South)
I do not think that we could have had a better example of the muddleheaded thinking which underlies the whole of this 15 per cent. surcharge than by reference to the matters dealt with in the Amendment. The object of the surcharge is both to discourage imports and to levy duty. What will be the effect of this? As my hon. Friend has said, there is not the slightest doubt that this extra imposition will serve exactly the law of diminishing returns and that there will be a considerable reduction in sales.
This is a serious matter for the Chancellor of the Exchequer. It may not be at the moment, but it will be in due course, because he depends for a substantial amount of revenue from the wine and spirit duties. It will do that part of his revenue harm. If, to some extent, the right hon. Gentleman wants to replace imported wines with the homegrown varieties, he is, however, as I see in the fourth line of the Schedule, also levying the tax on the concentrated extracts from which home-produced wines 499 are made. Therefore, it is also the raw material of the home-grown produced wine which is going to suffer. That being so, it will not be a question of replacing an imported wine with a domestic product. It is simply going to be a question of reducing consumption all round. That is one side of the matter.
§ Mr. Julian Snow (Lichfield and Tamworth)
In support of his argument, can the hon. Gentleman cite a previous reduction in consumption when there has been an increase in duty, and, if so, in what years?
§ Sir H. d'Avigdor-Goldsmid
That will not help imports. There comes a time, as the hon. Member will know, when every camel's back breaks. This is not a straw which is being put on the back of the camel, but a hefty beam of timber.
We want seriously to call the attention of the Government Front Bench to this inescapable dilemma, that they will make the task of the Chancellor next April just that much harder than it would otherwise be. If the Royal Navy has enjoyed the rum ration all these years, it is perfectly clear that the rum ration which the Chancellor has indulged in, and which successive Chancellors have indulged in, will be poisoned from the source, because he will not obtain from the wine and spirit taxes that same share of the revenue which has been available in the past. This will certainly be a major element in a future Budget.
§ 5.15 p.m.
§ Sir Eric Fletcher
We have heard some rather contradictory arguments in support of this Amendment, and I cannot help feeling that if the Committee reflects seriously on the matter it will not have any real hesitation in rejecting it. We have heard something about the law of diminishing returns, but I would remind the Committee that the whole object of this surcharge is to try to reduce our import bill. There is no doubt that in recent years the wine and spirit trade, with the increased consumption year by year, has made a notable addition to our import bill. It is our object to try to reduce it.
The figures are these. The value of imported wines and spirits in 1963 was £41 million. In the current year it is running at an annual rate of £48.3 million. Although it is true, as the hon. 500 Member for Gosport and Fareham (Dr. Bennett) pointed out, that the wine trade has suffered various imposts of duty under successive Chancellors, experience shows that notwithstanding that fact the consumption of wine and spirits in the country has increased. I doubt very much whether it is likely to go down as a result of this surcharge.
The net effect of the surcharge, I am told, will be the equivalent of about 3d. to 6d. per bottle on light table wines. 6d. to ls. on a bottle of sherry or port and 2s. on a bottle of brandy. Incidentally, I think that I ought to correct the impression under which the hon. and gallant Member for Knutsford (Sir W. Bromley-Davenport) was suffering. He seemed to think that the surcharge was to be imposed on top of the existing duty. Of course it is not. It is a parallel impost levied on the import value of the wines and spirits when they come into the country.
Therefore, while I do not think that the experience of the wine and spirit trade justifies any arguments based upon the alleged law of diminishing returns, and while it may well be that this surcharge on wines and spirits will not make very much of a contribution to our attempt to reduce our total imports, yet, at the same time, those facts themselves are, of course, sufficient to justify the Government's decision to resist this Amendment. If they do succeed in their object, well and good, but there cannot on any basis be a case for exempting wines and spirits from the surcharge. We only hope that it will have the desired effect of making some useful contribution which my right hon. Friend the Chancellor has in mind.
For these reasons, I hope that the Committee will agree with me and will reject the Amendment.
§ Mr. John Hall
I must, first, declare an interest to the Committee. For many years I have had an interest in the wine and spirit industry. This is the first time in the 12 years that I have been a Member of Parliament that I have been drawn to my feet to speak in any way on behalf of that industry, but, really, the imposition now being placed on the wine and spirit trade is too much. It has stung me to my feet.
I wish, in a way, that it was the right hon. Gentleman the Chancellor of the 501 Exchequer who was facing me at this moment. This is no reflection on the Minister without Portfolio. I wish that it was the Chancellor because I think that he might, perhaps, show rather more sympathy with the case so eloquently deployed by my hon. Friend the Member for Gosport and Fareham (Dr. Bennett) and supported so cogently by some of my other hon. Friends.
On 2nd June this year the present Chancellor, speaking from this Box at the time, said:I noticed that the Prime Minister"—now, of course, my right hon. Friend the Leader of the Opposition—yesterday, discussing taxation, which is the purpose of this Clause, said that the Socialists will bring in higher taxation. Well, it was Aneurin Bevan who said, 'why peer into a crystal when you can read the book?'".We have read the book, and it is true what my right hon. Friend said at the time, that it was the Socialists' intention to increase taxation.
The right hon. Gentleman went on to say:The plain truth is that the duty on spirits is higher today than it has ever been in the whole history of these duties. It is a record which I am sure the Government will be proud to publicise among their records—that they have raised the taxation on spirits to the highest level ever.That record did not stand long. It has been raised to a new record level by the new Government, and I find myself agreeing with the present Chancellor when he went on:… although I know that the Government are acting purely in the knowledge that there is nobody left who wants to drink their health they are now making it more expensive for us to drown our sorrows.How right he was. How right he is. Were the Chancellor here he might listen with the same sympathy which has been displayed by hon. Members, except those on the Front Bench opposite.
Possible retaliatory steps affecting our exports have been mentioned. Does the Minister know that already, since the imposition of the surcharge, six countries have considerably increased their tariffs on whisky exports from this country? How many other countries are likely to follow suit? That is an unfortunate result of a surcharge of this kind and I find it difficult to understand some of the arguments being deployed by the Government.
502 Why is it, for normal purposes, that wines and spirits are included in the food regulations and are regarded as foodstuffs in precisely the same way as tea and coffee? Why is a distinction now made between the two? Why allow tea and coffee to remain in the list of exemptions and not wines and spirits? Why do we allow tobacco to come in. a commodity which, we are told on the highest authority, is harmful to health? It is understood that consideration is being given to legislation to restrict the advertising of cigarettes and tobacco generally—yet the Government exempt tobacco from the surcharge and place it on wines and spirits. I find this hard to understand.
In attempting to show the small effect the surcharge will have the Minister quoted certain figures. He did not point out, however, that its effect on wines of some classes—I am thinking particularly in this context of table wines of good quality—will mean a doubling of the tax paid on those classes of wine. The duties on a large range of imported spirits and liqueurs already stand at 400 per cent. or more of the c.i.f. landed cost, before the surcharge is imposed. There is little doubt that wines and spirits are among the highest taxed commodities in the country. The trade has gone on bearing these increased costs—which, I admit, all Governments have placed on it from time to time—without much complaint, but it considers that the time has come when it must protest.
I realise that it was Napoleon who said that he made more out of the vices than the virtues of his citizens. Apparently every Government act, rather cynically, on that assumption. They go on taxing wines and spirits, considering that it will make little difference to the consumption of those goods because people apparently must have some kind of stimulant. I agree with my hon. and gallant Friend the Member for Knutsford (Sir W. Bromley-Davenport) that we may be in desperate need of a stimulant for the next few months.
This thought obviously crossed the mind of the present Chancellor, when speaking in the debate from which I have quoted, for he said:… this extremely high level of duty is having an effect on making other stimulants more accessible and cheaper. We have had a lot of discussion recently about drugs".503 He went on to quote a professor as saying that… as many people take drugs in this country today as drink."—[OFFICIAL REPORT, 2nd June, 1964; Vol. 695, c. 944–5–6.]The present Chancellor inferred that the time would come when the level of taxation on wines and spirits would be so high that people would be driven more and more to the cheap and readily available drugs which act as stimulants. I am sure that the Minister does not want that to happen and will adopt a more sympathetic attitude to the Amendment. I hope that he will consider the case made out by my hon. Friends and will table a suitable Amendment on Report.
§ Amendment negatived.
§ The Temporary Chairman (Dr. A. D. D. Broughton)
In calling the Minister without Portfolio to move Amendment No. 26, I think that it will be convenient for the Committee to discuss, at the same time, Amendment No. 28, in page 14, line 6, at end insert:
28.01 (B) … Bromide.
§ Amendment No. 29, in line 6, at end insert:
§ Amendment No. 30, in line 6, at end insert:
§ Amendment No. 31, in line 6, at end insert:
§ Amendment No. 32, in line 6, at end insert:
§ Amendment No. 33, in line 6, at end insert:
§ Amendment No. 34, in line 6, at end insert:
§ Amendment No. 35, in line 6, at end insert:
|28.46||(G) (2) (a)||Borax, anhydrous.|
§ Amendment No. 36, in line 6, at end insert:
|ex 28.52||…||Thorium and rare earth metal concentrates.|
§ Amendment No. 53, in line 7, at end insert:
§ Amendment No.66, in line 21, at end insert:
§ Amendment No. 67, in line 21, at end insert:
|38.15||…||…||Prepared rubber accelerators.|
§ Amendment No. 75, in line 22, at end insert:
§ Amendment No. 127, in line 10, at end insert:
|Ammonium Meta Vanadate.|
|Chrome Oxide (German).|
|Potassium Hydroxide A.R.|
|Guignets Green, American.|
§ Mr. John Page
On a point of order. Although it may be convenient that these Amendments should be discussed together, I wonder whether you would consider, Dr. Broughton, taking Amendment No. 75, which stands in the name of my hon. Friend the Member for Wycombe (Mr. John Hall) and myself, separately so that, at a later stage, the Committee could, if it wished, divide on it.
§ The Temporary Chairman
I understand that the Chairman has considered that matter and that he would permit a Division on it if the Committee so desired.
§ Mr. Norman Cole (Bedfordshire, South)
Further to that point of order. Did you mention Amendment No. 125, standing in my name?
§ Mr. Edward du Cann (Taunton)
I observe that Amendment No. 125 is down to be discussed with the next series of Amendments, Dr. Broughton.
§ Sir Eric Fletcher
I beg to move Amendment No. 26, in page 14, line 6, column 1, at the end to insert:
I understand that the effect of moving this Amendment is that if it is accepted by the Committee it would be unnecessary for the Committee to consider Amendment Nos. 28, 29, 31, 32, 33 and 34.
- Bromine and iodine within 28.01.
- Silicon, selenium and tellurium within 28.04.
- Mercury within 28.05.
- Arsenic trioxide within 28.11.
Since Second Reading of the Bill my right hon. Friend the Chancellor of the Exchequer has listened to the many representations he has received in regard to what should be included in and what should be excluded from Chapter 28 of the Customs tariff. In his Second Reading speech my right hon. Friend explained the principles on which the Schedule of exemptions had been based. He emphasised that there were no generally accepted rules which could be applied precisely and consistently over the whole field. He went on to say that he would consider a small group of items which, on strict application of the general principle, could be added to the First Schedule.
I think that the Committee will agree that the Chancellor has indicated his readiness to be as flexible and helpful as possible by giving the most sympathetic consideration to chemical items that should be added to the Schedule. It may be for the convenience of the Committee, Dr. Broughton, if, having moved the Amendment, I postponed any further observations I might have to make on the other Amendments until I have heard the arguments in support of them deployed by those hon. Members who will doubtless address you on them.
§ 5.30 p.m.
§ Mr. A. E. Cooper (Ilford, South)
I would, first, thank the Chancellor for the concession on the Amendments that have been moved, but his action rather 506 turns on their head the arguments he used earlier this afternoon, when he said that he did not have the time to look into some of these matters. I mentioned some of these to the right hon. Gentleman during Second Reading, and subsequently, and it has taken only two weeks to get these Amendments on the Notice Paper. If it was possible to do it in those cases, it must have been possible to do it for other items. All this shows, as we have said over and over again, that this whole Bill and all the proposals to deal with this alleged crisis have been the result of hasty and ill-considered action, and that the Government are now having to back-pedal as quickly as they can on almost everything they have done.
I was rather disturbed by what the Minister without Portfolio said to my hon. Friend the Member for Wycombe (Mr. John Hall) about the concessions, if any, that he will be able to make today. Are we to understand that we are to go through a complete charade today on all of these things, and that, no matter how strong the argument may be in favour of exempting a product, the Minister does not intend to give way one jot? If that is so, why are we wasting our time?
The Amendments that have been tabled by the chemical industry have been put down having in mind the Government's idea and ideal that we should consider basic raw materials only in this context. When one looks at the Amendments that the Minister has accepted, one is tempted to ask why many others have not also been accepted, as they fall into precisely the same category. Some of the products mentioned in the Chancellor's Amendments are semi-processed materials which fall outside the rules that the right hon. Gentleman indicated earlier in our discussions.
We should, in this context, consider those materials that our industry must have, and which are not capable of production in this country. If we can accept that as a starting point we have a genuine basis for discussion, but if it is to be said that industry must have these raw materials, which cannot be produced here but will be subject to the 15 per cent. surcharge, all that the Government are doing is what we have said for weeks past they were doing, and that is to put up the costs of production.
507 I do not want the Minister without Portfolio to pontificate, as did his hon. Friend the Chief Secretary when he said that any self-respecting board of directors would see how it could absorb the costs of this impost. There is a limit to what one can absorb. First, we are told to absorb 6d. a gallon on petrol, then 3s. 3d. per employee on the stamp, and now a 15 per cent. surcharge on our goods. With this sort of thing going on, how do the Government think that British industry will be able to compete in the world's markets?
The Government say, "This is all very fine and large, but under one of the Clauses you can get all this sort of thing rebated." We shall later see that the question of rebate is not quite as simple as the Government make out; and that very stringent regulations have to be met before one can get the money back. British industry is buying a pig in a poke. The Government know it, and have not a case to argue.
I invite the Minister to tell the Committee and the chemical industry how the argument in favour of some products which I shall mention differs from that in favour of the products in the Amendments which the Chancellor is now asking the Committee to accept. I defy him to find any difference. Let us start with helium. Helium occurs in various natural gases. There are no sources of commercial importance in this country, and the world's major suppliers are the United States. Such helium as this country requires must, therefore, be imported.
We might find a case for calling borax a semi-manufactured product. Borax is produced with a very high water content. To ship it in that form would be very costly in terms of freight, so the water is extracted at the source of winning the borax, and anhydrous borax is shipped to this country, resulting in a considerable saving in freight costs and considerable benefit to our glass manufacturing industry. We have no natural sources of borax in Britain. It would be very difficult, however we worked out the rebate system, to rebate the duty that will be paid on borax used in the manufacture of glass, yet one only has to use one's imagination to know the wide areas in our export 508 markets in which glass plays a very important part.
Another instance is thorium, and rare earth metal concentrates. We have no natural supplies here. In fact, the Amendments relating to all these things show just the paucity of raw materials we have, and the extent to which we are dependent on imports from other countries. Thorium and other rare earth metal concentrates are essential for various of our industries. Again, we must handicap industry when we impose a surcharge on that type of material.
Finally, I would mention the naph-thenicacids—complex acids that arise from the refining of certain petroleum products. We do not get these crudes in this country—the principal source of supply is the Caribbean, and has been for all the years that we have used these acids. We cannot produce them here. Many thousands of tons are imported annually from the Caribbean. They are used in the chemical industry not only for the manufacture of what we call paint dryers, but in the manufacture of all sorts of wood preservatives—a very important part of our construction industry. The 15 per cent. surcharge is an impost that we should not have to bear now. Bearing in mind that we are trying to develop quite a substantial export business in materials made from these acids, naphthenic acids, the Government, once again, are imposing a liability.
These are simply products which I have mentioned—I could mention many more —which, by the method of their production, fall into line very roughly with the type of materials which are mentioned in the Chancellor's Amendments. I therefore hope that before the Report stage the Chancellor will see his way to include some of the very vital materials which we must have and which cannot be obtained in this country.
§ Mr. Geoffrey Hirst (Shipley)
This, of course, is a Treasury Measure and we are very grateful on this side of the Committee to see a Minister of the Board of Trade present today to listen to these discussions, in considerable contradistinction to yesterday. One realises that the mechanics of a Finance Bill must be handled technically by the Treasury, but this is a very serious matter indeed for the industry of our country, as my hon. 509 Friend the Member for Ilford, South (Mr. Cooper) has illustrated already, and I think that it is very right that a Board of Trade Minister should be here.
I am a little puzzled about the strict application of principles in this matter, to which the Minister without Portfolio referred, quoting from the Chancellor, because I cannot find the strict application of principle anywhere at all. I have here dozens of copies of letters and memoranda, the majority of which are copy letters sent in by industry to the Board of Trade. So the Board of Trade has had quite detailed arguments and, as I see from these letters, subsequent interviews in some cases, and I would not state that they have not listened to industry. This is at least something and I am always grateful for something. But I cannot see that very much use has been made of them or intelligence applied to them. I cannot see that the strict application of principle has come up anywhere, except in one or two quite obvious instances in Amendment No. 36 which the right hon. Gentleman has mentioned, which is no excuse whatsoever for not putting these in the residual list. We must have this question of the strict application of principle cleared up, because there is none at the present moment.
Surely the fundamental one must be whether a material is of real importance to industry and cannot be obtained in reasonable quantities on the home market. That is surely the principle to apply here. That is where we are in great difficulty, because the items which have been mentioned by my hon. Friend come within that category in every single instance. And surely this applies to the Amendment in my name, Amendment No. 53, which I think has the support of my hon. Friends, and which includes a somewhat less known material to most people, furfural, which is the basis of furan chemicals, furfural alcohol, tetrahydro-furinal alcohol and an even newer one, tetrahydro-furan, which are extracted from vegetable materials, corn cobs, etc., and manufactured, as far as I know, entirely in the United States and nowhere else, and which cannot be obtained in this country.
They are very specially used and, so far as I am aware, there is no satisfactory substitute for furfural in lubrication oil refining or as an intermediate 510 in the manufacture of furfural alcohol as a resin former. I do not know what representations have been made—because I have not a copy of the letter to the Board of Trade on this one—but I understand that representation has been made by companies interested in this matter to the Board of Trade. But surely this is, on that evidence alone—and a lot more could be quoted—well within the definition, if it means anything at all, of strict application of principle, the strict application actually being that it is entirely manufactured outside this country and is performing a thoroughly essential purpose. It is not something that might be, say, an alternative face cream—there are alternatives but some lady Members do not think so. This is not an occasion where there is any alternative at all, and I would have said that it was a clear instance of something which should be considered within the bracket.
If this debate is not to be strung out for an appalling time, we must have something more forthcoming than we have had so far from the Minister without Portfolio. He has had plenty of time overnight to take counsel with the Board of Trade to improve the quality of the brief which unhappily he was provided with yesterday and, although I think he probably did his best, one cannot make bricks without straw. But he has had time in the intervening period and hope that he has profited himself a little. I shall not be too difficult about this because he has said that he is prepared to listen to what we have to say. That is a natural courtesy which one would expect from the hon. Gentleman, because one cannot be extraordinarily well informed on these matters, and, after all, there is collective intelligence and knowledge on these benches over a wide range of chemical matters. I hope that this will lead to some approach to trade and industry to make quite sure that his list of exemptions is a really sensible and proper one and not something which Customs and Excise to the best of its ability got up overnight to bail the Cabinet out of an unfortunate position.
§ Mr. Hugh Fraser (Stafford and Stone)
I wish to intervene for only a few minutes to appeal to the Minister without Portfolio to make some clarification not merely to this Committee but to industry 511 as a whole on precisely what the Government mean. There are only two points that I should like to stress now.
As regards the ceramics colouring industry, which many hon. Members now in the Government from the Stoke-on-Trent area will know is of immense importance to exports directly and indirectly, there is at the moment total confusion as to what Government policy is on the restrictions on the various chemicals involved. We are all pleased to see that the various forms of arsenic trioxide have now been exempted and that selenium has been taken out.
If the right hon. Gentleman would study my Amendment No. 127 he will see that a vast range of other chemicals are equally of great importance to this industry, both in direct exports and in indirect exports, through the production of ceramics in the British pottery industry. Why one or two of the chemicals should be exempted and the rest remain in baffles both me and those engaged in the industry.
When we come to later discussions, doubtless the right hon. Gentleman will explain how all this is to apply. Let me stress the immense confusion which will come to an industry, such as the pottery industry, where it is very difficult to identify what is for export and what is not, and certainly, so far as they concern the use of colouring matters, they are of a most complicated, unique and difficult composition. I hope, therefore, that the Minister will explain to the Committee what differentiation there is and how this differentiation has been arrived at between individual raw materials in the same type of chemical group. Secondly, at a later stage in the debate I hope that he will make perfectly clear to the Committee how an industry such as the ceramics colouring industry will be able to receive the rebate that has been promised. I believe that on neither of those two points have the Government given full consideration and if they cannot satisfy the Committee, I think that they are properly beholden to the country to make different decisions when we come to the Report stage.
§ Mr. Charles Longbottom (York)
I wish to support what my hon. Friend the Member for Shipley (Mr. Hirst) said 512 about furfural. My hon. Friend explained what furfural is. It is made from corn cobs and oat hulls. Therefore, it can be made economically only where plenty of that vegetable material is available near the coast and close to the factory site. It is impossible to have this raw material in this country. It is found only in large countries such as the United States and the Soviet Union, which are both big producers of furfural. It has never been produced here. There is no likelihood that it ever will be, because it could not be produced economically. The United Kingdom offers no criteria for its production.
My hon. Friend the Member for Shipley mentioned one or two uses for furfural. I want to emphasise another use. Its use in core making, in binding sand together in foundaries, has revolutionised the making of castings in the foundry industry. It has enabled castings for the motor car industry, the agricultural industry and the machine tool industry to be made much more economically and efficiently than they were before furfural alcohol was used to help to bind castings together. By increasing the cost of furfural alcohol the Government are deliberately increasing the cost of manufacture of many component parts in the motor car industry and the agricultural industry. Surely right hon. and hon. Members opposite realise that the country relies on both industries for its export trade.
I ask the Minister without Portfolio to consider this point carefully. This is an example of a product which cannot be produced here. It never has been, and it never will be. It is an important item in the costs of many of our industries. It surely must fall within the Chancellor's definition of the type of material which he would consider sympathetically for exemption. I therefore hope that, in winding up, the right hon. Gentleman will deal with this point or will bring the matter up again on Report.
§ Mr. Cole
The Government's intention to try to clear up some of the anachronisms in Schedule I only makes confusion worse confounded. I have been puzzling my brains trying to discover what yardstick, if there was one, originally actuated the Government in fixing the list of goods which would be 513 exempted and, therefore, by implication, those not to be exempted. I have thought up three different possibilities ranging over all these Amendments. Each possibility is destroyed, however, when one applies to it the test mentioned by the Minister without Portfolio to be employed by the Chancellor of the Exchequer in deciding which items to exempt. I was reinforced by what my hon. Friend the Member for Ilford, South (Mr. Cooper) said about the differentiation between certain chemicals, some of which have been excepted by the Government and some of which I presume will not be excepted.
It might be useful on this group of Amendments to try to ascertain the Government's mind. One can suggest some things to which the Minister without Portfolio might address his mind. What is the definition underlying the list of goods which will eventually be exempted? The Committee should remember that, except for what is allowed for in Clause 3, namely, the Treasury coming to the House of Commons and allowing a reduction or further reduction, all items not mentioned in the Bill when enacted will carry the extra 15 per cent.
What are the variations on the possible yardstick which the Government adopted? Was a raw material meant to be something which was an element—something in other words which could not be manufactured of itself but which was perhaps found in a compound form in some places? That might have been some definition, though it would be a very limited one. My hon. Friend the Member for Ilford, South was careful to point out that the Minister without Portfolio has moved an Amendment one effect of which would be to exempt bromine and iodine under the Schedule. However, the right hon. Gentleman left out helium, which is also an element. He left out a number of other items which are elements. So what is the criterion? We can only assume that, chemically speaking, the yardstick is not those things which are elements and which up to now have not been further broken down.
I am trying to find a golden path through the list of concessions which the Government will allow. This might be some guidance to us on Report, not 514 to mention the fact that it would afford great guidance to manufacturers, who should know where they are. This is a very important aspect. At present it is an understatement that they do not know where they are. The second definition is this. Was it those articles which it was intended should be more intensively produced by industry here rather than the assumed somewhat easier and possibly cheaper course of importing them?
This definition, again, falls down, because there are a number of items which we are now considering on this group of Amendments which are not produced in this country, never have been produced in this country and never could be produced in this country economically. This applies to those things which the Minister without Portfolio suggested today. I have some small personal knowledge of chemistry. I suppose the Minister knows that some items like arsenic peroxide, which is probably produced from something in its natural state—one of the higher oxides of arsenic—cannot be made in this country. That is all right, but the Minister has by implication refused to accept other Amendments which apply to things which cannot be made in this country.
I want to discover what the Government's approach is. Do they want to set up a whole range of specialised manufacturing industries of certain articles which we must have for our industry? Or what do they suppose will happen? Or do they deliberately wish 15 per cent. to go on those composite parts used in our industries? I do not know the answer to these questions, but they are certainly posed by the Government's attitude on the variation.
I come to the third definition. When the Schedule was published and before the Government brought forward their Amendments, did they consider that all the articles they included comprehensively took care of all those which could not be and were not produced in this country? If so, in all kindness I can only say that there could not have been a greater error. The Government have realised that many substances could not be so produced and they have had to introduce concessions. I predict 515 that when the dust has settled and the Bill has become law, industry will find, especially when some stocks have been used up, that many more substances will be added. I do not think that the average person realises the truth of the statement by my hon. Friend the Member for Ilford, South that there is a tremendous paucity of raw materials in this country. I think it has been rightly said that we have no great quantities, except coal and a little inferior iron. All the rest have to be manufactured or imported.
§ 6.0 p.m.
§ Mr. Cole
My hon. Friend the Member for Truro (Mr. G. Wilson) mentions china clay, but that does not figure in every industry.
In supporting this range of Amendments, I ask the Government on Report, or in any way possible, if necessary by Treasury action, to do two things: first, to try to arrive at some kind of guiding principle. I know that when the Minister winds up I shall be told that there is a guiding principle. If there is, I can only say that I, and I suspect other hon. Friends of mine, have not spotted it. Secondly, I ask the Government, who in the main have our support in doing all they can about the export-import position, if they will, for their own benefit as well as ours and the manufacturers, lay down some kind of principle so that when we go to our constituents we can say, "Yours is so and so under paragraph (a)." I think this is the approach of a sensible man, and I hope that the Government will react to it.
§ Sir Eric Fletcher
I have listened carefully to the speech of the hon. Member for Bedfordshire, South (Mr. Cole) and the other speeches in support of this series of Amendments. Although the subject with which we are dealing is inherently complex and technical, I shall do my best to answer the questions.
First, may I once again try to disabuse the thought in the hon. Member's mind on this question of availability or non-availability of any particular chemical or any other matter in this country. It is irrelevant. I thought I had made it plain 516 and that some of my hon. Friends have made it plain in earlier debates that the availability or non-availability of any particular chemical, metal, foodstuff or anything else is completely irrelevant to where the dividing line should be drawn between what is subject to the surcharge and what is not.
If we once sought to introduce the test of something being available in this country or something not being available and therefore eligible for exemption, we should be introducing duties that were protective in character and we should be falling foul of international obligations. The Chancellor made it clear in his Second Reading speech—it has been made clear before and since—that the object of this surcharge is to reduce our adverse balance of payments. To do that we have made exemptions on a certain basis which I have tried to explain and will repeat. But in no case is the non-availability of any particular article in this country a ground for granting exemption.
Then the hon. Member asked what are the grounds, what is the dividing line—
§ Sir E. Fletcher
—the yardstick, the dividing line between those chemicals which are the subject matter of the Amendment in the name of my right hon. Friend the Chancellor of the Exchequer which I have moved, and, on the other hand, those chemicals which are the subject of other Amendments which the Government feel obliged to resist.
The basic dividing line is this. In so far as some of these chemicals are manufactured chemicals, they are not eligible for exemption. In so far as they are chemicals in their natural state or only slightly processed, they are eligible for exemption. That basic distinction is subject to one qualification. The hon. Member pointed out correctly that that basic distinction would not cover the case of helium. I agree. I shall deal with helium separately. The reason why helium is to be dealt with separately is this. Those hon. Members who have taken the trouble or have had the misfortune to have to study this Customs tariff may have recognised that, for some curious reason, the classification of chemicals under Chapter 28 is arranged on a totally different basis from the other 517 chapters. It is not arranged and classified in accordance with processes of manufacture or processes of development and so forth. Each particular chemical is taken, and its derivatives, compounds and associates are dealt with, with the result that some of them are natural and some are processed, and it is, therefore, difficult to apply the same tests to some of the articles in Chapter 28.
The Committee will forgive me, I hope, for being a little technical for the moment. With that exception, these are the reasons why the Chancellor of the Exchequer has decided, following representations made to him, to grant exemption to bromine and iodine. They are both obtained by the simple processing of natural materials at source. Silicon is a non-metal whose main use is in the production of alloys which are already exempt. Selenium and tellurium are the inevitable by-products in the production of copper which is itself exempt and, therefore, logically and rationally should also be exempt.
Mercury, I need hardly remind the Committee, is a natural material processed at source. Arsenic trioxide is an inevitable by-product of the production of nickel, and since nickel is exempt the case for exempting arsenic trioxide, I would have thought, was fairly clear.
Those arguments do not apply to some of the other chemicals in other Amendments which I feel obliged to advise the Committee to resist. For example, take the case of borax, anhydrous, which was referred to by the hon. Member for Shipley (Mr. Hirst). This is a chemical obtained by refining natural borates or by the chemical treatment of other borates. Other chemicals subject to the charge are made in similar ways. Therefore, that commodity has undergone a certain amount of processing before it comes into this country.
§ Mr. Cooper
Will the hon. Gentleman say where he got that definition? Borates is simply borax in a very dilute form. The refining that he refers to is simply a process to get rid of the water so that the material can be shipped here in concentrated form. No chemical refining takes place at all.
§ Sir E. Fletcher
I am obliged to the hon. Gentleman. I have no doubt that he has much greater technical knowledge of the subject than I have. But, of course, there is a further difficulty about borax. Borax, like helium, comes into the difficulty in which we are situated with regard to the classification in Chapter 28.
May I take helium as an example. Helium falls into Chapter 28.04, the main heading of which is "Hydrogen, rare gases and other non-metals." Then in the statistical key among the subheadings there are listed oxygen, nitrogen, hydrogen and rare gases, and then finally others. Helium is not specifically mentioned. Therefore, as the hon. Gentleman will realise, helium would appear to have no better claim to exemption than other gaseous elements such as oxygen, hydrogen, nitrogen and rare gases.
Helium is not listed in this Customs tariff except as a rare gas. The difficulty is that if one tries to make an exception for helium on the grounds put forward one inevitably gets a chain reaction in which other people who are interested in other rare gases ask why similar exceptions should not be made in respect of those elements for which, quite clearly, there would be no justification.
§ Mr. Cole
I appreciate the hon. Gentleman's giving way and also that he is doing his best to find his way through the labyrinth of the Customs list which, in passing, I would suggest might well be brought up-to-date because then we should not find these complications. I do not want to swop chemical formulae across the Floor, but does the hon. Gentleman think that the extraction of iodine, which is not found free anywhere in the world, from its various vegetable origins is any less a process than the dehydration of borax? Yet borax is outside the list and iodine is inside.
§ Sir E. Fletcher
I would not quarrel about the degree of processing in those two examples. We are in this further difficulty that owing to this classification if one attempts to make exemptions in respect of helium or something not listed in the catalogues one inevitably covers other elements or perhaps other processed chemicals, for which there would be no justification.
519 This is an inherently difficult task. The Board of Trade and my right hon. Friend the Chancellor of the Exchequer are quite sympathetic. They understand these problems of the industry. They have an obligation to secure the maximum justice and equity that can be obtained in a very difficult field. This is sufficiently indicated by the exemptions already made. This process will continue. The Chancellor has undertaken to review this, and when the time comes for lifting the surcharge there obviously will be a much greater claim in respect of some of the commodities and processed chemicals which we have been talking about today than for a totally different range of goods.
§ Mr. John Hall
I know that this is a very complicated subject to discuss. Can the hon. Gentleman tell the Committee what is the difficulty which prevents him or the Chancellor from introducing new headings into the Customs and Excise list? What is the procedure that must be followed which makes this so difficult?
§ Sir E. Fletcher
I am not sure whether the hon. Gentleman was present at the beginning when I thought that I explained that, for better for worse, and I think for better, in all this Customs legislation we are now parties to an international convention called the Brussels Tariff, with which the right hon. Member for Bexley (Mr. Heath) will be familiar. As a result of an Order made by the Treasury under the 1958 Act, the Government for the first time have adopted for all Customs purposes in this country the Customs tariff based on the Convention of Brussels which is brought up to date from year to year. By reason of this tariff, all commodities or articles are classified in a uniform way for international purposes. This is very convenient. It would be unfortunate, therefore, if we were driven to depart in out domestic legislation from the guiding lines and detailed specifications laid down in that Tariff.
But in this field, I admit, it has introduced complications, because there are some items for which there is good claim for concessions. I am advised, however, that if that claim was accepted it would lead to an inevitable chain reaction leading to others interested in 520 other articles in the same sub-division equally asking for exemptions. Then we should be on a slippery slope and we would not achieve the objects which we have in mind.
I turn now, as I promised to do, to the rather different questions addressed to me by the right hon. Member for Stafford and Stone (Mr. Hugh Fraser). As the Committee will appreciate, he has on the Order Paper Amendment No. 127 which comes a long way after the Amendments which we are now discussing. It deals with a large variety of substances, including ammonium meta vanadate, Armac 'C', burnishing sand, cerium oxide, sodium chlorate, sodium nitrate, Stockholm tar and vanadium pentoxide. I think that I have named enough to indicate that I am familiar with them and have studied them. They all have some relation to the ceramic industry which flourishes so greatly in the right hon. Gentleman's constituency. We all endorse what he says about the value to the community of that industry.
One answer to the right hon. Gentleman is that some of the articles for which he seeks exemption are already exempt. For example, he will find that vegetable waxes are exempt under heading 15.16 and mineral waxes under Chapter 27. On the other hand, artificial waxes are chargeable under heading 34.04. I do not think that the right hon. Gentleman addressed any particular case for exempting artificial waxes. I am advised that potassium chlorate is already exempt from the charge under heading 31.04, unless it is of analytical reagent quality, that is, highly purified for laboratory use.
I am told that cryolite in its natural form is exempt from the charge under heading 25.28. On the other hand, the synthetic form of cryolite is chargeable under heading 28.29 as aluminium sodium fluoride. It is used as a substitute for the natural material in metallurgy, enamel manufacture, glass-making and some insecticides. I think that the Committee would find it frightfully tedious if I attempted to give a detailed explanation in highly technical language of each of this list of about 30 items to which the right hon. Gentleman's Amendment refers. I hope 521 that the Committee will bear with me, however, if I make one general composite comment on this list.
I have done my best to analyse the items in the list. I have not been able to discern a consistent pattern in it apart from the fact that all the items have a bearing on the ceramic industry in Staffordshire—and they are none the worse for that. It is perfectly true that some of them are not available in this country, but, as I have said, non-availability is not an argument which the Government can accept as a reason for adding anything to the Schedule. The articles for which exemption has not been granted are not regarded as eligible because they are more fully processed than others.
My right hon. Friend has a good deal of sympathy for one item, Stockholm tar. [HON. MEMBERS: "Hear, hear."] I hope that the right hon. Gentleman will accept my assurance that my right hon. Friend will give sympathetic consideration to remitting the duty in respect of Stockholm tar and some of these other articles when he comes to make his review.
§ Mr. Hirst
Once or twice, with reference to the principle which we are discussing, the hon. Gentleman has said that non-availability is not in itself an argument for exemption because the purpose is to curtain imports. If, as we have shown several times, non-availability means that a particular essential product must be obtained for use in increasing our export trade, there will be not the slightest curtailment of imports. All the Government are doing is adding to the costs of industry and reducing the chance of exports.
§ Sir E. Fletcher
There are two answers to that. In so far as exports are involved, they are not affected because they will be subject to the rebate. As regards goods imported which are not available here, some are more necessary than others, some which are necessary are necessary in greater quantities than others, and some are necessary at earlier times than others. One cannot say, merely because something is not available here, that it should escape duty. There are plenty of articles which should be charged to duty even though they are not available here.
§ Sir Knox Cunningham (Antrim, South)
At an earlier point, the hon. Gentleman said that his right hon. Friend would view with sympathy the various qualities of certain articles when the time came to remove this impost. Does this mean that, when the impost is to be taken off, there will be a sort of creeping relief over a period of, perhaps, months, and that certain items will come off earlier than others? If so, shall we be able to make representations on these questions?
§ Sir E. Fletcher
My right hon. Friend will listen to all representations made to him and will do his best to give the greatest possible help to industry consistent with the overriding reasons for which the surcharge is being imposed.
§ Mr. John Page
I am very grateful that the Chair has agreed that a Division may be called later on Amendment No. 75, to include synthetic rubber within the exemptions. At the outset, I must declare a personal interest. I work in the rubber moulding industry, and I wish this evening to speak on behalf of the other 126,000 people who work in that great industry, many of whom live in my constituency. I shall concentrate my argument on Amendment No. 75, and I hope to persuade the Government that synthetic rubber exactly fulfils all three of the requirements laid down by the Chancellor in his speech of 24th November.
First, synthetic rubber is a "basic raw material"Second, its exclusion from the Schedule would be a "glaring anomaly" and constitute a "most major and important inperfection" in the Bill. Third, its exclusion would have anadverse effect on our exports of products which are made from or incorporate goods which bear the charge."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1097.]Undoubtedly, synthetic rubber is a basic raw material. At present, about 55 per cent. of rubber used in this country is natural and 45 per cent. is synthetic, and of this amount of synthetic rubber 170 million tons are manufactured in the United Kingdom. Nearly 50 million tons of this will be exported during the present period of 12 months. On the import side, about 60 million tons of synthetic rubber are imported.
§ Sir John Barlow (Middleton and Prestwich)
Is my hon. Friend 523 right in giving those figures in millions of tons? I think that the total usage of rubber in the world is about 4 million tons, so I cannot believe that his figures are correct.
§ Mr. Page
The industry which manufactures synthetic rubber is expanding, but it cannot expand to the extent of taking up the whole tonnage of synthetic rubber which is now imported.
The Minister without Portfolio has said that availability or non-availability of products in this country does not affect whether or not they should be subject to the surcharge. It might be said also that the rubber industry could buy more natural rubbber from overseas.
§ Mr. Page
I think that we have an expert on natural rubber here. There is no great availability of surplus natural rubber in the world, but, even if there were, all this would mean would be more foreign exchange used for the purchase of natural rubber rather than the purchase of synthetic rubber. In the result, the price of natural rubber might go up, which could mean that the whole amount of natural or synthetic rubber imported cost more foreign exchange.
I have already stated that synthetic rubber is a basic raw material. On this question, the Chancellor gave an example, saying that raw hides are exempt but dressed leather is not. The importation of dressed leather means that less work is required on it in this country than would be necessary to process imported raw hides. In confirmation of my point that synthetic rubber is a true basic raw material, I can tell the Committee that, except as regards small technicalities, the preparation of synthetic rubber for use in the rubber industry is no different from the manufacture and preparation of natural rubber. The processes 524 are the same. I hope that that will make clear to the Committee how basic a raw material for the industry synthetic rubber is.
Next, I take the point that the exclusion of any material from the Schedule would be a "glaring anomaly" and constitute a "most major and important imperfection". Hon. Members will see in the Schedule that natural rubber is excluded under chapter heading 40.01 and reclaimed and waste rubber are excluded from the surcharge under headings 40.03 and 40.04. Synthetic rubber under heading 40.02 is left out. As a rough indication of the existence of the anomaly, I point out that this is, as far as I know, the only tariff heading where more than one item is mentioned consecutively and where there is a break omitting one item from the list.
Reclaimed rubber and waste rubber do not have to bear the surcharge, but reclaimed rubber is between 50 per cent. and 100 per cent. synthetic rubber, and it seems quite extraordinary that one may freely and without surcharge import synthetic rubber if it has been reclaimed but one may not so import synthetic rubber in its original state. This is a glaring anomaly. In order to reclaim synthetic rubber, one has to go through a vast and complicated chemical process, yet reclaimed synthetic rubber is exempt from the surcharge.
Taking up a point made a short time ago by the Minister without Portfolio, I remind the Committee that synthetic rubber is the inevitable by-product of the reclaiming of waste rubber. The hon. Gentleman made the point that, if something was an inevitable by-product of another, it ought not to be excluded from the general list in the Schedule.
Third, I take the question whether or not export prices would be affected by the surcharge. The Chancellor said thatany adverse effect on our export of products which are made from or incorporate imported goods which bear the chargeshould be avoided.
There are very few rubber products, except, possibly, rubber tyres, which are exported in a finished state. Most rubber mouldings are incorporated as components of other manufactures, motor cars, aeroplanes, pharmaceutical products, and so on.
525 It might be said that the surcharge on synthetic rubber could be subject to drawback when exported. I ask the Committee to consider how it would be possible for drawback to be claimed on a rubber product such as a door seal in a motor car. This might have a synthetic skin which could be made from either surcharged or non-surcharged synthetic rubber, and it might have a natural rubber sponge inside. Even if this separation were possible, these components would have to be sent to the motor company to be incorporated in a motor car. These components which included an element of surcharged synthetic rubber would have to be marked in some way so that on export of the finished car it could be seen whether one or possibly two of these door seals had borne surcharge at some time.
§ Mr. F. A. Burden (Gillingham)
This is very important. This problem is at the back of these arrangements. The surcharge would be paid back to a company as drawback on exports. But it would not be paid to the company which had imported the rubber. There would be difficulty in tracing it back through the article which was eventually to be exported, and there would be great problems for the Customs officials.
§ Mr. Page
May I inform my hon. Friend that I believe that many highly skilled economists and mathematicians, with red-hot slide rules, are trying to work out this kind of problem but that, according to those in industry to whom I have spoken, no positive answer has been found.
The surcharge on imported synthetic rubber would be about £1 million a year, which is a substantial sum of money. It is impossible to believe that this surcharge of £1 million will not be passed on by rubber manufacturers to those people who buy their components. It must therefore both increase the cost of goods in this country and increase the cost of goods which are exported from this country.
Secondly, the surcharge on synthetic rubber would adversely affect our exports. The 50,000 tons which are exported would be jeopardised because great pressure would be put on British manufacturers of synthetic rubber by British users of synthetic rubber to be supplied with 526 more of the home-produced synthetic rubber. We might well find that the efforts of the industry to expand its exports, which increased over the past year by 9½ per cent. would be jeopardised. It is for these, I believe logical and important, reasons, that I hope that the Financial Secretary will ask his right hon. Friend the Chancellor to exclude imported synthetic rubber from the import surcharge. I feel that it would be grossly unfair and quite illogical if this were not done.
§ 6.45 p.m.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
The hon. Member for Harrow, West (Mr. John Page) has developed very fully the arguments in support of the Amendment No. 75 standing in his name and that of his hon. Friend the Member for Wycombe (Mr. John Hall). I hope that he will not think me guilty of any discourtesy or disrespect for his argument if I seek to answer it briefly. I am conscious that there are many hon. Members who have on the Order Paper other Amendments to the Schedule which I am sure they will wish to have time to consider.
I am afraid that I must advise the Committee to reject the Amendment for reasons which I shall give. First, I am afraid that synthetic rubber does not pass the tests which were outlined earlier this afternoon by my hon. Friend the Minister without Portfolio when he explained the principles upon which we could consider accepting Amendments of this kind. First, it must be shown that there is a glaring anomally in the sense that the goods are either materials which have undergone only elementary processing or are foodstuffs which should have been included originally in the list of exemptions. Secondly, it must be shown that it is causing real hardship. Thirdly, it must be shown that the items for which exemption is sought would not, if exempted, endanger the whole fabric of the scheme by starting a chain reaction and a series of other anomalies.
I do not wish to comment at all on the hardship aspect, but I must point out from the beginning that this item of synthetic rubber fails to pass the first and third of those tests. It is a fully manufactured product. Not only that, but it is made from chemicals which themselves are liable to the charge. 527 It obviously would be quite indefensible to exempt a manufactured product which was produced from other chemicals which are subject to charge, and two of which are Butadiene and Acrylonitrile. The other consequence is that if we were to grant this exemption it would immediately set off a whole chain reaction of demands for other goods to be exempted for which it would be claimed that there was an equal right.
The hon. Member rightly pointed out the anomaly that reclaimed rubber is exempted. This is precisely an example of the kind of anomaly which is bound to arise when we base these inclusions and exemptions, as we have had to do, on the agreed Brussels Nomenclature. This difficulty arises particularly in relation to chemicals. Generally speaking, in the Brussels Nomenclature goods are grouped according to the degree of processing which they have undergone. That was not done for chemicals. They were grouped according to the chemical constituents. The result is that within one heading we find articles some of which are virtually raw materials and others of which have undergone a great deal of processing.
We therefore have to look at the consideration which applies to the bulk of the articles under that heading. If we can regard the bulk as raw materials, we think that it is defensible to exempt them. If the bulk are not raw materials, then it is not defensible to exempt them. Of course, in each case there are some items falling on one side of the line or the other which do not correspond to the bulk and therefore cause anomalies.
The hon. Member gave the example of reclaimed rubber. The point is that generally throughout the Schedule it will be found that what may be called waste products are exempted. I do not think that hon. Members will quarrel with that. Thus, reclaimed rubber finds itself in the nomenclature in the category of waste products although, as the hon. Member pointed out, it had undergone quite a degree of processing and manufacture in order to be reclaimed. It is therefore an item which, perhaps wrongly, has the benefit of exemption. I hope that the hon. Member will not press that point too much or we may find 528 ourselves compelled to use the power which exists in the Bill to delete an exemption because it is anomalous.
This is a good illustration of how we could go on arguing until midnight and long beyond that on particular items and could show that there are these anomalies. This is bound to happen. We have to take a broad look at each heading. Having done that, I am afraid that I must advise the Committee that it would not be right to exempt synthetic rubber and that reclaimed rubber is very lucky to find itself exempted.
The hon. Member's final argument was about the effect on the export trade. I am advised that synthetic rubber can qualify for drawback. The hon. Member gave one example of rubber used in door seals and pointed out what might be the difficulties of making a successful application there for drawback. But the great majority of this material in the motor industry is used for tyres, and drawback can be claimed, and is claimed, from protective duties, and can also be claimed in respect of this duty, for tyres. I see the hon. Member shaking his head, but I assure him that where there is an existing drawback we propose to frame the procedure for drawback under these provisions on exactly the same lines.
§ Mr. John Page
I said that tyres were obviously and clearly a separate item. But it would be impossible to separate very many other products between those on which drawback can be claimed and those on which it cannot be claimed, especially as many of them are made of materials which are mixed—some materials being liable to surcharge and some not being liable to surcharge. It would require the most remarkable piece of accounting to make this arrangement.
§ Mr. Graham Page (Crosby)
On a point of order. I hope to deploy the argument, on the Question, "That this be Schedule 1 to the Bill", that reclaimed rubber should be omitted from the Schedule and made subject to the charge. The question of reclaimed rubber, however, has been raised as a side issue in this debate. Would it be convenient, if I caught your eye, Sir Samuel, for me to address my remarks to you on that subject now or should I wait until we reach the later Question?
§ The Deputy-Chairman (Sir Samuel Storey)
I do not think that the hon. Member is right in saying that this is a side issue. It is one of the matters being discussed on the Amendment. As to what happens when we reach the Question, "That this be Schedule 1 to the Bill", we must consider that when we get there.
§ Mr. Hirst
I am sure that the Minister without Portfolio did not mean any discourtesy to the Committee, but we have had a wide-ranging discussion on the Amendments and there has been no comment whatever on Amendment No. 53 which stands in my name and to which my hon. Friend the Member for York (Mr. Longbottom) spoke. It is an important Amendment, and it is also important that we should clear this point up. I do not think that we shall have plain sailing for the remainder of the Amendments unless we do.
It is not good enough and it is not treating the Committee, or indeed the industry and trade of the country, with the natural and normal courtesy which any Government should show for Ministers to admit that something is anomalous but to add that it cannot be considered. It is not right for them to turn arguments down flat just like that. We are dealing with the trade and industry of the country. When it is stated that there is a product which is not available in this country but which is essential to industry—and when there is no argument about that from either side of the Committee—it is wrong that this point should not be considered. Such a product cannot affect the Government's economic purpose because the material will still have to be imported.
We are dealing here with something far more important than the Government's face in this matter; we are dealing with the health and strength of the British economy in trade and industry. We are not dealing with academic arguments. That is not what we have been hearing this afternoon—this is something far more fundamental. We shall not get very far in these debates unless a more practical and more businesslike and more respectful attitude towards trade and industry is adopted.
We may be arguing about strange names and strange chemicals, but these are raw materials or extremely valuable 530 products in the production of goods for large companies dealing with a large employment and a large degree of trade. Nor is it good enough to argue on many of the aspects of the so-called drawback on the export rebate that the ultimate exporter will reap some advantage. It is useless to say, "One need not worry about the exports; one can get all that on rebate". It will not work out that way at all; that is not a practical approach.
It shows that the Government rushed into this decision without thinking of the consequences of the action they were taking. Having done that, it is perfectly clear to this Committee and to the country that they should listen to arguments much less rigidly and with greater regard for the consequences than has been the case this afternoon. I do not think that any Amendment which has been called and which is under discussion and about which speeches have been made should be ignored.
§ Sir D. Glover
This is a vital arid a tragic debate. Throughout the afternoon cogent speeches from this side of the Committee have pressed for retention of the equilibrium and the fine balance in vital and important industries. Yet not a single speech has been made from back-benchers opposite, from any trade unionist, or anybody speaking for the interests of his own industry. That is one of the most tragic experiences we can have in a discussion on the Finance Bill.
I am not saying that I do not admire the way the Financial Secretary to the Treasury and his hon. Friend have this afternoon tried to deal with these problems, but, with greatest respect, lawyers, while they have great virtues attributable to them, are not expert to deal with trade and industry. It has been quite obvious for the last two hours that what the two hon. Gentleman needed was a guide dog. They are the blind leading the blind.
§ Sir D. Glover
We are dealing here with the delicate mechanism of large industries. Hon. Members on this side of the Committee have made very reasoned speeches and have made their case an immensely strong one. Yet throughout the whole of this debate there has not been a single representative of 531 the Board of Trade present to intervene. [An HON. MEMBER:" There is one."] Is the hon. Lady the Member for Stoke on Trent, North (Mrs. Harriet Slater) a representative of the Board of Trade?
§ Mr. MacDermot indicated dissent.
§ Sir D. Glover
If the hon. Member for Walthamstow, West (Mr. Redhead) has been here it is a pity that he has not joined in our discussions, because the picture has been that all the problems have been settled purely on a legalistic basis, and not on a practical basis of British industry. I hope that the right hon. and hon. Members opposite will bring forward somebody who will talk to us on this side of the House and explain the difficulties—when we come to further Amendments or even at this late stage. We realise that these difficulties confront British industry over the Amendments with which we are dealing.
§ Mr. MacDermot
Before the hon. Member for Taunton (Mr. du Cann), I hope, winds up this debate, may I answer the last two hon. Members? Neither of them has brought forward any further arguments in support of the Amendments. Both have expressed the irritation which I know all hon. Members feel when they have to listen to a couple of lawyers for several hours from time to time.
I apologise to the hon. Member for Shipley (Mr. Hirst) for not having commented upon the particular Amendment which stood in his name. I think that the reason was that we had overlooked the fact that it was covered by the remarks of other of his hon. Friends. We were looking forward to his own deployment of the argument.
§ Mr. MacDermot
It sometimes happens that one misses even pearls of wisdom when talking of another point. I shall try to give a full answer on the item he mentioned. Furfural is prepared by distilling cereal bran with sulphuric acid. It is, therefore, itself a processed product and we come up against the difficulty about the heading under which it falls. The other products of heading 29.35 are also derived from vegetable materials and it means that if this Amend- 532 ment were accepted it would be difficult not to concede the whole heading.
If we did that it would lead to further pressure on the charge on other organic chemicals. It is another instance of the difficulty we have, and I must assure the Committee that our rejection is not due to any pig-headed obstinacy. I assure hon. Members that as we continue to advance through the Amendments on the Notice Paper we shall certainly listen sympathetically to the arguments. I hope that there may be some at least where hon. Members will find that we can meet them.
§ Mr. du Cann
My hon. and right hon. Friends the Members for Ilford, South (Mr. Cooper), Shipley (Mr. Hirst), Stafford and Stone (Mr. Hugh Fraser), York (Mr. Longbottom), Bedfordshire, South (Mr. Cole), Harrow, West (Mr. John Page) and, last but by no means least, my hon. Friend the Member for Ormskirk (Sir D. Glover) have directed their speeches to the Amendments which we are discussing. I am bound to say, after listening to them, that they have made a positive case. They have also spoken about the principles on which the Government have devised the First Schedule. The more I have listened to the speeches of the Minister without Portfolio and the hon. and learned Gentleman the Financial Secretary to the Treasury, the more convinced I am that this Schedule has been extraordinarily badly drafted and that it is hasty and ill-conceived in the extreme.
Before I deal with these matters of principle I will say a little on the rebate, which we are going to discuss later and upon which I will not linger for fear, Sir Samuel, of making you cross. It is perfectly plain that all that the Financial Secretary has said about the rebate—and the Minister without Portfolio before him—will not in any way necessarily make all exports cheaper. There will be cases where it is not reclaimable. Even if it were reclaimable in every case, the effect of the imposition of the surcharge on basic raw materials for British industry will certainly put up their costs. It must inevitably affect export costs. If the Government have not understood that, they understand nothing about exports.
We are grateful to the hon. and learned Gentleman and to the Minister 533 without Portfolio, who have been helpful and courteous, and patient with all the arguments. I hope that it will be appreciated that we on this side of the Committee regard the whole of this subject as a very serious matter from the point of view of industry. I think the Committee will understand from the number of well-informed speeches by my hon. Friends on these technical matters and from the number of practical and important Amendments which are on the Order Paper how strongly we feel about these things and how anxious we are, for the sake of the British economy, to endeavour to improve this ragbag Measure and make sense out of it. My hon. Friend the Member for Ormskirk pointed out that there has not been a single speech from the other side of the Committee during the three and a half hours of this debate dealing with three separate Amendments. That must give the Government cause for concern also, I think.
I am sure that Ministers have looked at this for days and have endeavoured to perfect it. The lack of a practical approach is, however, evident and I hope that they will be ready to give further consideration to this Schedule. About the principles by which the Government have defined the exemptions to the Schedule, the White Paper made it plain in more than one case that basic raw materials were to be excluded. Paragraph (6) of the White Paper says:So far as imports are concerned a sharp distinction must he drawn between the increase in raw material imports required to service an expansion in production and the disturbing increase in manufactured goods most of which this country should be perfectly capable of producing on a competitive basis.We suggest that that is precisely the distinction which the Government have not made in this Schedule, and here lies the tragedy. We would not be having these discussions, nor have this great list of Amendments before us if the Schedule were broadly right in principle.
The Government have said that they are willing to be helpful and reasonable in these matters. We are grateful for that. We are also grateful for the reassurance about Stockholm tar and for what the Financial Secretary and the Minister without Portfolio said about 534 their readiness to consider matters, but I beg them when giving assurances to make sure that they are put into effect. We are very bothered about the way in which Amendments are being turned down on grounds which seem to us not necessarily appropriate or wise.
What I find difficult to understand is the criteria which Ministers themselves advance by which exemptions included in the Schedule are judged. The Financial Secretary has stated, as did the Minister, that they will be judged on such questions as whether the articles are food or feeding-stuffs, are likely to cause hardship if they are not included, or would upset the whole fabric of the scheme by creating anomalies. I thought those were alternatives, but I gather that they are complementary and that all three conditions must be satisfied. If the Financial Secretary looks again at the arguments brought forward by my hon. Friends on these individual matters I think he will find that many satisfy these criteria. If so, I hope that he will agree to exempt them.
The Minister without Portfolio and the Financial Secretary, in an attempt to be helpful to the Committee, for which we are grateful, have said—no doubt in order to appease the strong feeling understandably experienced on this side of the Committee—that the Chancellor will look again at these matters to see if some change might be made in the spring, but why not now? They have all the experience which is deposited in the Board of Trade, although the Board of Trade appears to play a minor part in this matter. If we can find all these details, why cannot the Government supply them? The suggestion was made earlier in reply to one of my hon. Friends that we were in favour of importing luxuries. What nonsense that is in regard to these Amendments. These are the raw materials of British industry, without which it cannot live. How does the refusal of the majority of these Amendments square with the declaration made in the White Paper, which the House thought was, as it were, the skeleton of the scheme which we are considering?
There are many further arguments which have been well put forward by my hon. Friends in support of their Amendments. Possibly the Committee 535 wishes to come to a conclusion on one or more of them, so I do not wish to delay the process for we have a great deal to do. I hope that if there is one matter on which I have been able to impress the Financial Secretary, it is that we are immensely concerned on behalf of British industry about the way in which the Schedule has been prepared. We listened to the technical discussion about iodine, but we cannot see why borax is not included.
We appreciate the difficulties of the Financial Secretary, because the Chancellor of the Exchequer is out of the country having to explain himself away in O.E.C.D. We understand that this puts Ministers in a difficulty at this time, but, even if the hon. and learned Gentleman cannot concede the principle of these Amendments, I hope that he at any rate will decide, in consultation with Ministers of the Board of Trade who have practical experience and must know the situation very clearly, that these matters should be examined and that the Government should bring forward Amendments to deal with the position on Report.
We welcome the fact that six at least of the Amendments put forward by my hon. Friends have now apparently been accepted by the Government, but these improvements should have been made in the first place. We ask the Government to continue that process and to select from the additional Amendments. Our only purpose is to make sense of the Bill. We are only trying to be constructive and helpful. We are grateful for this Amendment and support it. I must leave my hon. Friends to decide whether to vote on the other Amendments. If they do so, I shall certainly go into the Lobby with them to demonstrate that we feel that the Government have bungled this whole matter.
§ Amendment agreed to.
§ Mr. Cooper
I beg to move Amendment No. 27, in page 14, line 6, at the end to insert:
Chapter 29 … Acrylonitrile.
§ The Deputy-Chairman
With this Amendment the Committee can consider Amendment No. 52, in page 14, line 7, at end insert:1:6 Hexolactam within 29.37.
Amendment No. 68, in line 21, at end insert:
Niax polyol within 38.19.
Amendment No. 69, in line 21, at end insert:
Nylon 6 polymer within 39.01 being material of the description specified in Schedule 2 to the Import Duties (Temporary Exemptions) (No. 8) Order 1964.
Amendment No. 70, in line 21, at end insert:
Polyadipate esters within 39.01 being material of the description specified in Schedule 2 to the Import Duties (Temporary Exemptions) (No. 8) Order 1964.
Amendment No. 71, in line 21, at end insert:
Nylon flake within 39.01.
Amendment No. 84, in page 15, line 27, at end insert:
Nylon yarn within 51.01.
Amendment No. 85, in line 38, at end insert:
Acrylic fibres within 56.06.
Amendment No. 86, in line 42, at end insert:
Glass marbles for the manufacture of glass yarn within 70.03.
§ Amendment No. 94, in page 17, line 10, at end insert:
|Chapter||100||…||Man-made fibres (continuous) being continuous filament synthetic gains made wholly from polyamide fibres or polyester fibres.|
§ Amendment No. 96, in line 17, at end add:
|Part||2||…||…||Raw materials not obtainable in the United Kingdom and used in the production of man-made fibres manufactured i n Northern Ireland and the development areas.|
§ Amendment No. 125, in line 17, at end add:
|Part 2||…||…||Plait, braid and straw hoods and braids and hoods made of manmade fibres.|
Amendment No. 126, in page 15, line 38, at end insert:
Nylon and rayon staple fibres within 56.01.
§ Mr. Cooper
This group of Amendments can be broadly described as covering the man-made fibre industry. The whole Committee would agree that 537 over the years, since the war particularly, man-made fibres have made a striking contribution to our prosperity at home and to our export trade. I hope that the Minister will pay attention to what is said about acrylonitrile, which is mentioned in the Amendment I am moving, because it is exceptional as compared with all the other products we shall discuss. It was originally manufactured from acetylene.
It was from this base product that man-made fibres started and its use in plastics and synthetic rubber was made. There was set up in Northern Ireland at Coleraine, through Monsanto, the big firm of Chemstrand to make synthetic fibres on a large scale based on acrylonitrile. The factory was set up to give employment in Northern Ireland, and for that reason I should have thought that the Government would apply a quite different test in considering raw materials for this factory.
About two years ago a firm of chemical manufacturers in this country set up a plant to manufacture acrylonitrile here, but just as the plant was about to go on stream a new scientific development in the manufacture of this product was made and instead of acrylonitrile being made from acetylene the product is now made from ethylene. The result was a very substantial reduction in price, but this process was still for material manufactured in the United States.
The reduction in price was so great that the British manufactured material based on acetylene was no longer economic, so the factory never went on stream at all. Now another group of British chemical manufacturers have got together and have evolved a process based on ethylene. A new plant is at present under construction, and will go on stream in about 12 or 18 months' time. In the meantime, under this Bill Chemstrand has to buy acrylonitrile plus a surcharge of 15 per cent., and it must be remembered that this firm is trying to sell its goods in a pretty tough market.
If we want to provide employment in Northern Ireland, this is one product from which the surcharge must be removed. The product will be cheaper for the industry when the new factory comes on stream, but for the moment it is wrong, and quite illogical, to give 538 great tax concessions in Northern Ireland to provide employment, and at the same time slap on a 15 per cent. surcharge on the basic raw material of a product which is fed into one of the major factories in the country.
§ 7.15 p.m.
§ Mr. Archie Manuel (Central Ayrshire)
I rise to support what was said by the hon. Member for Ilford, South (Mr. Cooper). I realise the significance of this 15 per cent. surcharge on the raw materials imported by Chemstrand for the manufacture of nylon yarn. For a long time the local authorities in my area, and the Scottish Development Council, were interested in getting this firm to come to Scotland. It ultimately decided to locate its new factory in my constituency—and I am intensely proud of it—and it bought 350 acres near the little village of Dundonald, a beautiful part of my constituency. It now needs the other ancillary attractions which are to be found in Ayr county, and housing and other social inducements have been promised and will be provided.
I should like my right hon. and hon. Friends to recognise that Dundonald is in a development area. In fact, most of my constituency is listed as such. Unemployment is still high there, with an average of 6.5 per cent. The Ayr County Council did everything possible to attract industry into its area, and the local authority was unanimous in doing everything possible to bring Chemstrand to Ayrshire. Their efforts were ultimately crowned with success when this company decided to develop its product at Dundonald. The siting of the factory there was made possible by Ayr County Council undertaking a capital expenditure of £1½ million to provide an adequate water supply at the site. We must not lose sight of the fact that although this is capital expenditure, it is a rate-borne burden, and was made possible by the intense desire of the local authority to attract this firm to its area.
This company is planning big. It is planning an initial capital investment of £6 million, which will provide employment for 800 people by early 1966. There are plans to quadruple the size of the plant during the next five years, and to invest a further sum of more than £30 million, which will provide employment for 2,900 people by late 1969.
539 I hope that my right hon. and hon. Friends will recognise that, while the plant is being constructed, the company must build up a market for the products it will ultimately produce. This is a most important time for the firm, and I go so far as to say that the product is in some danger of not being produced because of the imposition of this 15 per cent. surcharge at this time. I accept that this surcharge is necessary because of the position which the Government found when they came to power, but I emphasise that the surcharge imposed on the raw materials used by this firm must be for a very limited period, indeed. If the surcharge is maintained for too long, this firm's product will be endangered.
I am heartened by the fact that during the E.F.T.A. talks the indications were that the surcharges were to be imposed for a short time only, but I submit that the surcharge on the raw materials required to make nylon yarn must be reconsidered at an even earlier stage than that indicated during those talks. I have been in touch with my right hon. and hon. Friends, and also with the firm, and I hope that tonight we shall be given some indication of the Government's proposed line of action.
This is a young, growing industry. It is now at the cross-roads. We can make something of it in this modern age about which we hear so much. We can do something worth while, which will repay this country a hundredfold, and ultimately avoid the imports which are necessary at the present time. This firm must be listed as one to be given early relief. I have been informed that there is a Government Amendment to provide relief in respect of casein, but this is only one small item of the raw materials used in the manufacture of this product, and not much help will be derived from that concession.
We appreciate that, but that is not the relief that we are looking for. Because of its efforts to locate this development in Scotland, Chemstrand and other firms allied with it in this field should be treated as cases of an exceptional character, to the extent that they should be given relief from the surcharge at the earliest moment.
540 We appreciate the significance of the surcharge, but we also realise that this year the firm is already paying import duties of 16 per cent., plus 7½d. per lb. on yarn imported, amounting to a total sum of £750,000. On top of that must be added the 15 per cent. surcharge. It will be appreciated that this is an intolerable burden for a firm that is starting up, and which is putting in the amount of capital that this firm is putting in.
I am well aware of the development in Coleraine, in Northern Ireland. I support what I am sure will be said about that, because I know the position, and I know that the firm went to that area not only because it liked it, but because it wanted to relieve unemployment. It is taking the same view in Scotland. As yet, nothing has gone back to the firm in the way of profits. It is merely holding its own. We know that at least a 10 per cent. return is expected on capital invested. The principals of the firm will be visiting this country in the next few days and will need some reassurance. That is why it is important for the Government to realise that early relief should be given in this case. Exemption should be given because of what this production means to the country.
§ Mr. Edward Heath (Bexley)
The hon. Member said, first, that early relief should be given, and at the end that exemption should be given. He is fully supporting the case made by my hon. Friend the Member for Ilford. South (Mr. Cooper), but does he agree that there is a real danger that this project will not go forward if the surcharge has to be paid, and, therefore, that the surcharge ought not to be imposed on these items?
§ Mr. Manuel
When I said "exemption", I meant early total relief from the 15 per cent. surcharge. I believe that the firm would be satisfied if it felt that within a month, or a month and a half, or some such period, the Government would give it relief. The firm would appreciate it, because it understands the difficulties that the Government found when they came to office, with our imports exceeding our exports to such an extent. I would not want to say 541 anything to stop my right hon. Friends giving exemption right away. If they accepted the Amendments I should be very happy. I would throw my weight, for what it is worth, in that direction.
But I understand the position, and if my right hon. Friends say that exemption will be given in a couple of months I shall he fairly satisfied, and I believe that the firm will be satisfied. I want to impress upon my tight hon. and hon. Friends the fact that this project means very much to my constituency, to Ayrshire, and to the whole of Scotland. For many years my constituency has been suffering from a high rate of unemployment. This project would break the back of it. Let us seize the opportunity of this modern age by giving relief where it is necessary and so helping an industry to expand where expansion is needed, thereby bringing something really worth while to Scotland.
§ Mr. R. Chichester-Clark (Londonderry)
It have a great deal of sympathy with the hon. Member for Central Ayrshire (Mr. Manuel). I am well acquainted with the Chemstrand works in Coleraine. I, too, have heard from the firm. It has told me what I have no doubt it has told the hon. Member, about the plant in his constituency. It says:Imports of nylon yarn are necessary to support Chemstrand's planned nylon production in Scotland. These imports are essential if Chemstrand is to create a market for the Dundonald plant. Chemstrand's customers for the output of this plant must be familiarised with the product before and not after production begins. Surcharge on these imports threatens the feasibility of the plans to develop production in this development area…I can understand why the hon. Member for Central Ayrshire is worried about this.
I believe that we are discussing several Amendments together, and I welcome this, in that it will enable me to avoid having to pronounce some of the names in the various Amendments. I shall direct most of my remarks to Amendment No. 96. In the last few years Northern Ireland has become very much a centre of the man-made fibre industry. This has been very welcome, in that it has taken up the slack of employment at a time when some of the older and more traditional industries have run down to some extent. In Northern Ireland, Chemstrand, British Enkalon and Courtaulds, are all household names.
542 In the last few months, a degree of optimism has been generated in Northern Ireland, which was nothing to do with the result of the British General Election. Optimism was generated in terms of fuller employment. When we saw the November employment figures we were delighted to find that they were the best for November for 14 years. So, if I may borrow a phrase from elsewhere, we thought, that we were "on our way". But that was before we heard about the 6d. on petrol tax, the 7 per cent. Bank Rate and the 15 per cent. surcharge.
I hope that when he replies the Minister will not say anything which will cause more gloom. I hope that we shall hear something to make us a little more hopeful than we have been in the last few weeks. All the firms that I have mentioned so far are to a lesser or greater extent dependent upon the import of the materials mentioned in the Amendments. The firms consider that these are basic raw materials, consistent with the definition in the White Paper. I do not doubt that the Government will contend—as they have been contending practically all the afternoon—that these are manufactured materials, but I very much doubt whether that is a tenable argument in this case. It must be pointed out that all natural fibres need some processing before entering the United Kingdom as imports. Does not cotton go through certain processes? Silk goes through elaborate processes between leaving the cocoon and entering the mill, and even wool has to be shorn from the sheep and then washed and put through many processes. I see very little difference between those materials and these mentioned in the Amendments.
If what I have said does not make out a case, it must be remembered that in the case of these man-made fibres there is often a middle-man, and nearly always a middle price. Let met take the example of silk. The price to the silk farm owner is different from the price paid for the landed product in the United Kingdom, and the difference is not accounted for merely by transport costs.
Incidently, if it is alleged that these are manufactured materials, why are such items as leather, vinegar, metal alloys and confectionery regarded as non-manfactured items? 543 Many of the materials that we are talking about are common needs of the industries that I have mentioned. From our point of view one of the interesting things about them is the situation of their plants. They are nearly all in areas of high unemployment. Let me take Chemstrand as an example. It has an acrylic fibre production plant at Coleraine. It also has the nylon plant, about which the hon. Member was speaking, at Dundonald, in Scotland. We known how serious is the problem there. I have more sympathy with the hon. Member for Central Ayrshire because I noticed that throughout his speech there was not a single Scottish Minister in the Chamber. I think that they ought to be taking this more seriously, I should have thought that by now they would have got over St. Andrew's Day.
On present plans, Chemstrand will invest £10 million per annum over the next five years. Coleraine will benefit to the extent of £12 million and employ in future about 700 more people than today. This will make a big dent in the local unemployment figure which at the moment stands at 1,094. A sum of £38 million is to go to the new Dundonald plant in which the hon. Member is interested and it is envisaged that 2,900 people will be employed by 1969.
Chemstrand also has Elastomeric Fibre, producing nylon, using niax, located in Northern Ireland, where plans have been made to increase the total investment to £1 million. I will not say anything about the costs passed on to customers, deriving from this surcharge. It seems to me that the effect of the surcharge on a firm which forms part of an international organisation—and all three firms which I have mentioned do—will be to tempt them to serve their export markets from their plants elsewhere abroad. This, it seems to me, could have very serious results. At present Chemstrand contends that the level of the surcharge is such that the firm would have to export 10 times the value of its imports in order to nullify its effect. With the best will in the world that must be beyond all commercial feasibility.
It is obvious that, unless these raw materials are exempted, the surcharge will have a very serious consequence for some of the companies which I have mentioned. It will provide at least an 544 attendant risk—I do not wish to appear alarmist and to put it too high—but there will be a certain risk to employment in difficult areas and to future employment in these areas.
The White Paper has been quoted a good deal and I must quote from it again. It states that the Government will…foster more rapid development in the under-employed areas of the country.If these Amendments are not accepted, can it really be said that the Government are fostering rapid developments or indeed development at all, in these areas? The Government have a chance, which I hope they will take, to make amends for the effect of some of the policies which they have been putting into practice in the last few weeks. I hope that this may prove a test of the sincerity of the Government toward the areas of unemployment about which I have been speaking.
I hope that the Government are sincere and that they will accept these Amendments. This provides them with a chance. Let them take that chance, and not shrug off their responsibilities to Northern Ireland, Scotland and the development districts.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
Like my hon. Friend the Member for Londonderry (Mr. Chichester-Clark), I was delighted to hear the speech of the hon. Member for Central Ayrshire (Mr. Manuel). The hon. Gentleman drove a coach and four through the argument of the Government on this Schedule; perhaps a coach and four is the wrong term—one should say a multiple diesel unit.
With these Amendments to this immensely complicated Chapter 29 of the tariff list we arrive at a point where the effect of a surcharge of this sort is shown up in its full futility. In the organic chemical industry, a large part of which is comprised within Chapter 29, there are a large number of products which range over the whole field of the industry.
After the speech of my hon. Friend the Member for Ormskirk (Sir D. Glover) I hesitate to intervene as another lawyer. My hon. Friend talked about the blind leading the blind. Perhaps I should declare an interest, because, although a lawyer, I work in the chemical industry in a fairly subordinate capacity. If the debate so far is anything to go by, it is not so much a case of the blind leading 545 the blind as the blind striving to lead the slightly myopic.
The chemical industry seems to have three major characteristics which render it totally inappropriate for the application of a complicated surcharge of this sort. The first seems to be the nature, and the reasons for the nature, of the very substantial international trade in chemicals which has always gone on and which always will go on. The second is the sheer impossibility of drawing a line or, at any rate, drawing a rational line between raw materials and manufactured goods. Thirdly—this point was touched on during the previous debate—there is the virtual impossibility, in a great many cases, of making any provision for drawback on exports. I wish to say a word about all three of those characteristics of the trade.
There will always be a big international trade in chemicals, for two main reasons. One was touched on by my hon. Friend the Member for Ilford, South (Mr. Cooper) namely, the high rate of obsolescence. New processes inevitably come along which render existing processes obsolete overnight, and plants close down. It is in the national interest, one might almost say in the international interest, that this should be done in order that technology may progress and resources may be used to the best advantage.
I am proud to be associated with the firm in this country which is building a new plant to produce the material acrylonitrile by an ammoxidation process, that is, the reaction of an olefin—propylene—with ammonia. The scientists who have developed this process deserve the highest possible praise. This plant is not yet ready for use and will not be ready until the middle of next year. Acrylonitrile ceased to be economic when made by the old process. It has to be imported and is being imported to a high degree.
The other characteristic under this head is that of capital. In an intensive industry investment comes, if I may use the term, in very large dollops. It can be calculated not on the purely national market, but on a wider international market. The result is that over a period of years there is a flow of chemical materials from the countries which have most recently put in new capacity because they are in a position to supply the growing market. 546 Importing countries tend to take imports for a period of two or three years until the market has reached a stage at which the next dollop of major investment is provided, when the trade will flow in another direction.
There will be substantial quantities of some of these imports because our existing plants are being expanded. It is nonsensical to impose a surcharge of this sort on a short-term basis on imports of chemical raw materials which are being imported as part of an inevitable longterm development. The nature of the international trade in chemicals makes it quite inappropriate for the imposition of such a surcharge. Taking acrylonitrile as an example, the cost adds to the nonsense. Here we have a raw material supplying the synthetic fibre industries, which is one of the most exciting growth points in the whole of our industry. If they are to be held back, if the surcharge works and imports are reduced, the consequence will be that unit costs will go up and exports will become more uneconomic, even if it is possible to calculate the rebate and drawback. It seems to me that we are proceeding in a totally wrong direction.
The next point is that one man's finished product is often the next man's raw material. This is nowhere more true than in plastics and synthetic textiles. Another material imported on a very large scale, though at present not in the Schedule—although I have tabled an Amendment to have it included—is benzene. I refer, of course, to the chemical grade of benzene which falls within Chapter 29-the raw substance made in Britain from coal mainly goes into fuel. This cannot be used in chemical manufacture. Imports of benzene are running at between 100,000 and 150,000 tons a year.
The surcharge has been placed on plastic materials and this will have some effect—perhaps not as much as is being hoped—on reducing imports of these materials. It will, however, add to the amount of raw materials that will be needed to produce goods to satisfy the home market by domestic producers of these plastic materials. This will increase the demand for the raw material benzene—yet we find that this raw material will itself be subject to the surcharge. It has been calculated 547 that, based on a 15 per cent. surcharge on the average landed price of about £25 per ton, £400,000 to £500,000 will be added to the costs of importing this material.
There is then the problem of calculating the drawback in an industry where the products completely lose their identify by chemical changes or reaction. Often two or three changes take place by a chemical process. I would be grateful if the Minister would comment on the report which appeared in the Financial Times yesterday to the effect that the Government were considering amending the rules so that products produced as a result of chemical reactions could qualify for drawback. I hope that this will be done.
The Financial Times report seemed to suggest that a change of policy would be necessary to enable this to happen. I do not understand this, for there has never been any suggestion, in relation to protective duties, that drawback cannot be claimed in these circumstances. However such a change is necessary I hope that it will be made, otherwise there will be large quantities of exports of plastics, fibres and other materials which have undergone some chemical reaction in their manufacture—thereby the material having entirely changed its nature—not qualifying for drawback. Thus the surcharge could make these exports more expensive.
The surcharge, particularly in this sphere of organic chemicals, has caused immense uncertainty in the chemical industry. Without doubt, it must be harmful to the growth of the industry and, in this connection, I remind the Committee of what was stated in the N.E.D.C. Report about the chemical industry and the 4 per cent. growth rate. The Report indicated that the industry would have to work extremely hard to match the growth requirements of the economy as a whole.
The surcharge is bound to be detrimental to our exports, particularly if there is any suggestion that drawback will not apply where products have gone through a chemical reaction. I hope that the Government will, as a result of this debate, adopt a more flexible attitude, particularly to organic chemicals within Chapter 29 of the tariff list.
§ Sir Knox Cunningham (Antrim, South)
In rising to support the Amendment I wish to refer particularly to Amendment No. 96, which refers to raw materials not obtainable in the United Kingdom and used in the production of man-made fibres manufactured in Northern Ireland and the development areas. I will not follow the remarks of my hon. Friend the Member for Wan-stead and Woodford (Mr. Patrick Jenkin), who, as we heard, has expert knowledge of the chemical industry. He covered this subject much better than I could hope to do.
I wish to refer to my constituency of South Antrim. In it, and in Northern Ireland as a whole, there has been established in the last decade a centre of the man-made fibre industry. In South Antrim we have at Carrickfergus the large Courtaulds factory. It has been in the area for some years and works a 24-hour shift. I am told that if it closed it would take a fortnight to start again. Working around the clock is necessary for the type of goods which are produced there.
Also, in Antrim recently we have welcomed the firm of British Enkalon, which has come from Holland to open a plant. Its activities will revolutionise the area. It has brought employment and its presence is very welcomed. Housing has been provided for the workpeople and expansion in the area is considerable.
The hon. Member for Central Ayrshire (Mr. Manuel) mentioned the firm of Chemstrand, a subsidiary of which is to start in his constituency. I know that my hon. Friend the Member for Londonderry (Mr. Chichester-Clark) has the main plant of Chemstrand in Northern Ireland in his constituency, but too, have a plant belonging to that company at Newtownabbey, a new town in my constituency. I have been told by officials of these firms that the raw materials they use, and which are referred to in the various Amendments, cannot be obtained in Britain, but must be imported. The Minister said that this was irrelevant. I dispute that. When the White Paper was published it was stated that basic raw materials would be exempted. I now understand the Government to say that this is not so; that is, if any manufacture 549 takes place in that raw material. In that case the raw material is not exempt.
What is the principle being adopted by the Government? I have understood the Government to say—and it seemed from the speech of the Minister without Portfolio on an earlier Amendment that this is so—that we need to reduce our imports to help our balance of payments. If these raw materials, because they are partly manufactured and are coming to firms in South Antrim and Ulster, are to be excluded—simply because there has been some process of manufacture abroad—what will be the result? It can only lead to a reduction in the output of our manufactured goods and a consequent reduction in employment. Is that what the Government want?
I am speaking of an area into which new industry is coming. There has been a reduction in the rate of unemployment and until now an excellent future appeared to present itself to these firms. Do the Government, by placing a 15 per cent. surcharge on these goods, intend to make the workpeople of this area unemployed?
I ask the Government to think very carefully about this matter and to make some concessions this evening on these items. If they do not, the people of Ulster, who heard during the election statements made by the Labour Party of Northern Ireland about its desire to help the employment position will draw their own conclusions. There will be great bitterness in Ulster and great sadness and, if the Government intend to make no exclusion of the basic raw material used by these firms, the quality of their election protestations will be taken at their true value.
§ Mr. Cole
I want to refer to an industry that has been rather longer established than some of those that we have been hearing about but which is very modern in its working. Amendment No. 125 seeks to add to the Schedule, and thereby exempt from the surchargePlait, braid and straw hoods and braids and hoods made of man-made fibres.I should here explain, in fairness, that the hon. Member for Luton (Mr. Howie) is somewhat inhibited from addressing this Committee as he is in the Government, but as one of the Members for the County Borough of Luton, where I 550 have nearly 40,000 constituents, I am privileged to represent the views of Luton hat manufacturers, and probably of hat manufacturers in other centres who must be similarly affected by this surcharge on their raw materials.
In the County Borough of Luton, which has rejoiced in that status since 1st April of this year, no fewer than 5,000 people are employed in the hat industry, by about 150 firms. As this is a somewhat technical matter, I must be very careful to get my following descriptions correct. The hat manufacturers are at present manufacturing for the spring and summer of next year hats made from imported plait, braid, and straw hoods and braids and hoods made of man-made fibres, and it is categorically so stated that none of these is available or manufactured in this country.
About 100 years ago, there was a straw plaiting industry in Bedfordshire, and those who have made their representations have asked "Is it intended that the cottage industry of straw plaiting should be revived so that we may have some home-made materials in this country?". I hasten to say that I do not think that that is the Government's intention.
Although Luton is very famous for the manufacture of motor cars—we have the Vauxhall Works there—hat making, amongst other industries, is an important industry, and it is now presented, out of the blue, with a 15 per cent. surcharge on all its raw materials. This is to be a surcharge on the raw materials of the industry concerned. The Minister without Portfolio told me earlier that non-availability of a home product was no criterion in trying to get exemption from the surcharge—in other words, the Government said, it was irrelevant. But who decided that it was irrelevant? I hope sincerely that the Government will not regret this idea of irrelevancy in the next few weeks. We have already heard of what might happen in Northern Ireland in certain circumstances. I hope that, even now, the Government will not be too pontifical about irrelevancy.
The purpose of the surcharge is to try to damp down imports. I cannot see any kind of guiding plan on how that is to be effected, except that some items are surcharged and some are exempt, but there will be two net results 551 for Luton. First, people will still wear hats, and manufacturers will still sell them. I hope that that will go on, but the net result is that everyone buying a hat will pay 3s. in the £ more for the same hat than they would have paid had they bought earlier. That increase may not appear in the cost of living, but it is a considerable irritant.
The other result is one which I am sure the Government never intended. There will be no palpable diminution in the amount of imports of these raw materials, so the net result there will be that, instead of damping down imports, the raw material account in the trade will be increased by 15 per cent. That leads to another point. It was said on Monday that this 15 per cent. surcharge would yield about £100 million. I hope that the Government have not overlooked the fact that the £100 million added to the import bill has to be made up by exports.
I do not wish to overstate the case by suggesting that there will be high unemployment in any particular area because of this impost to the hat trade, but I do suggest that those employed in the smaller specialist firms may be minimally hit by the 15 per cent. surcharge. It may lead to little pockets of unemployment, not only in the County Borough of Luton but in other places where hats are made. Have the Government considered the effect of putting on 3s. in the £—which is by no means a trifling addition—on industries that depend on competitive selling to the public?
I do not expect that the Government will necessarily lean over to make an exception in the case of the hat industry. They will probably say that these are manufactured articles—very much manufactured—and that the fact that alternative materials are not availble is not relevant. But will they please keep the way open for these raw materials, which cannot figure very largely in our impost bill? Will they please remember that the effect on the happiness of the 5,000 people employed in the industry in Luton—and of those engaged in the industry elsewhere—is greater than is reflected by the amount concerned on the import bill?
I hope that the Government will Keep all these considerations in mind and, at an early date—if not immediately, as I would hope—make some concessions.
§ The Minister of State, Board of Trade (Mr. Edward Redhead)
If I intervene at this early stage, conscious that there are still some hon. Members who wish to debate this long list of Amendments, it is not with the intention of trying to baulk them in any way. They will obviously have an opportunity to speak, if they so desire. However, as we have a great deal yet to do, and I think there will be a common desire that we should make as rapid progress as possible, I hope that what I have to say may in some degree help to shorten the debate.
Things are a little complicated when one is faced with a rather long list of Amendments, as in this case, but I think that I am correct in saying that the group as a whole concerns a series of specific chemicals and, in another context, other raw materials used in the manufacture of man-made fibres. Other Amendments deal specifically with man-made fibres themselves. So far as I have followed the general trend of the discussion, the arguments adduced in respect of the Amendments to which hon. Members have addressed themselves have drawn upon a variety of arguments which represent a degree of repetition of what has already been said in preceding debates.
We have had again the argument as to what could rightly be construed in the context of this charge as a basic raw material. We have had again, rehashed and rehearsed, the argument as to availability in the home market of some of these commodities, and tacked on to this group we have had a plea for a regional concession in regard to certain of these commodities, and even, on the part of my hon. Friend the Member for Central Ayrshire (Mr. Manuel), virtually a request for a concession for a particular firm.
I think that it would be worth while refreshing the minds of the Committee once more on what my right hon. Friend the Chancellor of the Exchequer said on Second Reading:The phrase 'basic raw materials' has been used in a generally descriptive sense. We have not attempted to apply it with precision because, obviously, there are many opinions about what is a raw material.In the light of the debates which we have had in the last few days that 553 statement might be regarded as virtually prophetic. He went on to say:We have adopted as a guide the general principle that materials which have undergone only elementary processing should be exempted.Later he said:I am aware that even such a principle has no generally accepted rules which could he applied precisely and consistently over the whole field.From that he said that the Schedule exemptions had been drawn upon that basis, and while he was still considering certain items he would consider the possibility of producing further Amendments some of which have appeared on the Amendment Paper and some of which the Committee has already dealt with. But he added:I shall, of course, always be ready to consider any similar glaring anomalies which hon. Members may alight upon."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1096–7.]This stands as an assurance. I want to make it abundantly clear that my right hon. Friend means by that that, while it may not be possible in advance of more detailed examination of what the repercussions would be in specific cases of making concessions for which there have been claims before this Committee, either now or even on the Report stage, this reconsideration does not mean that of necessity we have to wait until there is a general review of the scheme as whole. I give this assurance. In a number of instances which have been urged upon us both by correspondence and in discussions in Committee, we have taken careful note of the submissions, and if, therefore, within the ambit of the general principle which I have again referred to by quoting my right hon. Friend, the answer has to be that we cannot concede a particular concession requested at this stage, I beg hon. Members to believe that we will give most earnest consideration to any further representations that are made. We will examine them. I am not to be construed as committing myself on any specific instance, but I want it to be clear that this is not the last word until such time as there will be a general review of the charge as a whole.
§ Mr. John Hall
The hon. Gentleman has stressed to the Committee the principles announced by the Chancellor of the 554 Exchequer which guide him in selection of materials for exclusion. Does this mean that the objective laid down in the White Paper has been abandoned? The objective was that, so far as imports are concerned, a sharp distinction must be drawn between increases in raw material imports required to service as an expansion in production. Many of the chemicals which have been referred to in the debates that we have had so far are required for that very purpose. Am I to understand from what has just been said to us that this objective laid down in the White Paper has been abandoned in favour of the principles stated by the Chancellor in his speech?
§ Mr. Redhead
If the hon. Gentleman will be good enough to await what I have to say about a particular Amendment which seeks a regional concession, I think that he will find that it will have some bearing on this matter.
I should like to look at the set of Amendments within this particular group. The first set deals with a series of highly complex manufactured chemicals which are used for the manufacture of man-made fibres. Because they are manufactured, by reference to the principle that I have already enunciated, they clearly cannot be regarded as basic raw materials and for that reason we cannot concede the Amendments in that respect.
It is perfectly true that in some instances these chemicals are wholly unobtainable, or insufficiently obtainable, from United Kingdom sources. The need of particular firms and industries to import them is accepted, but—this is again reiteration—the criterion of availability from home sources cannot be conceded as a valid ground for exemption in the context of this charge. To do so—I want to emphasise this once more—would be to give credence to the very point which the right hon. Member for Bexley (Mr. Heath) was trying to emphasise at an earlier stage in Committee, that this was a protectionist charge. In fact this is not the purpose or intention of the charge, but clearly to do this would involve creating that protectionist flavour about it.
§ Mr. Cole
I am trying hard to see a way through all this and to find a path. What would be the position if 555 the Chancellor thinks that the nearest he can get to a garden path is to talk about basic raw materials irrespective of what definition is used? If there was a raw material which was available in reasonable quantities in this country—I know that this is hypothetical, but I am trying to arrive at the Government's mind—but by some quirk of production it was cheaper to import, would it still be exempted, although it could be produced here?
§ Mr. Redhead
I think that I made it abundantly clear in quoting from my right hon. Friend that no precise rules can possibly be applied in determining the issue of what is a basic raw material. I should find it extremely difficult to seek to do so in relation to a hypothetical question, and I am sure that the hon. Member will forgive me if I do not enter into a somewhat difficult argument on that score.
I want to refer now to the particular Amendments which relate to man-made fibres, Amendments Nos. 84, 85 and 94. May I say in passing that there seems to be some little defect in the drafting of Amendment No. 94 in that I gather that it refers to a non-existent chapter of the tariff. We gather the purpose. It may be that there is a typographical error in it as well. The purpose is to try to secure a concession for man-made fibres. I think that it must be accepted as completely illogical to exempt them. If we reject the case for exempting specific complex manufactured chemicals which are used for the purposes of producing man-made fibres, we cannot logically concede exemption to the man-made fibres themselves. For that reason, I cannot urge the Committee to accept these Amendments.
§ The Temporary Chairman (Sir Harry Legge-Bourke)
I think I heard the hon. Gentleman say that Amendment No. 94 referred to Chapter 100, which does not exist. Is that so?
§ Mr. Redhead
My advice is that it is a non-existent chapter of the tariff. I would not pursue the point unduly. I would not in any case want to take advantage of any little technical defect in the drafting.
§ The Temporary Chairman
Order. The only reason why I ask the hon. 556 Gentleman the question is that, if Chapter 100 does not exist any longer, Amendment 94 must be out of order.
§ Mr. Redhead
I do not raise the point from that point of view, Sir Harry. In so far as the general argument applies to man-made fibres, I accept that those responsible for the Amendment want to urge this point for consideration in the context of the charge.
One specific Amendment goes a little beyond the aspect of chemicals but, on the same principle as it is sought to exempt chemicals which go into the making of man-made fibres, it is suggested in Amendment No. 86 that exemption should be given to glass marbles which are used for the manufacture of glass yarn. Again, I think that the Committee must accept that it would be wholly illogical and inconsistent, when glass in the mass and glass balls, rods and tubes are subject to the charge as manufactured materials, to exempt glass marbles used in the manufacture of glass yarn.
On the third category of Amendments—the hon. Member for Ilford, South (Mr. Cooper) by cross-reference tied this up with Amendment No. 27 in his reference to the chemical stipulated in that Amendment—the problem is in regard to regions where industrial concerns manufacturing man-made fibres are under the necessity of importing raw materials which, it is said, are not obtainable in the United Kingdom but are essential for these industries. The contention is made that, because these establishments are located in Northern Ireland and in certain development districts—my hon. Friend the Member for Central Ayrshire brought Scotland into the picture—there should be a regional exemption for the raw materials used for these manufactures in these areas.
I accept that these firms are contributing to the expansion of a major growth industry. The case of Chemstrand has been quoted. In the Board of Trade we have been made very much aware of the problem of Chemstrand in this connection. We are not insensitive to the problem, but we are bound to look at the problem enshrined in the Amendment not solely from the point of view of one company or, indeed, from the point of view of any one region. I think that on reflection hon. Members will accept that 557 the line of argument that we should apply the concession of duty exemption on the basis of some regional consideration, because there is high unemployment or because firms are operating in an area where it is important that there should be an expansion of industry, would lead us to almost impossible situations in the application of duty generally. Nor would the argument possibly be confined to raw materials for these purposes. It would stretch out inevitably to pressure for many other goods and commodities, and it might well be argued in respect of other duties outside the scope of the immediate surcharge.
§ 8.15 p.m.
§ Mr. Manuel
My hon. Friend is talking about particular regions. Will he turn his mind to development districts? Development districts are well defined: Already they get reliefs in many ways which are not available to other areas. This is accepted as a principle. If Chemstrand could provide 2,900 jobs in my constituency, there would be comparatively large savings in other directions through people being taken off the unemployment queue and provided with employment.
§ Mr. Redhead
I ask the Committee to recognise that the argument in this connection is essentially an argument for giving special treatment to particular user industries or to firms in certain geographical areas. However appealing that may be in general principle, we must face the fact that from the point of view of administration and equity it would be completely unworkable. The burden which would be involved in setting up elaborate machinery to ensure that the goods which were supposedly destined to those for whom this tax concession might he granted in fact reached them would be of such a character as clearly to vitiate the whole apparatus and, indeed, would make it impossible to cope with what would follow as a result of any such concession.
§ Sir D. Glover
In dealing with this problem the Minister seems to have forgotten that his hon. Friend the Member for Central Ayrshire (Mr. Manuel) has quoted an area which is a development district. Hon. Members on this side have quoted Northern Ireland and other development districts. Outside Liverpool 558 there is another factory producing this sort of synthetic fibre. Because they are new industries, the bulk of these factories are in development districts. That is one of the reasons why we on this side want to get the best use of this surcharge.
§ Mr. Redhead
I suggest, nevertheless, that the pattern which would have to be followed in an entirely novel procedure in the application of any form of tax would be such as to render it completely unworkable and in fact it would not result in an equitable arrangement.
§ The Temporary Chairman
I am sorry to have to interrupt the hon. Gentleman, but I think that all the Amendments we are discussing in this group relate to man-made fibres. I would, therefore, hope that the Committee would feel it as well to concentrate mainly on that rather than to go into the general argument as to the incidence of the surcharge.
§ Mr. Redhead
Naturally I bow to your Ruling, Sir Harry. I was construing the argument on the last of the Amendments to involve the very claims which I was trying to deal with in regard to a concession of this kind. In so far as Chemstrand—there are other firms involved—is affected by this matter, although I cannot possibly hold out any hope of a relief for the firm on the basis of any special concession on a regional or development district basis, or by reference to any specific firm, nevertheless its circumstances in relation to its problem can be, and will be, taken into account as a factor when consideration is given to the specific items which we have been discussing.
Although I am not able at this stage without further examination to make any concession and accept that any item should be included in the exempt list, this matter will be considered and, as I said at the outset, consideration need not be deferred until the general review of the surcharge scheme itself. But indeed I give an undertaking that those considerations will be made, and will be made on their merits, so long as we can have a reasonable time to examine the possible repercussions. I am not committing myself about any one of them, but there is nothing to prevent the consideration which I have promised we shall give. We shall give most careful consideration 559 to what has been said about these and, indeed, any other anomalies which are brought to our attention.
§ Mr. Redhead
I thought I had made it clear that I could not necessarily give that undertaking. The Report stage, I believe, is fixed for next week and obviously in some instances it would require more detailed consideration than would be possible in order to arrive at a decision in time for the Report stage. Clause 3(9) gives an opportunity for dealing with goods of descriptions specified in the order if a substantial case is made out.
§ Mr. Rafton Pounder (Belfast, South)
I have listened with considerable interest and attention to the remarks made by the various Government spokesmen during the past five hours. As the discussion has continued I have found myself becoming more and more at a loss to understand some of the definitions which have been put to the Committee. One has had the impression that we are almost playing a word game. We are not. We are dealing with the vital future of vast sections of British industry. From some of the things which have been said—such as, if we were to reduce the surcharge on some articles we would have to increase it on others—one almost gets the idea that one is not discussing a reduction in the import bill so much as imposing a 15 per cent. penalty on vast sections of British industry.
In the recent election manifesto of the party opposite great play was made on regional development. This has been knocked firmly on the head in the speech to which we have just listened. Endeavours to give tangible effect to these protestations of interest in areas of regional development seem to have gone out of the window.
In view of the hour and the fact that many other hon. Member wish to speak, I shall make my few points very briefly. The arguments advanced by my hon. Friend the Member for Londonderry (Mr. Chichester-Clark) and my hon. and learned Friend the Member for Antrim, South (Sir Knox Cunningham) with regard to specific firms apply also to the 560 entire synthetic fibre industry of Northern Ireland. Over the last decade and, indeed, over an even shorter period, there has been in Ulster a meteoric rise from nothing at all in the man-made fibre field to the position of leader in Western Europe. We are rightly proud of these achievements, and now that this field of activity and employment in Northern Ireland is reaching a position of considerable importance, the industry is suddenly faced with an ill-defined and ill-conceived measure of the kind of the surcharge which we are discussing. It strikes at the whole root and concept of attracting new firms to development areas when a surcharge is introduced against which these firms are absolutely powerless.
The hon. Member for Central Ayrsshire (Mr. Manuel) could well have joined us on these benches in his impassioned argument in favour of the Dundonald branch of Chemstrand. The hon. Member's remarks could well have been made by any Ulster Member and with equal validity. The fact that these firms have been set up largely in development areas does not invalidate the argument that they should be given preferential treatment. The purpose of setting up firms in development areas is surely to encourage employment in various places where hitherto it has been difficult to provide. Yet as soon as we get this opportunity there is this 15 per cent. surcharge.
I say in all sincerity that if in the coming months the unemployment figures in Northern Ireland rise—my hon. Friend the Member for Londonderry said that last month they were the lowest in any November for the last 14 years—the responsibility will rest fairly and squarely on the shoulders of right hon. and hon. Members opposite because of this surcharge. I hope they will think again.
§ Mr. G. Elfed Davies (Rhondda, East)
The hon. Gentleman has just said that the unemployment figures are the lowest for the last 14 years. May I ask where he has been during the last 13 years?
§ Mr. Pounder
I fail to see the relevance of that intervention. I made a perfectly valid statement. The figures are going down and down. If there is any increase in unemployment, the hon. Gentleman knows as well as I do—
§ The Temporary Chairman
Order. It is important that we should remember what the topic is in these Amendments. They are all concerned with man-made fibres, and unless man-made fibres can be related to the last 13 years I must ask the hon. Member to confine himself to the subject of the Amendment.
§ Sir D. Glover
The reply given by the Minister of State, Board of Trade was the most unconvincing that I have heard during the whole of today and yesterday. If he will carry out a survey in his Department between now and the Report stage he will find that the bulk of the man-made fibre factories in the United Kingdom, because they are new factories and because it was easy to direct them into the areas where they were required to go, are, by and large, in areas, which without them, would suffer from greatly increased unemployment. Therefore, hon. Members have not been speaking solely on behalf of their particular parts of Ulster or of Ayrshire. If one studies Scotland, one finds that by granting these concessions we would be doing something for the benefit of the less prosperous areas in Great Britain.
However, I want to devote my main argument to a different aspect of the problem. I want to speak on Amendment No. 96 which deals with raw materials not obtainable in the United Kingdom. I do not think hon. Members opposite appreciate that they are proposing a direct disincentive to exports. The whole basis of the Budget is supposed to be an attempt to reduce the volume of imports and increase exports.
Let me take the Committee with me into these factories to see what happens. A raw material comes in; it is processed and made into some type of yarn. It may be processed in a factory which produces synthetic fibres, or it may be a factory which processes raw wool.
In Britain we export very little of the completely raw material in the shape of yarn, but we still export considerable quantities of piece-goods, particularly synthetic fibre piece-goods in hosiery from Leicestershire. We use some strange terms in the trade and by hosiery I mean cardigans, jumpers and dress fabric which is knitted, particularly in 562 the synthetic fibres. All these have a growing impact on the export market, and they are growing exports.
What happens as a result of the 15 per cent. surcharge? The price of the raw material to that factory goes up by 15 per cent. The manufacturer in Leicester or in Lancashire decides that because of the increase there will be a reduction in the demand for that product in the United Kingdom, but, of course, the manufacturer can use viscose or a combination of wool and viscose materials which are available for use in his factory for the home market. He puts these combinations of materials on to his machines and then his salesmen overseas send him an order, if he has not already withdrawn synthetics from his range. Orders come in from Australia, Canada, New Zealand and so on for a fabric or a garment of material which is made up of, or contains a large element of, the synthetic fibre which he no longer has on his machines because of the increased price in the home market. As a result the export orders are lost.
I emphasise that in this sort of trade when these exports are lost it does not mean that they are lost on one particular order. It means that the firm overseas which wants cardigan material of synthetic fibre or jumpers or cardigans made of nylon and which finds that it cannot obtain them from this country gets them from other countries which are competitors and which build up good will for a continuation of those orders in the future. We have not lost one order in isolation. We have lost a continuation of orders over the years in a growing market. We give our competitors in the overseas market a golden opportunity to take those markets from us because of the Government's ill-conceived proposal to put a 15 per cent. surcharge on what is obviously today a growing element in the textile industry.
§ Mr. Ron Ledger (Romford)
The hon. Gentleman has studied this matter closely and he obviously has a considerable knowledge of the industry. He may be giving the impression that the cost to the firm has gone up by 15 per cent. following the surcharge on raw material, but can he say what percentage increase there is in the total cost of these goods 563 so that we may know exactly how uncompetitive we are?
§ Sir D. Glover
I am grateful to the hon. Member for asking that question. I do not think that without delaying the Committee I can give those figures in detail, but at a rough guess, depending on the quality of the goods and of the raw material, I think that it would be at least 7½ per cent.
If, therefore, we are dealing with that sort of figure we are putting the garments, material or the yarding out of court. A great many jobs in Britain are involved in this matter and I seriously ask the Minister whether between now and Report he will have another look at it.
On the question of the siting of the factories which produce the raw material in the form of yarn, it would not be difficult to carry out a survey. They are large units and there are not so many of them in the United Kingdom. The hon. Gentleman will find the great bulk of them in areas where the Government are pledged to increase employment. If the hon. Gentleman carries out this survey between now and Report he will do a great deal to help the development areas and—which is claimed to be the purpose of the Budget—to buttress our export performance in the months to come.
§ Mr. Henry Clark (Antrim, North)
It is a belief of mine that more sins are committed in the name of principle than in any other name. One of the most pathetic things that I have seen today has been hon. Members opposite looking for a principle by which to justify the sin which the Government have clearly decided to commit against the synthetics industry. The Government's decision to impose the 15 per cent. surcharge on the raw material of the synthetics industry is purely arbitrary. There is no possible principle on which even the most casuistic member of the Labour Party can possibly draw to justify it.
I should like to consider one aspect of this case. Hon. Members from constituencies on every side of mine have spoken, from the hon. Member for Central Ayrshire (Mr. Manuel) just across the sea to my hon. Friend the Member for Londonderry (Mr. Chichester-Clark) 564 and my hon. and learned Friend the Member for Antrim, South (Sir Knox Cunningham). They all have large synthetic fibre plants in their constituencies.
There is no synthetic fibre factory in my constituency, but—this will be good news for the hon. Member for Central Ayrshire—we in the middle probably gain most of the benefits. During the past five years, four new factories, employing about 2,000 people, have been opened, based entirely on the ready supply on their doorstep of synthetic fibre as a raw material. I assure the hon. Member for Central Ayrshire that, when Chemstrand gets going in his area, he will be able to look forward to a number of secondary industries growing up.
If the four large synthetic fibre factories in Northern Ireland provide a reasonable amount of employment, the secondary industries which are now growing, and growing very fast, based on this raw material, will probably provide ten times that amount of employment. All this has been a shot in the arm for the Northern Ireland textile industry, and I am sure that it will be a shot in the arm for the Lancashire textile industry.
The Government have decided to hit the synthetic fibre industry. They say that they will consider the matter further, but they probably cannot have anything ready in time for the Report stage. If they change their mind in a month, they will have created just that kind of uncertainty which they seem to have been particularly expert at creating in the last six weeks. This surcharge is certain to do more damage to our economy than anything else. They must not think that they can get away with it on a stupid basis of so-called principle regarding raw materials. There is no such principle to be applied to substances as complicated as synthetic fibres.
§ Mr. Anthony Kershaw (Stroud)
When the Minister went to the Dispatch Box, a few minutes ago, I hoped that we might have some assurances which would curtail the debate. I listened with mounting excitement as he came to the sentences in which he began to give assurances, but they were completely insufficient. They were vague in meaning and unrestricted as to time. They amounted to nothing more than an admission that the Government have not thought matters out in the way the Opposition have. Therefore, we must press our case.
565 I refer particularly to Amendment No. 126, which stands in the name of my hon. Friend the Member for Kidderminster (Sir T. Brinton) and myself. My hon. Friend has left word with me that, unfortunately, he cannot be present now, but the Committee will realise, from my mention of the name Kidderminster, that I intend to refer to carpets. There is a carpet factory in my constituency, too.
In about 80 per cent. of carpets man-made fibres are used. There is no more man-made fibre available for carpet manufacture in this country than can be obtained today. I understand that British Nylon Spinners is having to import finished material from Japan to keep its deliveries going to the trade. In these circumstances, there is nothing that the carpet manufacturer can do to save himself from the 15 per cent. surcharge.
The Government maintain that availability is irrelevant, but I have never been able to understand their argument. They say, also, that the surcharge is not protectionist in its nature. It may not be by intention, but it certainly is in its effect. If the material is not available, if one cannot buy more man-made fibre for carpets, what is the result? Costs are raised on the home market and exports are made more difficult. I cannot believe that this is the Government's intention.
The demand for carpets is fairly inelastic. It depends quite closely on the number of houses completed, and those who buy carpets are, to a quite important extent, those who are furnishing houses for the first time. It is the younger people who will find it particularly difficult to pay 3s. extra in the £ on their carpets. This will be wholly bad. It will take money out of the pockets of the people. It will do nothing to bolster the carpet industry. It will harm our exports.
I make so bold as to say that this surcharge in general, and the added duty on carpets in particular, will probably come off before long. It will come off not because it will have done its work in any financial sense, but because of the, administrative chaos which it will cause and because it will be seen to be completely useless as well.
§ Mr. Geoffrey Lloyd (Sutton Coldfield)
We are all in favour of modernising our industry. The Prime Minister invited the country to "Go with Labour" towards 566 the new technological age, but the Government spokesman tonight has shown their muddled approach to the question of the surcharge. They are hitting the newest industries, and hitting hardest of all the newest sections of the newest industries.
Once again, the Government are striking at the prosperity of the Midlands. We, also, are interested in the man-made fibre industry, particularly in Coventry, where about 7,000 men are employed on this very work at Courtaulds. We are concerned about what is to happen as regards acrylic fibres, which make wool-like materials which can be used in suits, and about polyurethane yarn, which is used in the rapidly growing market for ladies' elastic underwear and corsets.
The older man-made fibre industries have their chemical raw materials now available in this country, but this is not true of the new sections of the industry. The Minister without Portfolio told us that availability is irrelevant. Why? It is irrelevant, we are told, because to regard it otherwise would give a protective character to the surcharge. But this is not so as regards acrylonitrile, which is the chemical raw material which we have particularly in mind.
It is now known—my hon. Friend the Member for Ilford, South (Mr. Cooper) demonstrated this—that there are plans for a plant to come into operation next year. This is all to happen and, very shortly, therefore, the material will be available here and it could not be alleged that there is a protective purpose in the surcharge. The only effect of the surcharge will be to increase the costs of production in the interim. This extra cost can amount to as much as 8½d. per lb. in the initial manufactured stage. The material then goes to the weaver, from the weaver to the converter, and from the converter to the garment maker, and I am advised that the increase can, with Purchase Tax, be sixfold over the original 8½d.
This complicated chain also affects the question of the export rebate, because I am advised that, at any rate for the smaller men in the industry, the voluminous records which would be necessary in order to enable them to claim the export rebate would not be 567 a practical proposition. I therefore claim that to impose the surcharge on acrilonytrile is a mistake. My hon. Friend the Member for Dorset, West (Mr. Wingfield Digby), who has had to leave the Chamber, asked me to mention that he feels that the same considerations apply to marbles, which are the foundation of the glass fibre industry. In any case, this surcharge discriminates in favour of the older industry of cotton and also in favour of the older man-made fibres.
§ Mr. Burden
My right hon. Friend is wrong in saying that it discriminates in favour of cotton. It imposes a surcharge on cotton grey cloth, about which I shall have something to say later.
§ Mr. Lloyd
No doubt my hon. Friend will explain the position later. But the surcharge discriminates in favour of the older man-made fibres industries in which the chemical raw material is already available in this country.
My hon. Friend the Member for Londonderry (Mr. Chichester-Clark) went to the heart of the matter when he said that he did not believe that the Government were approaching in the correct way the question of principle of what constitutes a raw material. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) gave a most interesting explanation of the exceptional features of this international trade in chemicals. I argue that this is the case and that the Government have not given sufficient weight to the different position of the raw material in these modern, technological, organic chemical industries as compared with the old-fashioned industries which were converting a natural product.
There was some support for that view when we were told by the Minister without Portfolio, in explaining the new tariff list which had been adopted from the international model, that everything in that model was classified in a certain manner except chemicals. These were classified entirely differently. In this classification each chemical stands on its own and has to be considered on its own merits. This is a guide to us as to what we should do. It shows that the Government have been old-fashioned in their approach to this problem and have paid insufficient attention 568 to the dramatic revolution in industry which has come about in these man-made industries based on these very new organic chemicals.
I suggest that it is not beyond the Government's wit even now, if they are prepared to do the work, to produce a series of principles which could be applied to the man-made fibres industry and to this particular and unusual class of product with these chemical raw materials. That is what I ask them to do.
§ Mr. John Hall
We have had an exhaustive and exhausting debate over the last few hours and it has been notable, as was the previous debate, for the absence of speakers—with one solitary exception—from the Government back benches. Excepting the Minister, we have had 11 speakers so far, including only the hon. Member for Central Ayrshire (Mr. Manuel) from the Government side of the Committee. I suppose that if I used statistics as sometimes they were used by hon. Members opposite I could say that that is a 100 per cent. improvement on their previous record. I was delighted to listen to the hon. Member for Central Ayrshire's plea for his constituency. I do not share the Minister's view about the improper aspect of making a plea for one's constituency or about regional problems.
§ Mr. Hall
I withdraw the word "improper". I think that the hon. Member is properly concerned about the effect of the surcharge on a project which will bring considerable employment to his area. It is expected that, by 1969, 2,900 to 3,000 people will be given jobs in that area, and it must be a matter of concern to any hon. Member when measures taken by the Government are likely to have an unfortunate effect upon the growth of industry in his area.
§ Mr. Burden
Perhaps the hon. Member for Central Ayrshire (Mr. Manuel) will vote with us in the Lobby.
§ Mr. Manuel
The right hon. Member for Bexley (Mr. Heath) asked me about the word "exemption". I pointed out that in consultations with the principals of these concerns I approached them about complete exemption within a month or two. My plea was for earlier consideration than that given to the general principle over the whole range. I got that assurance from the Minister. [HON. MEMBERS: "Oh."] Hon. Members should be truthful about it. Had I not been given that assurance I should have voted with the Opposition.
§ Mr. Hall
If that is what the hon. Member says, he is very much more easily satisfied than any of my hon. and right hon. Friends are likely to be.
I am sorry that my hon. Friend the Member for Ilford, South (Mr. Cooper) is not here, because he started off this debate with a very good speech which commanded the respect of the Committee because it sprang from the great knowledge that he has of the chemical industry. He was supported by some of my hon. Friends with constituencies in Northern Ireland, who, like the hon. Member for Central Ayrshire, showed concern about the effect of these measures on their own constituencies and, indeed, on the development areas as a whole.
We do not want to leave the impression that in these Amendments my hon. Friends are seeking regional or constituency concessions. The examples that have been given show how the surcharge will "bite," to use the Government's own word, on certain very important industries. There are no doubt many other industries that will be similarly affected by these surcharges. In bringing forward these examples my hon. Friends were trying to find out whether an expanding industry of great importance to this country and with tremendous export potential would be very seriously affected.
The Minister of State seems to be shifting ground a little. He mentioned one point which is entirely new to me and, I think, to my hon. Friends. He said that the Government would be prepared to look at various items which are drawn to the attention of the Chancellor or the Board of Trade between now and the review in the spring.
570 This is new. We have not had this said before, and it is an advance, but why do we have to wait for him to look at these matters again between now and the spring? How long is that going to take? It has not taken hon. Members of the Opposition very long to put down Amendments arising out of cases brought to their notice of damage which might possibly be done to very important industries in this country. Why will it take such a long time? Why could not the Minister say tonight when this review is likely to be undertaken? It is thought to be a matter of six months. But that depends upon what is thought of as "in the spring." Our spring is rather a movable season. It could be until the end of June—some people regard that as the end of the spring.
§ Sir D. Glover
The Minister of State is in difficulty because the President of the Board of Trade has already told the countries of E.F.T.A. that the whole thing is coming off in the spring.
§ Mr. Hall
We can only hope that what his right hon. Friend has told the countries in E.F.T.A. turns out to be accurate. We have had no indication that there is to be any removal of any of these charges. We pressed for an assurance in the debate yesterday that these surcharges would be removed in a matter of months, but we received no assurance whatever.
The Minister of State denies that the surcharges will be on for a longer period, but, though this may not be the intention of the Government, this is what is likely to happen. As my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd) has pointed out, the effect of these surcharges to which we draw attention in this group of Amendments is to discriminate between synthetic and natural fibres—because the natural fibres in many cases are coming in exempt from this duty—and between allied types of synthetic fibres. This is a case of discrimination and protection. That may not have been the Government's intention, but that is precisely what has happened.
I should like to turn now to the regional problem. The Minister of State thought that it would be impossible to make concessions for particular industries 571 or particular regions. Is he right in this? Is it not already the case that concessions are made to industries going into particular areas? The example of free depreciation allowance comes to mind, where particular concessions are made to particular industries to encourage them to go into particular areas. Furthermore, there are other examples of industries which import goods for which they are afterwards able to reclaim a duty because of special direction or some similar reason. There has been no real problem in arranging the necessary administrative machinery for cases of that kind.
Why would it not be possible to treat certain extremely important expanding industries, which are vital to the country, in this way? The machinery is there and there is no great problem about doing so. I find it difficult to understand the reluctance of Ministers to consider the possibility.
I intervened earlier to ask the Minister whether the Government have abandoned the objective which they laid down in paragraph 6 of the White Paper. I understood that in his remarks the Minister would answer this question. Although I listened with care—I admit that I might have missed something—I do not think that I was given an answer. The point I made was that the White Paper which first gave to a startled world the news that we were to have this imposition of the 15 per cent. surcharge said:So far as imports are concerned a sharp distinction must be drawn between the increase in raw material imports required to service an expansion in production…I stress the words, "service an expansion in production"—
|Division No. 22.]||AYES||[8.58 p.m.|
|Agnew, Commander Sir Peter||Birch, Rt. Hn. Nigel||Chichester-Clark, R.|
|Alison, Michael (Barkston Ash)||Black, Sir Cyril||Clark, Henry (Antrim, N.)|
|Allason, James (Hemel Hempstead)||Blaker, Peter||Clark, William (Nottingham, S.)|
|Amery, Rt. Hn. Julian||Bossom, Hn. Clive||Cole, Norman|
|Astor, John||Bowen, Roderic (Cardigan)||Cooke, Robert|
|Atkins, Humphrey||Box, Donald||Cooper, A. E.|
|Awdry, Daniel||Braine, Bernard||Cordle, John|
|Baker, W. H. K.||Brewis, John||Costain, A. P.|
|Balniel, Lord||Brooke, Rt. Hn. Henry||Crowder, F. P.|
|Barlow, Sir John||Brown, Sir Edward (Bath)||Cunningham, Sir Knox|
|Batsford, Brian||Buchanan-Smith, Alick||Curran, Charles|
|Beamish, Col. Sir Tufton||Buck, Antony||Dalkeith, Earl of|
|Bennett, Sir Frederic (Torquay)||Burden, F. A.||Dance, James|
|Bennett, Dr. Reginald (Gos & Fhm)||Campbell, Gordon||Davies, Dr. W. R. (Perry Barr)|
|Berkeley, Humphry||Carlisle, Mark||d'Avigdor-Goldsmid, Sir Henry|
|Berry, Hn. Anthony||Carr, Rt. Hn. Robert||Dean, Paul|
|Biffen, John||Cary, Sir Robert||Donaldson, Cmdr. C. E. M.|
|Biggs-Davison, John||Channon, H. P. G.||Doughty, Charles|
|Bingham, R. M.||Chataway, Christopher||Drayson, G. B.|
§ "and the disturbing increase in manufactured goods."
§ These are the very items we have been talking about. They are meant to service industries which we want to expand. Have the Government now departed from that principle? Does the paragraph not mean what it says? There have been so many shifts of ground over the last few days that hardly anything would surprise me, but this seems very depressing indeed.
§ What my hon. Friend the Member for Ilford, South said at the beginning of this debate is probably correct. In a way, we are almost wasting time trying to put a case for industry because we are met with constant stonewalling from hon. Members opposite. There is no attempt to understand the problems. The Minister must look at this again, because I do not think that he understands the tremendous harm—perhaps lasting harm—which will be caused, not merely in the next few months.
§ There are the effects in lost markets and the appalling difficulty of getting drawback. Does the Minister understand the number of hands through which synthetic fibres pass, the many products which are used in their manufacture, and the difficulty about producing different types of product which are used? The effect on export markets will be quite dramatic over the next 12 months.
§ Having listened to the Minister, I confess that I am bitterly disappointed. I can only advise my right hon. and hon. Friends to carry the Amendment to a Division.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 194, Noes 219.
|du Cann, Rt. Hn. Edward||Jopling, Michael||Peyton, John|
|Eden, Sir john||Kaberry, Sir Donald||Pike, Miss Mervyn|
|Emery, Peter||Kerby, Capt. Henry||Pounder, Rafton|
|Fletcher-Cooke, Charles (Darwen)||Kerr, Sir Hamilton (Cambridge)||Prior, J. M. L.|
|Fletcher-Cooke, Sir John (S'pton)||Kershaw, Anthony||Pym, Francis|
|Forrest, George||Kilfedder, James A.||Quennell, Miss J. M.|
|Fraser, Ian (Plymouth, Sutton)||King, Evelyn (Dorset, S.)||Ramsden, Rt. Hn. James|
|Galbraith, Hn. T. G. D.||Lagden, Godfrey||Rawlinson, Rt. Hn. Sir Peter|
|Gammans, Lady||Lambton, Viscount||Redmayne, Rt. Hn. Sir Martin|
|Gardner, Edward||Lancaster, Col. C. G.||Rees-Davies, W. R.|
|Gibson-Watt, David||Langford-Holt, Sir John||Renton, Rt. Hn. Sir David|
|Giles, Rear-Admiral Morgan||Litchfield, Capt. John||Ridsdale, Julian|
|Glover, Sir Douglas||Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)||Roberts, Sir Peter (Heeley)|
|Glyn, Sir Richard||Longbottom, Charles||Rodgers, Sir John (Sevenoaks)|
|Goodhart, Philip||Longden, Gilbert||Roots, William|
|Goodhew, Victor||Loveys, Walter H.||Royle, Anthony|
|Gower, Raymond||Lubbock, Eric||Russell, Sir Ronald|
|Grant, Anthony||Lucas-Tooth, Sir Hugh||Scott-Hopkins, James|
|Griffiths, P. H. S. (Smethwick)||McAdden, Sir Stephen||Spearman, Sir Alexander|
|Grimond, Rt. Hn. J.||Mackenzie, Alasdair (Ross & Crom'ty)||Stainton, Keith|
|Gurden, Harold||Mackie, George Y. (C'ness & S'land)||Taylor, Edward M. (G'gow, Cathcart)|
|Hall, John (Wycombe)||McNair-Wilson, Patrick||Taylor, Frank (Moss Side)|
|Hall-Davies, A. G. F.||Maginis, John E.||Temple, John M.|
|Harrison, Col. Sir Harwood (Eye)||Mathew, Robert||Thomas, Sir Leslie (Canterbury)|
|Hastings, Stephen||Maude, Angus E. U.||Thorneycroft, Rt. Hn. Peter|
|Hawkins, Paul||Mawby, Ray||Thorpe, Jeremy|
|Hay, John||Maxwell-Hyslop, R. J.||Tiley, Arthur (Bradford, W.)|
|Heald, Rt. Hn. Sir Lionel||Maydon, Lt.-Cmdr. S. L. C.||Turton, Rt. Hn. R. H.|
|Heath, Rt. Hn. Edward||Meyer, Sir Anthony||Tweedsmuir, Lady|
|Higgins, Terence L.||Mills, Peter (Torrington)||van Straubenzee, W. R.|
|Hiley, Joseph||Mills, Stratton (Belfast, N.)||Vickers, Dame Joan|
|Hill, J. E. B. (S. Norfolk)||Miscampbell, Norman||Walder, David (High Peak)|
|Hirst, Geoffrey||Mitchell, David||Walker, Peter (Worcester)|
|Hobson, Rt. Hn. Sir John||Monro, Hector||Walker-Smith, Rt. Hn. Sir Derek|
|Hogg, Rt. Hn. Quintin||More, Jasper||Ward, Dame Irene|
|Hooson, H. E.||Morgan, W. G.||Weatherill, Bernard|
|Hordern, Peter||Murton, Oscar||Whitelaw, William|
|Hornsby-Smith, Rt. Hn. Dame P.||Nicholls, Sir Harmar||Wills, Sir Gerald (Bridgwater)|
|Howard, Hn. G. R. (St. Ives)||Noble, Rt. Hn. Michael||Wise, A. R.|
|Howe, Geoffrey (Bebington)||Nugent, Rt. Hn. Sir Richard||Wolrige-Gordon, Patrick|
|Hunt, John (Bromley)||Onslow, Cranley||Woodhouse, Hn. Christopher|
|Hutchison, Michael Clark||Osborne, John (Hallam)||Woodnutt, Mark|
|Iremonger, T. L.||Osborne, Sir Cyril (Louth)||Younger, Hn. George|
|Irvine, Bryant Godman (Rye)||Page, John (Harrow, W.)|
|Jennings, J. C.||Page, R. Graham (Crosby)||TELLERS FOR THE AYES:|
|Johnston, Russell (Inverness)||Pearson, Sir Frank (Clitheroe)||Mr. McLaren and Mr. MacArthur.|
|Jones, Rt. Hn. Aubrey (Hall Green)||Percival, Ian|
|Abse, Leo||Cullen, Mrs. Alice||Gregory, A.|
|Albu, Austen||Dalyell, Tam||Griffiths, David (Rother Valley)|
|Allaun, Frank (Salford, E.)||Davies, G. Elfed (Rhondda, E.)||Hale, Leslie|
|Alldritt, W. H.||Davies, Ifor (Gower)||Hamilton, James (Bothwell)|
|Allen, Scholefield (Crewe)||Davies, S. O. (Merthyr)||Hamling, William (Woolwich, W.)|
|Armstrong, Ernest||Delargy, Hugh||Harper, Joseph|
|Atkinson, Norman||Dell, Edmond||Harrison, Walter (Wakefield)|
|Bacon, Miss Alice||Dempsey, James||Hart, Mrs. Judith|
|Bagier, Gordon A. T.||Diamond, John||Hattersley, Ray|
|Barnett, Joel||Dodds, Norman||Heffer, E. S.|
|Baxter William||Doig, Peter||Henderson, Rt. Hn. Arthur|
|Beaney, Alan||Donnelly, Desmond||Herbison, Rt. Hn. Margaret|
|Bence, Cyril||Driberg, Tom||Hobden, Dennis (Brighton, K'town)|
|Bennett, J. (Glasgow, Bridgeton)||Duffy, Dr. A. E. P.||Holman, Percy|
|Binns, John||Dunn, James A. (L'pool, Kirkdale)||Horner, John|
|Blackburn, F.||Dunnett, J.J.(Nottingh'm,Central)||Houghton, Rt. Hn. Douglas|
|Blenkinsop, Arthur||Edwards, Rt. Hn. Ness (Caerphilly)||Howarth, Harry (Wellingborough)|
|Boardman, H.||Edwards, Robert (Bilston)||Howarth, Robert L. (Bolton, E.)|
|Bowden, Rt. Hn. H. W. (Leics S.W.)||English, Michael||Howell, Denis (Small Heath)|
|Boyden, James||Ensor, David||Howie, W.|
|Braddock, Mrs. E.M.||Evans, I. L. (Birmingham, Yardley)||Hoy, James|
|Brown, Hugh D. (Glasgow, Provan)||Fernyhough, E.||Hughes, Emrys (S. Ayrshire)|
|Brown, R. W. (Shoreditch & Fbury)||Finch, Harold||Hughes, Hector (Aberdeen, N.)|
|Buchan, Norman (Renfrewshire, W.)||Fitch, Alan||Hunter, Adam (Dunfermline)|
|Buchanan, Richard||Fletcher, Eric (Islington, E.)||Hunter, A. E. (Feltham)|
|Butler, Herbert (Hackney, C.)||Fletcher, E. J. (Darlington)||Irvine, A. J. (Edge Hill)|
|Butler, Mrs. Joyce (Wood Green)||Floud, Bernard||Irving, Sydney (Dartford)|
|Carmichael, Neil||Foot, Michael (Ebbw Vale)||Jackson, Colin|
|Coleman, Donald||Freeson, R.||Jeger, George (Goole)|
|Corbet, Mrs. Freda||Galpern, Sir Myer||Jeger, Mrs. Lena (H'bn & St.P'cras, S.)|
|Crawshaw, Richard||Garrett, W. E.||Jenkins, Hugh (Putney)|
|Cronin, John||Garrow, A.||Jones, Dan (Burnley)|
|Crossman, Rt. Hn. R. H. S.||Gourlay, Harry||Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)|
|Jones, J. Idwal (Wrexham)||Neal, Harold||Smith, Ellis (Stoke, S.)|
|Jones, T. W. (Merioneth)||Newens, Stan||Snow, Julian|
|Kelley, Richard||Noel-Baker, Francis (Swindon)||Solomons, Henry|
|Kenyon, Clifford||Noel-Baker, Rt. Hn. Philip (Derby, S.)||Sorensen, R. W.|
|Kerr, Mrs. Anne (R'ter & Chatham)||Norwood, Christopher||Spriggs, Leslie|
|Kerr, Dr. David (W'worth, Central)||Oakes, Gordon||Stewart, Rt. Hn. Michael|
|Lawson, George||O'Malley, Brian||Stones, William|
|Leadbitter, Ted||Oram, Albert E. (E. Ham S.)||Stross, Sir Barnett (Stoke-on-Trent, C.)|
|Ledger, Ron||Orme, Stanley||Summerskill, Dr. Shirley|
|Lee, Miss Jennie (Cannock)||Oswald, Thomas||Swain, Thomas|
|Lever, Harold (Cheetham)||Owen, Will||Swingler, Stephen|
|Lever, L. M. (Ardwick)||Page, Derek (King's Lynn)||Symonds, J. B.|
|Lewis, Ron (Carlisle)||Paget, R. T.||Taverne, Dick|
|Lomas, Kenneth||Park, Trevor (Derbyshire, S.E.)||Taylor, Bernard (Mansfield)|
|Loughlin, Charles||Pavitt, Laurence||Thomas, George (Cardiff, W.)|
|McBride, Neil||Pearson, Arthur (Pontypridd)||Thomas, Iorwerth (Rhondda, W.)|
|MacColl, James||Popplewell, Ernest||Thornton, Ernest|
|MacDermot, Niall||Probert, Arthur||Tinn, James|
|McGuire, Michael||Pursey, Cmdr. Harry||Urwin, T. W.|
|McInnes, James||Rankin, John||Varley, Eric G.|
|McLeavy, Frank||Redhead, Edward||Wainwright, Edwin|
|MacMillan, Malcolm||Reynolds, G. W.||Walden, Brian (All Saints)|
|Mahon, Peter (Preston, S.)||Rhodes, Geoffrey||Walker, Harold (Doncaster)|
|Mahon, Simon (Bootle)||Richard, Ivor||Wallace, George|
|Mallalieu, E. L. (Brigg)||Roberts, Albert (Normanton)||Watkins, Tudor|
|Manuel, Archie||Robertson, John (Paisley)||Weitzman, David|
|Mapp, Charles||Robinson, Rt. Hn. K. (St. Pancras, N.)||Whitlock, William|
|Mayhew, Christopher||Rodgers, William (Stockton)||Wilkins, W. A.|
|Mellish, Robert||Rogers, George (Kensington, N.)||Willey, Rt. Hn. Frederick|
|Mendelson, J. J.||Ross, Rt. Hn. William||Williams, Alan (Swansea, W.)|
|Mikardo, Ian||Rowland, Christopher||Williams, Mrs. Shirley (Hitchin)|
|Millan, Bruce||Sheldon, Robert||Williams, W. T. (Warrington)|
|Miller, Dr. M. S.||Shinwell, Rt. Hn. E.||Willis, George (Edinburgh, E.)|
|Milne, Edward (Blyth)||Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)||Wilson, William (Coventry, S.)|
|Molloy, William||Silkin, John (Deptford)||Winterbottom, R. E.|
|Monslow, Walter||Silkin, S. C. (Camberwell, Dulwich)||Woodburn, Rt. Hn. A.|
|Morris, Alfred (Wythenshawe)||Silverman, Julius (Aston)||Woof, Robert|
|Morris, Charles (Openshaw)||Silverman, Sydney (Nelson)||Wyatt, Woodrow|
|Morris, John (Aberavon)||Slater, Mrs. Harriet (Stoke, N.)|
|Mulley, Rt. Hn. Frederick (SheffieldPk)||Slater, Joseph (Sedgefield)||TELLERS FOR THE NOES:|
|Murray, Albert||Small, William||Mr. Grey and Mr. McCann.|
§ 9.0 p.m.
§ Sir Ronald Russell (Wembley, South)
I beg to move Amendment No. 37, in page 14, line 6, at the end to insert:
28.20 … … Aluminium oxide. 28.56 … … Silicon carbide
§ The Temporary Chairman
With this Amendment it is proposed to take Amendment No. 40, in page 14, line 6, at end insert:
28.20 … … Artificial corundum.
§ Amendment No. 47; in line 6, at end insert:
§ Sir R. Russell
Yes, Sir Harry.
This Amendment deals with two substances; aluminium oxide—or artificial corundum, as my hon. Friend the Member for Shipley (Mr. Hirst) has called it in his Amendment—and silicon carbide, which are the chief raw materials of the abrasive industry. I have listened during the last five hours to most of the discussion in this debate and I have 576 followed the arguments of right hon. and hon. Members on the Government Front Bench. I cannot understand how the imposition of a 15 per cent. surcharge on these two materials will help in any way to solve the balance of payments problem. In fact, it may easily make it considerably worse.
These two materials constitute, I understand, the largest single item in the cost of bonded abrasive products such as grinding wheels, and they are the operative element of coated abrasive products such as emery cloth. The reason why I have put down this Amendment is that one of the 25 firms affected by the 15 per cent. Surcharge—Anglo Abrasive Works Limited—is in my constituency. I appreciate that these two products are classified as manufactured products in Chapter 28 of the tariff, but they have always been regarded as raw materials. During the last war they were under the same control as asbestos and graphite. It was called the abrasive, graphite and asbestos control. Graphite and asbestos are classified as raw materials under Chapter 25 of the tariff and, like them, these two substances have always been regarded as 577 raw materials, although I admit that they are classified as manufactured products and have to be processed.
Half our requirements of aluminium oxide are manufactured at a plant in Hull. The other half have to be imported. No silicone carbide is manufactured here at all because of the large consumption of electric power needed in the process, so that all our requirements are imported. The imports of aluminium oxide come under the description of abrasive crude unground and ground and coated. For the first nine months of this year the total was 10,199 tons, of a value of £690,000. The imports of silicone carbide over the same period totalled 11,000-odd tons of a value of nearly £1¼ million of which more than half came from Norway. From that I calculate that the cost of exempting these two materials from the surcharge for a whole year would be something like £375,000.
This industry plays an absolutely vital part in our national economy because abrasives are used for grinding and polishing in almost every branch of the engineering industry and particularly the motor and machine tool industries which are two obvious examples. We have been told ad nauseam that the object of the surcharge is to improve the balance of payments. If the 15 per cent. surcharge is to have the effect in reducing imports of these materials or cutting them down, all that will happen is that unemployment will be caused in those industries, and production will be reduced in almost every other industry in the engineering field. The reduced imports cannot be replaced by home production, at any rate not at once, because there is not any in respect of silicone carbides. Only half of our requirements of aluminium oxide are produced in this country and all existing output is needed.
I understand that the application of the surcharge may increase from 5 per cent. to 10 per cent. the manufacturing costs of the abrasive industry. Although it is hoped that this may be countered without increasing prices, it is almost inevitable that prices will have to be increased. An amount of 15 per cent. of the total production of the abrasive industry is being exported and already the export side of the industry is having difficulty in competing with cheaper European products. Clearly, the export side would 578 be badly hit if prices of home products have to be increased.
I cannot help feeling that the surcharge on these materials just does not make sense. It can not possibly assist our balance of payments. Cutting down our imports of these materials would seriously damage the engineering industry because no part of that industry can do without grinding and polishing materials. If the surcharge does anything, it will, I believe, make our balance of payments position worse rather than better. I hope, therefore, that the Government will reconsider the matter and add these two materials to the exempted list.
§ Sir Eric Fletcher
I hope that the Committee will not think it discourteous it I reply immediately to the hon. Member for Wembley, South (Sir R. Russell) because we have discussed the principle involved in this matter on a number of earlier debates and it seemed that it might be for the convenience of the Committee if we avoided repetition on the question of principle, which my hon. Friends and I have tried to explain.
One naturally appreciates the inconvenience which the surcharge produces for those who are interested in the abrasive industries, but I must repeat that these two chemicals—aluminium oxide and silicon carbide—are chemical products of a kind which can only clearly be described as fully manufactured. They therefore fall within the scope of the charge.
§ Sir Harmar Nicholls (Peterborough)
I understand that the Minister without Portfolio wishes to help the Committee by giving his answer quickly, but on this occasion I think that he is a little too quick. I should like to read him a letter which I have received. It would take me only a minute or two to do so and, since the Minister may be giving a negative reply, the reading of this letter might just tip the scales in the other direction and he might accept the Amendment.
§ Sir E. Fletcher
I must continue.
I appreciate that the hon. Gentleman has received a letter from a constituent and that he is anxious to read it. In that respect he is no different from practically every hon. Member. We have all received letters indicating that in particular cases 579 hardship will result from the imposition of the 15 per cent. surcharge, but the Committee has agreed to the principle of the surcharge. We have passed Clauses 3 and 4 and we are dealing with a whole series of Amendments which suggest that particular commodities should be included in the Schedule. My hon. Friends and I have endeavoured to explain the principles on which we are operating and the reasons which make it impossible for us, without wrecking the whole scheme, to make additional exemptions which depart from the principle we have tried to enunciate.
Aluminium oxide and silicon carbide could not, in the view of the Government, be exempted from the charge without serious repercussions on a wide range of other manufactured chemicals which must remain subject to it in the interest of maintaining the charge over as wide a range of products as possible.—[HoN. MEMBERS: "Reading."]—I am reading my notes in the interest of accuracy. We appreciate the difficulties involved and I repeat the undertaking that when the Chancellor comes to review this he will naturally give the most sympathetic consideration to the cases of difficulty which have been raised from time to time.
§ Mr. John Hall
I should like to know in what way these chemicals are more fully manufactured than those, say, coming under 25.01 and 25.32—salt, sulphur, plaster, lime and cement. I confess that I find it hard to follow how they differ in this way.
§ Sir E. Fletcher
It is always difficult to draw a precise line. I am not a technical expert—and I am not sure that the hon. Member for Wycombe (Mr. John Hall) is—but I understand that aluminium oxide is, as the Committee probably knows, obtained by calcining aluminium hydroxide, which is itself obtained from bauxite. Silicon carbide is obtained from a combination of carbon and silicon fused in an electric furnace. Those operations seem to us to produce chemical products that can only be fairly classified as being fully manufactured chemicals and, therefore, outside the scope of the Schedule.
§ Mr. Hirst
This is really getting hopelessly out of hand, Sir Harry, and I must protest. This is a very serious debate on 580 a matter which affects many people, yet we have the Minister without Portfolio telling the Committee, after only one speech has been made, that the Government are not even prepared to listen to the arguments that are to come along, and praying in favour of that the monstrous argument that certain products are more or less manufactured than is something else.
Quite frankly, his right hon. Friend the Chancellor of the Exchequer did not know anything about this himself. He said on Second Reading:The phrase 'basic raw materials' has been used in a generally descriptive sense. We have not attempted to apply it with precision because, obviously, there are many opinions about what is a raw material."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1096.]It was palpably clear from the very beginning that there would have to be arguments about details, and throughout our discussions it has been clear that there must be some argument about necessity, about the question of availability, and about the economic terms to be applied in relation to Government policy. For the Minister without Portfolio to jump up and try to short-circuit a debate that seriously concerns a whole range of industries is just not good enough. I hope that arguments in favour of other products will be deployed, and that is what I myself propose to do.
§ Mr. Bernard Braine (Essex, South-East)
Does my hon. Friend recall that, on Second Reading, the Chancellor went so far as to say, in conciliatory tones:I shall, of course, always be ready to consider any similar glaring anomalies which hon. Members may alight upon."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1097.]The Minister without Portfolio has done less than justice to the Committee in trying to quash a debate on this important subject. The Chancellor himself, as my hon. Friend will agree, was ready to listen to serious argument, and it is a great pity that he is not here to see the way in which this matter, vital to the trade and future prosperity of the country, is being handled by the Treasury Bench.
§ The Temporary Chairman
I may have made a mistake in assuming that the hon. Member for Shipley (Mr. Hirst) had finished his speech, when I called the hon. Member for Essex, South-East (Mr. Braine), but if the hon. Member was merely giving way he has the Floor, and has the right to continue.
§ Mr. Hirst
That was precisely the position, Sir Harry. I was very grateful for the intervention of my hon. Friend, because I thought it right to get that point clear, as the Minister earlier said that we could not deal with anomalies. It shows the confusion into which the debate could be plunged. We pointed out earlier—it would not be right for me to go over that background—that there were many anomalies. Many things have been said to show that there were. That was recognised by the Chancellor of the Exchequer, who in this matter I think, although I do not like this Measure, has shown more common sense than we are getting from the Treasury Bench tonight. I do not wish to be at all rude, but it is monstrous to attempt to foreshorten such an important debate as this.
My hon. Friend the Member for Wembley, South (Sir R. Russell) rightly drew attention to the importance of this material. It is an historic situation. I can go a little further than my hon. Friend went, because I happen to know that during the war and in following years it was regarded as a highly strategic raw material and was stockpiled by this country. There is evidence from the Director-General of Raw Materials Controls, at the Ministry of Supply, to support that. It was considered to be a material which was absolutely basic and which even under war-time conditions had to be allowed a certain amount of entry into the country. It applies particularly to silicon carbide. Aluminium oxide or, as I call it, artificial corundum, is slightly different, because a certain amount—approximately 48,000 tons—is made in 582 this country, but nothing like sufficient to satisfy our needs.
I want to add a little to what my hon. Friend said about its uses. The most well known use of this is in grinding wheels in the industries to which my hon. Friend referred. He did not mention the optical industry. What is immensely important is the use of this material as a lining for crucible work in steel plants. There is not a steel producer in this country who does not use this material. It is basic to one of our most substantial and most important industries. It is wrong that that should be completely overlooked. It is an insult to the Committee for it to be said, "It is not for the convenience of the Government", that it does not fit into one of their miserable Schedules, and that therefore we cannot even discuss it. The less we have of that tonight the better.
§ Sir Harmar Nicholls
I can understand the manœuvre of the Minister without Portfolio in rising quickly. I never blame people who get away with it. I blame those that let them. It is right that my hon. Friends, who object as strongly as they do on this very important matter, should take steps to ensure that it is properly aired.
If I may venture an opinion, I think that the reason why the right hon. Gentleman did not give a clear answer to my hon. Friend the Member for Wycombe (Mr. John Hall) is that there is no substantial difference between the two products. However much the right hon. Gentleman may have tried to cover it up by reading a technical brief quickly, the fact is that if one material is exempted there is no sound reason why the other should not be.
I merely want to reinforce the arguments advanced by my hon. Friend by reading a letter written by the manufacturers. It is their business. They live with it. They depend upon its success if they are to remain in business. The letter reads:Silicon carbide is not manufactured in the United Kingdom and nearly half the total requirements of aluminium abrasive have to be imported.The imposition of this levy will be a heavy burden on our manufacturing costs, and will inevitably have the most damaging effects on our exports in spite of the marginal incentives which are now being offered.583Strong representations have been made to the Board of Trade by the Abrasive Industries Association who sent a deputation to discuss the matter on 11th November but there is. as yet, no indication that this levy on abrasives will be rescinded.We are most anxious to avoid any increase in grinding wheel prices at this time and will absorb the substantial additional cost involved…If we fail"—to get this exemption approved—some contribution towards this levy will be inevitable"—that is, from customers.
One takes into account what the right hon. Gentleman said about the Government considering that this group is essential for the success of their import restriction endeavour, but the other side of the coin should not be disregarded. If it will do more damage to our export endeavour—all the evidence we get from all sources shows clearly that this is more than likely to happen—it seems rather stupid to attempt to reduce imports if by so doing we do much more damage to our export trade. The balance of trade figure at the end is our concern. Even at this late hour, having had this deputation and having heard the representions from my hon. Friends, despite the fact that the Minister is committed to some extent to that rather premature and quickly read answer that he gave, I hope that his Department will have another thought on this matter. Exports are more important than the slightest effect we may have on import restriction, and on the evidence of my hon. Friends and of the association, I hope the Minister will have second thoughts.
§ 9.30 p.m.
§ Mr. Burden
Does not my hon. Friend agree that this makes no contribution at all to solving the balance of payments situation? If the commodity is not made in this country it has got to be imported anyhow.
§ Sir H. Nicholls
Yes. How stupid of me not to have emphasised that most important point. If we add that fact to the points that I have already made, it is certain that second thoughts ought to prevail.
§ Mr. Peter Emery (Reading)
May I take a step further the argument adduced by my hon. Friend 584 the Member for Peterborough (Sir Harmar Nicholls). May we have an absolutely clear answer from the Government Front Bench to this question? If they are not willing to accept this Amendment, are they suggesting that industry should reduce its imports of silicon carbide and the aluminium abrasives which are necessary for industry? If that is not what they want, surely they must accept this Amendment. Will they clearly let industry know? Industry has a right to know. Are they suggesting that these imports should be stopped? That is what this debate is all about—nothing more and nothing less.
§ Mr. Diamond indicated dissent.
§ Mr. Diamond indicated dissent.
§ The Chairman
Order. The hon. Member must know that the Chair cannot be either half or entirely pregnant.
§ Mr. Emery
I have always been willing to accept any Ruling so full of wisdom, Dr. King. Whether or not it was pregnant to begin with, I do not know. Obviously the decisions of the Government Front Bench are not pregnant with wisdom. Judging by the attitude of the occupants of the Front Bench in this debate, they have indicated clearly that we must not stop importing this product, but at the same time they do not intend to have costs put up. This is just nonsense.
May I deal with the matter not from the point of view of constituency cases but by mentioning three major firms in 585 this country? I want to produce evidence from nationalised industries. The Government will not listen to ordinary industry, but perhaps they will listen to the views of some nationalised industries. The letter which was read out by my hon. Friend the Member for Peterborough was sent to me by the chief buyer of Richard Thomas and Baldwins suggesting that I should bring it to the attention of the Government. The chief buyers of two nationalised industries have referred specifically to this matter and have said that it is bound to increase their purchasing costs which at any time will be reflected in the cost to consumers.
Is this really what the Government are trying to do? If they will not listen to us, will they listen to the nationalised industries? Can we, therefore, clearly understand that if the Government are not willing to accept the Amendment there can be only two alternatives: either we stop importing—and these things are not made at home—or the costs go up? Which do the Government want?
§ Sir H. d'Avigdor-Goldsmid
We are frequently told here that hard cases make bad law. It is perfectly clear from our discussion this evening that bad law makes a great number of hard cases. It is a matter of regret, for which both sides of the Committee can share the blame, that we should have taken a decision in principle on this important matter without having had a chance of hearing these details. This is a case where we allowed our natural obedience to the laws of procedure to take precedence over considerations of common sense. I hope that next time we consider a matter of this sort
|Division No. 23.]||AYES||[9.38 p.m.|
|Agnew, Commander Sir Peter||Blaker, Peter||Cole, Norman|
|Alison, Michael (Barkston Ash)||Bossom, Hn. Clive||Cooke, Robert|
|Allason, James (Hemel Hempstead)||Bowen, Roderic (Cardigan)||Cooper, A. E.|
|Astor, John||Box, Donald||Cooper-Key, Sir Neill|
|Atkins, Humphrey||Braine, Bernard||Costain, A. P.|
|Awdry, Daniel||Brewis, John||Crawley, Aidan|
|Baker, W. H. K.||Brooke, Rt. Hn. Henry||Crowder, F. P.|
|Balniel, Lord||Brown, Sir Edward (Bath)||Cunningham, Sir Knox|
|Barlow, Sir John||Buchanan-Smith, Alick||Curran, Charles|
|Batsford, Brian||Buck, Antony||Dance, James|
|Beamish, Col. Sir Tufton||Burden, F. A.||Davies, Dr. Wyndham (Perry Barr)|
|Bennett, Sir Frederic (Torquay)||Campbell, Gordon||d'Avigdor-Goldsmid, Sir Henry|
|Bennett, Dr. Reginald (Gos & Fhm)||Carlisle, Mark||Dean, Paul|
|Berkeley, Humphry||Carr, Rt. Hn. Robert||Donaldson, Cmdr. C. E. M.|
|Berry, Hn. Anthony||Channon, H. P. G.||Doughty, Charles|
|Biffen, John||Chataway, Christopher||Drayson, G. B.|
|Bingham, R. M.||Chichester-Clark, R.||du Cann, Rt. Hn. Edward|
|Black, Sir Cyril||Clark, William (Nottingham, S.)||Emery, Peter|
§ we shall study the procedural Motion very closely and that next time we discuss a Finance Bill we shall discuss the Schedules before we take the decision in principle on the Clause itself.
§ The Minister without Portfolio referred to hon. Members in all parts of the Committee as having received appeals for help from the abrasive industries. It is curious that these appeals have been voiced only from one side of the Committee and that hon. Members opposite do not consider their constituents' legitimate claims in this matter. It therefore falls on the smaller side of the Committee to try and obtain justice for the individual case which is so hard hit. The case in logic made by my hon. Friend the Member for Reading (Mr. Peter Emery) was unanswerable, and it is perfectly clear that this is a very bad law indeed and that this particular example proves the folly of the whole business.
§ Mr. John Hall
The hour is getting late and we have a great deal to do. I therefore do not propose to detain the Committee for more than a moment. The case presented by my hon. Friend the Member for Wembley, South (Sir R. Russell), supported with such powerful speeches by my hon. Friend the Member for Shipley (Mr. Hirst) and my hon. Friend the Member for Reading (Mr. Peter Emery), has been absolutely unanswerable. Indeed, it has not been answered, and because it has not been answered I would advise my hon. and right hon. Friends to proceed to a Division.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 181, Noes 210.
|Fletcher-Cooke, Charles (Darwen)||Kerby, Capt. Henry||Percival, Ian|
|Fletcher-Cooke, Sir John (S'pton)||Kerr, Sir Hamilton (Cambridge)||Pike, Miss Mervyn|
|Forrest, George||Kershaw, Anthony||Pounder, Rafton|
|Fraser, Ian (Plymouth, Sutton)||Kilfedder, J. A.||Prior, J. M. L.|
|Galbraith, Hn. T. G. D.||King, E. M. (Dorset, S.)||Pym, Francis|
|Gammans, Lady||Lambton, Viscount||Quennell, Miss J. M.|
|Gardner, Edward||Lancaster, Col. C. G.||Ramsden, Rt. Hn. James|
|Gibson-Watt, David||Langford-Holt, Sir John||Rawlinson, Rt. Hn. Sir Peter|
|Giles, Rear-Admiral Morgan||Litchfield, Capt. John||Redmayne, Rt. Hn. Sir Martin|
|Glover, Sir Douglas||Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)||Rees-Davies, W. R.|
|Glyn, Sir Richard||Lloyd, Ian (P'tsm'th, Langstone)||Renton, Rt. Hn. Sir David|
|Goodhart, Philip||Longbottom, Charles||Ridsdale, Julian|
|Goodhew, Victor||Longden, Gilbert||Roberts, Sir Peter (Heeley)|
|Gower, Raymond||Loveys, Walter H.||Rodgers, Sir John (Sevenoaks)|
|Grant, Anthony||Lubbock, Eric||Roots, William|
|Griffiths, Peter (Smethwick)||Lucas-Tooth, Sir Hugh (Hendon, S.)||Royle, Anthony|
|Grimond, Rt. Hn. J.||McAdden, Sir Stephen||Russell, Sir Ronald|
|Gurden, Harold||MacArthur, Ian||Scott-Hopkins, James|
|Hall, John (Wycombe)||Mackenzie, A. R. (Ross & Cromarty)||Spearman, Sir Alexander|
|Hall-Davis, A. G. F.||Mackie, G. Y. (C'ness & S'land)||Stainton, Keith|
|Harrison, Col. Sir Harwood (Eye)||McNair-Wilson, P. M. E. D.||Taylor, Edward M. (G'gow, Cathcart)|
|Hawkins, Paul||Maginnis, John E.||Taylor, Frank (Moss Side)|
|Hay, John||Mathew, Robert||Temple, John M.|
|Heald, Rt. Hn. Sir Lionel||Maude, Angus, E. U.||Thorneycroft, Rt. Hn. Peter|
|Heath, Rt. Hn. Edward||Mawby, Ray||Thorpe, Jeremy|
|Higgins Terence L.||Maxwell-Hyslop, R. J.||Tiley, Arthur (Bradford W.)|
|Hiley, Joseph||Maydon, Lt.-Cmdr. S. L. C.||Turton, Rt. Hn. R. H|
|Hill, J. E. B. (S. Norfolk)||Meyer, Sir Anthony||Tweedsmuir, Lady|
|Hirst, Geoffrey||Mills, Peter (Torrington)||van Straubenzee, W. R.|
|Hobson, Rt. Hn. Sir John||Mills, Stratton (Belfast, N.)||Vickers, Dame Joan|
|Hogg, Rt. Hn Quintin||Miscampbell, Norman||Walder, David (High Peak)|
|Hooson, H. E.||Mitchell, David||Walker, Peter (Worcester)|
|Hordern, P. M.||Monro, Hector||Walker-Smith, Rt. Hn. Sir Derek|
|Hornsby-Smith, Rt. Hn. Dame P.||Morgan, W. G.||Ward, Dame Irene|
|Howard, Hn. G. R. (St. Ives)||Murton, Oscar||Weatherill, Bernard|
|Howe, R. E. G. (Bebington)||Nicholls, Sir Harmar||Whitelaw, William|
|Hunt, John (Bromley)||Noble, Rt. Hn. Michael||wise, A. R.|
|Hutchison, Michael Clark||Nugent, Rt. Hn. Sir Richard||Wolrige-Gordon, Patrick|
|Iremonger, T. L.||Onslow, Cranley||Woodhouse, Hn. Christopher|
|Irvine, Bryant Godman (Rye)||Osborn, John (Hallam)||Woodnutt, Mark|
|Jennings, J. C.||Page, John (Harrow, W.)||Younger, Hn. George|
|Johnston, Russell (Inverness)||Page, R. Graham (Crosby)|
|Kaberry, Sir Donald||Pearson, Sir Frank (Clitheroe)||TELLERS FOR THE AYES:|
|Mr. More and Mr. McLaren.|
|Abse, Leo||Delargy, Hugh||Hayman, F. H.|
|Albu, Austen||Dell, Edmund||Heffer, Eric S.|
|Allaun, Frank (Salford, E.)||Dempsey, James||Henderson, Rt. Hn. Arthur|
|Alldritt, W. H.||Diamond, John||Herbison, Rt. Hn. Margaret|
|Allen, Scholefield (Crewe)||Dodds, Norman||Hobden, D. H. (Brighton, K'town)|
|Armstrong, Ernest||Doig, Peter||Holman, Percy|
|Atkinson, Norman||Donnelly, Desmond||Horner, J.|
|Bacon, Miss Alice||Driberg, Tom||Houghton, Rt. Hn. Douglas|
|Bagier, Gordon A. T.||Dunn, James A.||Howarth, Harry (Wellingborough)|
|Barnett, Joel||Dunnett, Jack||Howarth, R. L. (Bolton, E.)|
|Baxter, William||Edwards, Rt. Hon. Ness (Caerphilly)||Howell, Denis (Small Heath)|
|Beaney, Alan||Edwards, Robert (Bilston)||Howie, W.|
|Bence, Cyril||English, Michael||Hoy, James H.|
|Bennett, J. (Glasgow, Bridgeton)||Ensor, David||Hughes, Emrys (S. Ayrshire)|
|Binns, John||Evans, Ioan (Birmingham, Yardley)||Hughes, Hector (Aberdeen, N.)|
|Blackburn, F.||Fernyhough, E.||Hunter, Adam (Dunfermline)|
|Blenkinsop, Arthur||Finch, Harold (Bedwellty)||Hunter, A. E. (Feltham)|
|Boardman, H.||Fitch, Alan (Wigan)||Irvine, A. J. (Edge Hill)|
|Bowden, Rt. Hn. H. W. (Leics S.W.)||Fletcher, Sir Eric (Islington, E.)||Irving, Sydney (Dartford)|
|Boyden, James||Fletcher, Ted (Darlington)||Jackson, Colin|
|Brown, Hugh D. (Glasgow, Provan)||Foot, Michael (Ebbw Vale)||Jeger, George (Goole)|
|Brown, R. W. (Shoreditch & Fbury)||Freeson, Reginald||Jones, Dan (Burnley)|
|Buchan, Norman (Renfrewshire, W.)||Galpern, Sir Myer||Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)|
|Buchanan, Richard||Garrett, W. E.||Jones, Idwal (Wrexham)|
|Butler, Mrs. Joyce (Wood Green)||Garrow, A.||Jones, T. W. (Merioneth)|
|Carmichael, Neil||Gourlay, Harry||Kelley, Richard|
|Coleman, Donald||Gregory, Arnold||Kenyon, Clifford|
|Corbet, Mrs. Freda||Grey, Charles||Kerr, Mrs. Anne (R'ter & Chatham)|
|Crawshaw, Richard||Griffiths, David (Rother Valley)||Kerr, Dr. David (W'worth, Central)|
|Cronin, John||Hale, Leslie||Leadbitter, Ted|
|Crossman, Rt. Hn. R. H. S.||Hamilton, James (Bothwell)||Lee, Miss Jennie (Cannock)|
|Cullen, Mrs. Alice||Hamling, William (Woolwich, W.)||Lever, Harold (Cheetham)|
|Dalyell, Tam||Harper, Joseph||Lever, L. M. (Ardwick)|
|Davies, G. Elfed (Rhondda, E.)||Harrison, Walter (Wakefield)||Lewis, Ron (Carlisle)|
|Davies, Ifor (Gower)||Hart, Mrs. Judith||Lomas, Kenneth|
|Davies, S. O. (Merthyr)||Hattersley, Ray||Loughlin, Charles|
|McBride, Neil||Orme, Stanley||Stress,Sir Barnett (Stoke-on-Trent,C.)|
|MacColl, James||Oswald, Thomas||Summerskill, Dr. Shirley|
|MacDermot, Niall||Owen, Will||Swain, Thomas|
|McGuire, Michael||Page, Derek (King's Lynn)||Swingler, Stephen|
|Mclnnes, James||Park, Trevor (Derbyshire, S.E.)||Symonds, J. B.|
|McLeavy, Frank||Pavitt, Laurence||Taverne, Dick|
|MacMillan, Malcolm||Perry, E. G.||Taylor, Bernard (Mansfield)|
|Mahon, Peter (Preston, S.)||Popplewell, Ernest||Thomas, George (Cardiff, W.)|
|Mahon, Simon (Bootle)||Probert, Arthur||Thomas, Iorwerth (Rhondda, W.)|
|Mallalieu, E. L. (Brigg)||Pursey, Cmdr. Harry||Thornton, Ernest|
|Mallalieu, J. P. W. (Huddersfield, E.)||Rankin, John||Tinn, James|
|Manuel, Archie||Redhead, Edward||Urwin, T. W.|
|Mapp, Charles||Reynolds, Gerald||Varley, Eric G.|
|Mayhew, Christopher||Rhodes, Geoffrey||Wainwright, Edwin|
|Mellish, Robert||Richard, Ivor||Walden, Brian (All Saints)|
|Mendelson, J. J.||Roberts, Albert (Normanton)||Walker, Harold (Doncaster)|
|Mikardo, Ian)||Robertson, John (Paisley)||Wallace, George|
|Millan, Bruce||Robinson, Rt. Hn. K. (St. Pancras, N.)||Watkins, Tudor|
|Miller, Dr. M. S.||Rogers, George (Kensington, N.)||Weitzman, David|
|Milne, Edward (Blyth)||Ross, Rt. Hn. William||Whitlock, William|
|Monslow, Walter||Rowland, Christopher||Wilkins, W. A.|
|Morris, Alfred (Wythenshawe)||Sheldon, Robert||Williams, Alan (Swansea, W.)|
|Morris, Charles (Openshaw)||Short, Rt. Hn. E. (N'castle-on-Tyne, C.)||Williams, Mrs. Shirley (Hitehin)|
|Morris, John (Aberavon)||Silkin, John (Deptford)||Williams, W. T. (Warrington)|
|Mulley, Rt. Hn. Frederick (SheffieldPk)||Silkin, S. C. (Camberwell, Dulwich)||Willis, George (Edinburgh, E.)|
|Murray, Albert||Silvcrman, Julius (Aston)||Wilson, William (Coventry, S.)|
|Neal, Harold||silverman, Sydney (Nelson)||Winterbottom, R. E.|
|Newens, Stan||Slater, Mrs. Harriet (Stoke, N.)||Woodburn, Rt. Hn. A.|
|Noel-Baker, Francis (Swindon)||Slater, Joseph (Sedgefield)||Woof, Robert|
|Noel-Baker, Rt. Hn. Philip (Derby, S.)||Small, William||Wyatt, Woodrow|
|Norwood, Christopher||Solomons, Henry|
|Oakes, Gordon||Spriggs, Leslie||TELLERS FOR THE NOES:|
|O'Malley, Brian||Stewart, Rt. Hn. Michael||Mr. Lawson and Mr. McCann.|
|Oram, Albert E. (E. Ham S.)||stones, William|
§ Mr. Scott-Hopkins
I beg to move Amendment No. 38, in page 14, line 6, at the end to insert:
28.38 (A) (14) Manganese sulphate. 28.40 (H) … Calcium hydrogen orthophosphate.
§ The Chairman
I think that it will be for the convenience of the Committee to discuss, with this Amendment, Amendment No. 39, in page 14, line 6, at the end to insert:
28.17 … … Potassium hydroxide (solid forms).
§ Amendment No. 41, in page 14, line 6, at the end to insert:
§ Amendment No. 42, in page 14, line 6, at the end to insert:
|28.38||…||…||Calcined magnesium sulphate.|
§ Amendment No. 43, in page 14, line 6, at the end to insert:
§ Amendment No. 44, in page 14, line 6, at the end to insert:
§ Amendment No. 45, in page 14, line 6, at the end to insert:
|28.40||…||…||Calcium hydrogen orthophosphate.|
§ Amendment No. 46, in page 14, line 6, at the end to insert:
Amendment No. 54, in page 14, line 8, at the end to insert:
Ammonium sulphate nitrate within 31.02.
I suggest, also, that the Government Amendment No. 55, in page 14, line 10, coloumn 1, at the end to insert:
Basic slag within 31.03.
be taken with this group.
§ Mr. Scott-Hopkins
Yes, Dr. King; I am obliged.
I intended to discuss Amendments Nos. 38 and 54, and I hope that my hon. Friend the Member for Shipley (Mr. Hirst), if he catches your eye, will advance the arguments in support of the Amendments standing in his name, which, as you have said, Dr. King, are related to mine.
These Amendments deal with essential trace minerals used to a large extent in the preparation of animal feedingstuffs and compounds fed to stock. The two trace substances referred to in Amendment No. 38 are vital minerals for this purpose. Manganese sulphate is particularly valuable in the feeding of poultry, and we have in this country only about 10 per cent. of our requirement of this substance for addition to feed compound.
About 2,000 tons of this mineral is imported, and it is largely used, by spraying, as a plant nutrient. It is essential to the compound industry. At the 591 moment a duty of 10 per cent. is paid, and the addition of the extra 15 per cent. means an addition of £10 or £12 per ton. When it comes down to the compound sold to the farmer the increase is between 4d. and 5d. a ton. This may be a small amount, but when it is taken with the other trace mineral, which is calcium hydrogen orthophosphate, or, for shortness, dicalcium phosphate, it comes to a considerable amount.
Dicalcium phosphate is used to a much larger extent and for exactly the same reason. It is vital to have it in the compounds used in the animal feeding trade by the fanning industry. A large quantity is imported. We produce here about 20,000 tons, but the remainder of the 60,000 tons of this mineral which is used is imported. It is a vital mineral if we are to get the right balance in our animal feedingstuffs. Modern science has moved so far ahead that this is one of the essential elements in a balanced diet for our livestock.
Earlier we heard both from hon. Members opposite and from my hon. Friends that one of the exceptions to the surcharge is for materials to service the expansion of production. We all know how anxious the Minister of Agriculture is to expand production. This is one of the vital compounds in feedingstuffs which will help to expand agricultural production. These two trace elements, dicalcium phosphate and manganese sulphate, are vital to the compound industry and to the compounds which farmers buy. The additional cost of manganese sulphate will be about 4d. or 5d. a ton, but the additional cost of the dicalcium phosphate will be about 5s. a ton. This extra cost will have to be borne by the agricultural industry.
There is no alternative source available. The surcharge will not help the Chancellor in his balance of payments difficulties—and we have always understood that that was the purpose of the surcharge—because the 40,000 tons of dicalcium phosphate and the 2,000 tons of manganese sulphate must be imported. All that the surcharge does is to impose an extra burden. This is a revenue-raising operation, and the cost will be passed directly on to agriculture. This is a particularly unfortunate action at the moment.
592 Manganese sulphate comes almost exclusively from our E.F.T.A. partners in Denmark. It must be remembered that 2,000 tons is a considerable amount to import. The surcharge on manganese sulphate is one of the causes of the difficulty with Denmark, and I have a feeling that the Government already realise that.
Earlier in the debate I understood from the Minister without Portfolio that waste products or by-products would be excluded from the surcharge. I am advised that dicalcium phosphate is a by-product, or waste product if hon. Members prefer, of the extraction of glue from bones. It is a waste product from that industrial process. Therefore, if that is so, these would have qualified for the exemption which the Government are adding to the Schedule in the Amendment we are discussing at the moment.
Amendment No. 54 refers particularly to ammonium sulphate nitrate, which has nothing whatever to do with the feeding-stuffs industry, as the Minister will realise. It has to do with the fertiliser industry and this has a particular bearing on the efficiency of the farming industry and the productivity of farming, because the use of proper fertilisers increases the productivity of the farm.
Once again, as we understand it, the Government are engaged in increasing productivity. I am sure that the hon. Gentleman will know that there is an overall shortage of nitrogenous material at the moment and there is no alternative to this particular chemical coming into this country, until the plant—which, I think, will cost £12 million and is being erected at the moment—goes into operation in about 1966. Between now and 1966 there will be no alternative supply of this ammonium sulphate nitrate, which is a vital chemical in the modern use of nitrogenous fertiliser.
We have moved on to such an extent now that fertilisers are highly concentrated. They are compounds and are of very high quality. In these highly concentrated fertilisers, it is vital to have ammonium sulphate nitrate. There is a general shortage of this material and there is no alternative source, as I have said. Once again, the same argument applies. By the imposition of this charge, the Government and the hon. and right hon. Gentlemen opposite are not going to halt the importation of this 593 material. It will continue to come in, regardless. What will happen is an increased charge and cost on the industry. [An HON. MEMBER: "A tariff."] Indeed, some kind of tariff. I must agree with my hon. Friend.
This will raise the cost of ammonium sulphate nitrate. At the moment it bears a duty, which I think is quite heavy, of £3 4s. a ton, and if this 15 per cent. surcharge is added to this there will be an increase of £2 9s. on the existing £3 4s. So the hon. Gentleman will see that with these three substances—the two trace elements and ammonium sulphate nitrate—which are used in fertilisers, he is adding quite considerably to the costs of the farming industry. I do not want to weary the Committee—
§ Mr. Scott-Hopkins
It is all very well for the hon. Gentleman to say "Hear, hear," but these are important matters, particularly to the farming community. One of the important factors and one of the astonishing things is the lack of speeches and the lack, one might almost say, of interest shown by hon. Members opposite in these details and these exemptions which we on this side of the Committee are trying to put forward for industry, agriculture and other interests. It is of great importance to the farmer, large or small, to the compounders, and to the fertiliser industry as well.
I understood from what the Minister of State said earlier, that we have now advanced from the position as outlined by his hon. Friend the Minister without Portfolio. We are now at the stage of not having to wait until April for a review, but are to have a review in the shortest possible period, of the various points we are making in this Committee—but not before the Report stage, if I understand the Minister correctly. I hope that, while he listens to the arguments we are putting forward, and if he is not able to accept them—though I hope he is—he will bear these matters in mind. I hope that they will be among the first to be included in the reviewed list, and I hope that this will take place before Christmas. Perhaps the hon. Gentleman can give an assurance that this earlier review will 594 take place before Christmas and that we shall have the results announced to the House before we rise for the Christmas Recess.
§ It being Ten o'clock, The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
§ Committee report Progress.