Clause 4.—(GOODS EXEMPTED FROM DUTY.)

HC Deb 07 December 1964 vol 703 cc1133-229

7.0 p.m.

Mr. Edward du Cann (Taunton)

I beg to move Amendment No. 4, in page 4, line 35, at the beginning to insert: (1) Duty under section 3 of this Act shall not be charged on goods which were exempted from duty under the Import Duties Act 1958 on 26th October 1964 or on goods so exempted at a subsequent date.

Mr. Speaker

I suggest that the House might find it convenient to extend the discussion to include Amendment No. 8, in line 35, at beginning insert: (1) Duty under section 3 of this Act shall not be charged on goods being raw materials used by manufacturing industry in the United Kingdom. And Amendment No. 9, in line 38, at end insert: Provided that duty shall not be chargeable on goods which are not available in the United Kingdom.

Mr. du Cann

It is particularly convenient that we should discuss these three Amendments together, Mr. Speaker, for they cover three broad categories of persons and companies who are affected by the previsions of Clause 4. When I say persons and companies I use the terms separately and deliberately, for the greater certainly includes the former and anything which is done and which affects the position of the great trading companies of Great Britain, particularly if it affects them in any way adversely, must have consequences directly bearing on the standard of living of persons employed in those industries, on their prospects of employment, on the whole economy structure and on the success which we all so ardently desire of the economy as a whole.

The three broad categories of persons and companies to which I refer are, first, those affected under the Import Duties Act, 1958, covered by Amendment No. 4; second, industry in general—Amendments Nos. 8 and 9. The third category is of companies and persons having special individual circumstances which, although not directly referred to in these Amendments, are none the less substantially covered by them, and these I should like to talk about first, and shortly.

They are those companies that are concerned with goods in transit from one place or another outside the United Kingdom to it, or to another country, maybe from short distances or from longer distances, and those companies which had entered into contracts before 26th October. I think I would be right in saying that the imposition of this surcharge, and its effect upon these two specially exceptional categories of companies, is quite unprecedented in our legal history, and we on this side find it very unsatisfactory, to say the least, that special exemptions have not been accepted for these two classes of persons or companies.

I remember that when the Committee discussed this matter I was somewhat chided by some of my hon. Friends—particularly by my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid)—because I deliberately refused to paint too black a picture of the consequences for these particular firms of the Government's hasty, unfair and precipitate action. On reflection, I am bound to think that the strictures of my hon. Friend the Member for Walsall, South, particularly and his colleagues, were right, and it is an unhappy matter that special exemption is not made for those companies. As the Liberal Party very properly pointed out, not only in the speech of the hon. Member for Bodmin (Mr. Bessell), but in the way it tabled an Amendment, it would be perfectly easy to find a method of granting exemption for people who are affected in this way. I repeat that, it is a sad matter that the Government are apparently unwilling to do so.

I turn now to Amendment No. 4. There are two types of exemptions from duty under the Act of 1958. I do not think there is any need to particularise them; one is, so to speak, a blanket exemption from duty for a period of time for various categories of goods, and the other method under the Act of granting exemption from duty relates to individual cases. I think I am right in saying, and I have checked the references with some care and I am sure that the Treasury Ministers present would be happy to confirm it—that this legislation was introduced with the good will and, indeed, the approval of the whole House, for it was thought—and, I believe, thought rightly—that to give exemption from duty to particular industries that wished to import raw materials or appartus that would facilitate, let us say, research, new development, modernisation—or any other word current in the fashionable jargon—would be wise and intelligent.

The sad thing is that the Finance Bill, as it is—and Act as it may shortly become—is apparently in direct conflict with the will of the House as expressed in the Import Duties Act, 1958. There is no logic for not exempting those categories of goods otherwise excluded under the 1958 Act from the incidence of the surcharge. If there is a defence for so doing, we shall be very interested to hear of it this evening, but I cannot imagine any way in which a reasonable and tolerable defence can be made.

It is true, as the hon. and learned Financial Secretary made plain to the Committee, that the Government have now raised certain exemptions which, of course, they failed to think of in the first place, and there are now limited exemptions, under the umbrella of the 1958 Act, in Schedule 2, which relate to articles for scientific research or articles that would be helpful to the blind. We welcome those two exceptions—there is also, of course, the question of aircraft, which was presupposed earlier—but when one looks with care at the detail of the Fourth Schedule to the 1958 Act it is plain that there are still a very large number of important categories of goods that are to be caught by this surcharge. I dare say that whoever is to reply for the Government will be good enough to list them or will, at any rate, have examined the list, and will certainly agree that the list is broad, long, large and important in the context of the national economy.

I feel obliged to call attention to a point that I have made before in these debates, and which I believe to be valid and of substance. There appears constantly to be a greater concentration on the part of the Labour Government on methods of disseminating wealth rather than concentration on seeking means for earning it and increasing it. The fact that there are as yet very few exemptions under the Import Duties Act, 1958, as affected by the surcharge is a precise example of that. Again, this action in not excluding those goods that are within the ambit of the 1958 Act is unprecedented and unfair.

Our discussion of the Schedule lasted for about 12 hours—a very long time—but I am sure the hon. Gentleman will agree that the discussion was valuable and useful. I hope he will think that it was also constructive—it was certainly intended to be constructive and helpful. But our discussion was somewhat inhibited, perhaps, by reason of the fact that it took place after we had discussed Clause 4, whereas now we are discussing, so to speak, Clause 4 and the Schedule together, which is, perhaps, a happier matter.

As I say, that discussion was long, and we on this side tried to put forward cases that we must still seriously insist merit full exemption from the surcharge, and it is to this end that Amendments No. 8 and 9 are directed. In that discussion, my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), and my hon. Friends the Members for Ilford, South (Mr. Cooper), Shipley (Mr. Hirst)—whom I am pleased to see in the Chamber—Southend, West (Mr. Chan-non), Reading (Mr. Peter Emery), Middleton and Prestwich (Sir J. Barlow) and many others, did extremely good work in drawing attention to the anomalies involved in Clause 4 and Schedule 1.

We discussed about 80 Amendments in all, and the Government, in their wisdom—or, I would say, at their pleasure—decided to accept about six of them. We are pleased to see on the Notice Paper a number of Amendments that give effect to some of the Government's undertakings to the Committee, and for that we are grateful. But the Government's own Amendments, both in Committee and on Report, cover no fewer than 22 tariff heads, and these facts—the great discussion, and the need of the Government to table this substantial number of Amendments to the Schedule—lead one to a certain number of clear conclusions.

First, it is right to say that there was from outside this House, and still is today, in so far as the Government have not met some of our objections in Committee, substantial anxiety on the part of industry about the whole of this Measure, and the way in which it has been framed. I hope that the Government are better aware of that now than some of us think was the case in the first place.

The second conclusion one is led to is that this arrangement under Clause 4 and the Schedule was hastily conceived and without proper thought. The third conclusion to which one comes is that the surcharge and Clause 4 and the Schedule are unfair in their incidence, of which I have given the House two specific examples. I am aware that the Chancellor very properly and clearly pointed out in the debate on the Budget that there was a situation in which there was impossibility of precision and that the Government are to some extent the prisoners of the arrangements they have made. That leads one to ask, if the Government found themselves in such a situation that they could not make definitions which were satisfactory, why did they in the first place introduce this surcharge? I say nothing about the manner of the introduction of it for to talk about that would take a very long time indeed. I hope that the Chancellor is now better seized of the difficulties which I believe he has created for himself.

I turn to our reasons for tabling Amendments Numbers 8 and 9. I have already made the point that we believe the drafting of Clause 4 and the First Schedule is defective. My hon. and right hon. Friends I listed a few moments ago indicated that certain consequences will follow from the imposition. The first, as my right hon. Friend the Member for Sutton Coldfield very properly pointed out, is that the most modern industries will be penalised to the greatest extent. Inevitably, as the Minister without Portfolio agreed, the tariff list of international standards is somewhat out of date, but that is no excuse for penalising the most modern industries which we want to encourage—not to mention the hard incidence that the surcharge will have on new industries which the last Government did so much to bring to development districts.

The second consequence which must inevitably follow is that prices will be increased. That is why we have suggested that the surcharge should not be imposed on raw materials used in manufacturing industry or on goods which are not available in the United Kingdom. Costs of production will rise following imposition of the surcharge as surely as the Chancellor is sitting opposite and I am standing here, with all that that implies not only at home but for the export effort. We are told in thundering speeches by the Chancellor, and even more thundering speeches by the President of the Board of Trade, that the need is for exports and that the Government will take the initiative to get them. Good luck to them; we shall support them, particularly when they are implementing policies which we introduced, but the right hand does not seem to know what the left hand is doing.

A great deal can be said on Third Reading about rebate, but again, as was indicated in our earlier debates, that cannot have much effect for practical purposes and it in no way mitigates the criticism that the Government will make exporting more difficult by the imposition of this surcharge. In many cases this applies to every category I have mentioned, whether in hardship cases or not. Imports will not be saved, either.

This will mean that the surcharge will have failed in its desired effect in these categories. Many of us in past debates were astonished at the attitude of the Minister without Portfolio, who tried to pretend that the imports we were discussing all came into the luxury category. That is far from the case. I do not think I misrepresent him for I distinctly remember him speaking about luxuries. These are the raw materials of industry—not luxuries—without which industry cannot survive, cannot thrive and cannot prosper.

The last consequence is that the Government statement in the definitive White Paper, which no doubt was supposed to indicate the whole line of Government policy in the future on these matters by paragraph 6, is completely thrown over. It is worth quoting it again to the House: 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 and the disturbing increase in manufactured goods … That is precisely the distinction which the Chancellor is not drawing in this Measure. We now know that the production target of 5 per cent. or 6 per cent., as it originally was, is thrown overboard and the 4 per cent. is thrown overboard. The Government are throwing overboard their own declared statements of policy and a very unhappy matter that is. Because we thought it appropriate to follow the line of argument which the chancellor and his colleagues announced, we have tabled these Amendments in this particular form.

7.15 p.m.

I pass to the Government's own criteria. I quote again what the Minister without Portfolio said and what was subsequently repeated by the Minister of State, Board of Trade and the Financial Secretary, which served to make the criteria entirely clear. The Minister specified certain conditions, as reported in c. 474 of the OFFICIAL REPORT. He said: Those conditions are, first, that the items represent anomalies in the sense that they are either materials which have 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."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 474–5]. These criteria, we understand, are complementary. This is the Government's definition of the criteria which has been repeated by three Ministers. Many of the Amendments we put forward to the Schedule in Committee, and certainly those we put forward now on Report, would satisfy all those criteria. Therefore, one is entitled to ask the Government why the Amendment put forward in Committee were not accepted and whether they will not now, in satisfaction of their own criteria, accept the Amendments we have on the Notice Paper today. The Government's criteria may or may not appear sensible in theory. That is a matter of judgment, but in practice, as one easily illustrate, they are the most utter nonsense and are not capable of practical definition.

That leads one to suppose that the criteria if not Clause 4 and the Schedule have been drafted by persons wholly unversed in the practicalities of the business world. It would be easy to give a large number of examples of what mean, but I shall not weary the House by doing so. What I say is fact which can be proved by examination. Why is cement excluded? Why do we have the Government Amendments Nos. 13 and 14 on the Notice Paper? Why do those Amendments not include myrcene and borax which have every much right to be excluded from the surcharge as the items listed in those Amendments?

The Financial Secretary said—and I gave him credit for it—that this was an attempt to secure justice. With his legal experience he knows a great deal about justice. I say that in a fully complimentary sense. But justice is precisely what the Clause is not achieving and still less what the Schedule will achieve. It is perfectly clear from all this sad, unhappy story that there must be a review of the situation soon. The Government have indicated in our earlier debates that there would be a review in due course.

This point has been acknowledged by the Government; I will not quote the references. Time and again the Minister of State, in the admirable replies which he gave, and also the Financial Secretary—I suggest defending the indefensible—said there would be a review in the spring. I am bound to ask, on behalf of my right hon. and hon. Friends—indeed, on behalf of industry and commerce in Great Britain as a whole—why the delay? Why had not the matter been properly thought out in the first place? Why were we presented with a Measure of this sort which has created great anxiety and uncertainty? To hear the Minister without Portfolio pleading that the Government did not have time to consider these things was to listen to the most arrant nonsense. Why should not Members of the Government work at week-ends? Why not have more Amendments on the Notice Paper? Why do not we have more of these points acknowledged in the form of Amendments?

A particular point which hon. Members on this side of the House find irksome is this. Very well, so there is to be this review. The Chancellor said that he would do what he could to rectify the anomalies, and, of course, we accept what he says. We shall look forward to that future desirable state of affairs, whatever the position now. But we do not think it good enough to ask the House to pass a Measure which gives the Government great discretion, in due course, as to what items they will exempt from taxes and what items they will not. The proper place to have these things in connection with bills and draft legislation is before the House at the time, not in the mind of the Government at a later stage.

We know how unpopular this Measure has been abroad, and there is no need to go over all that again. The Chancellor has created great difficulties for himself over the way in which this matter has been handled. Observers abroad can see quite as plainly as can hon. Members on this side of the House, how unsatisfactory is this list. Had the right hon. Gentleman got it into better shape and accepted Amendments, I daresay that his task abroad would have been substantially eased. The position was indicated the other day in the Sunday newspapers, where it was stated that the incidence of the surcharge we have imposed has proved a disincentive to people abroad to buy from the United Kingdom. This is one of the most serious criticisms of all.

Whatever may be the situation abroad, industry at home is in a state of frustrated anxiety. The home economy will not grow and neither will exports increase in a climate of uncertainty. This Clause and its attendant Schedule are undoubtedly bad law, I think that the Schedule is the worst part. The other day I had the pleasure—the amused pleasure in retrospect—of re-reading an article in Time magazine recording an interview with the Prime Minister, who at that time was the leader of the Opposition. I quote from what he said. The Labour Party is like a vehicle. If you drive at great speed all the people in it are either so exhilarated or so sick that you have no problem"— whoever "you" may be— When you stop they all get out and argue about which way to go. I do not know whether that is true. I can only say that we on this side of the House have the impression that it is a very sad matter if the country has been driven hard in this way in order to preserve unity within the Labour Party. I hope—[HON. MEMBERS: "You are the sick ones."] Yes. it is true. We are the sick ones; hon. Gentlemen opposite are entirely right. We are sick for the country, we are sick for British industry and the way this matter has been bungled. I hope that hon. Members opposite will support the Amendments. We believe that they give an opportunity to the Chancellor and to the Government to introduce a note of sanity into what otherwise is, and has been from the inception, a thoroughly unhappy story.

Mr. Geoffrey Hirst (Shipley)

We are all very glad to see the Chancellor of the Exchequer in the Chamber. We know that he had other business to attend to during the Committee stage, and I should think that it was a very hard sell. He will be aware that we spent a very long time in Committee discussing these matters, largely because hon. and right hon. Gentlemen opposite, however pleasant they were, arrived in the Chamber with about 40 briefs and about 33 of them were marked "reject".

I sincerely hope that now the Chancellor is present—the hon. Gentlemen could not do very much about the matter during the Committee stage—he will whisper gently occasionally—I shall take no exception to a bit of chatter on the benches opposite—that perhaps possibly one or two Amendments may be accepted.

I should like to say, "Thank you" to my right hon. Friend the Member for Taunton (Mr. du Cann), who gave us a brilliant précis of the many hours of debate that we had. It could not have been expressed more firmly and more accurately. I sat through most of those hours of debate and I think it a great pity that we are in this position. I support what was said about the time factor. In any case, apart from the weekend work—I suppose that some members of the Government have some-thing to do at weekends—there was no need for the time factor.

I say again that the time factor is a matter for the Government. It is absurd that hon. Members should be asked to consider the Report stage of the Bill so quickly after the Committee stage, without there having been the proper time for examination, and when the Government have published a Schedule which I am quite certain was a sort of hit-and-miss affair on the part of the Customs and Excise to rescue the Government from the consequences of a ridiculous political decision which had been taken before consultation.

We are faced with the necessity of having to put down omnibus Amendments to try to get some sense into Clause 4 and the Schedule. I support the Amendments, which are not quite the same, but they go over a wide field. I am deeply concerned—I have a considerable constituency interest in the matter—that duty-free machinery, made duty-free for the specific purpose—one had to satisfy the Board of Trade that it could not be procured elsewhere and had a certain technical advantage over any other British manufactured machinery—will bear the 15 per cent. surcharge.

The wool textile business, which is a constituency interest of mine, is a highly competitive industry and because of that, Governments have decided to retain this freedom from duty on the basis of the industry's tremendous record of efficiency. Now there is to be the 15 per cent. surcharge on something which Governments have always recognised as a special case. Other hon. Members will argue the merits of other cases.

I have argued an enormous number of cases during the years in which I have had the privilege of being a Member of this House. I have sat, as a member of committees, with Ministers who have discussed this matter, so I feel very keenly over the fact that this sort of quite irrational approach should have been made in respect of something fundamental and vital to the competitive efficiency of British industry—something which is far more important than saving the Government's face.

The principle proposed was not accepted by anyone on this side of the House during the Committee stage. It was a principle which, from our point of view, was the Government's principle. I do not understand it and I cannot apply it. I can apply the principle contained in the Amendments before us now, that drugs, or chemicals or whatever may be the raw materials of industry, if they are essential as the Amendments show, shall be exempted.

I have argued that in respect of dozens of fundamental chemicals which are tremendously important and cannot be regarded as luxury goods. If they are not obtainable in this country, and would have to be imported, to impose the duty on them would defeat the economic purpose of the Government and add to the costs of industry. It is shameful that these arguments should have to be placed before the Government again. The only excuse which may be offered—because obviously they are aware of these arguments—is that hon. and right hon. Members opposite were in an unhappy position.

They had to come to the Committee with those marked briefs and they had no senior Minister, neither the Chancellor of the Exchequer nor the President of the Board of Trade, as the heads of their respective Departments, to consult. Therefore, the Committee stage was very prolonged, though I am glad to say that it was good-natured. It was very tiresome and irritating. It did nothing to improve confidence abroad, because the major discussion of these things never does. We are now faced again with the argument that there has been no time, although there has been plenty of time.

7.30 p.m.

What have the Government been doing since last Thursday night? Have they been doing anything? I cannot see that they have been doing anything. There is no answer to our arguments on the Notice Paper, except one very futile Amendment, which I shall deal with when I reach it. The Government have done nothing. But they expect good will from this side of the House. We are being astonishingly gracious. In view of what we had to bear in debates on Finance Bills when we were the Government, not only from the Labour Opposition but sometimes from our own supporters, I cannot help feeling that we are being extraordinarily gracious. I hope that our attitude will not be misunderstood. We are being gracious as a matter of courtesy. We have very strong feelings, but we do not think that it is necessary enormously to exaggerate or overlard with superlatives an argument which is so painfully clear.

That is what is behind these Amendments. I support the argument advanced by my right hon. Friend the Member for Taunton. I hope that we shall not get tonight the "blank, blank, blank" which we had in Committee. It was wearisome. It did not pay proper respect to the country's needs, nor did it pay much tribute to our sense of managing our economy.

Sir Frederic Bennett (Torquay)

In Committee I was, doubtless properly, ruled out of order for referring to matters which fall more properly to be considered in the discussion on Amendments Nos. 8 and 9. When we discussed the timing of the surcharge, I said that I hoped that I should have an opportunity to draw certain matters to the attention of the House. My right hon. Friend the Member for Taunton (Mr. du cann) expressed in a wide and general sense feelings which all of us on this side of the House possess strongly, but which, so far, have not had even the start of an answer from the Government.

I shall content myself by telling the House of one specific example out of the many which have been drawn to my attention. I must say that, when the 15 per cent. surcharge was introduced and this matter about which I shall tell the House was drawn to my attention, I immediately placed it before the responsible Ministers. Although this was several weeks ago, so far I have received only a formal printed card to what is an absolutely constructive argument in favour of helping a firm which is interested only in trying to prevent a disastrous weakening of its export trade. I shall not give the name of the firm tonight, because, on the whole, mentioning firms' names is not advisable.

There is in my constituency, as hon. Members on both sides of the House may know full well, a firm which has a very good record indeed in exporting some extremely complicated electrical and electronic precision equipment. For this purpose the firm needs about three items of semi-manufactured components which are not available in this country. There is no way in which the firm can obtain these items in this country. The firm has full order books at present.

The firm supplies this equipment at a competitive price to various parts of the world in very close rivalry with a comparable item from Sweden. The firm only just managed to obtain the order because it quoted 6d. per item cheaper than its Swedish equivalent. As has been pointed out to the Government, the net result of the surcharge will be to raise the price of this firm's equipment by 8d. per item.

Although this fact has been brought to the Government's notice and although there is no question of the firm trying to import any form of luxury or consumer article, these three items being imported by the firm only to enable it to export valuable equipment, nothing has been done by the Government to meet this case.

I suggest that this is an unanswerable case. It is a purely technical one. It is about time that right hon. and hon. Members opposite started to reply in specific terms, because if I happen to be knowledgeable about this one item in a notably non-industrial area my right hon. and hon. Friends must know about many more comparable items.

I have raised this matter tonight not because I believe that the collapse or weakening of the export orders of one firm in a notably non-industrial constituency will make that much difference to our balance of payments, but because I simply cannot understand the attitude of the Government on a matter which surely does not permit of any argument. As these items are imported only to improve our export position, what is the sense in taking steps to weaken our export position without advancing any argument? I hope that the Government will not meet my argument with the counter argument that they have given an exports rebate. In the figures I have quoted the full effect of the rebate has been taken into account.

I hope that in answer to this purely practical example I have quoted, and in answer to similar ones which no doubt my hon. Friend's can quote, Ministers will be rather more constructive tonight. I cannot believe that they will not take notice of serious points which have been brought to their attention. It cannot be in their interest to be just b-minded on a subject like this. They should try to make their surcharge work. I dislike the surcharge altogether, but, if we are to have it, let us at least try to have it working perfectly. I hope that the speeches which follow my own and the vote which I hope will follow them, unless the Government give way, will result in some sense being written into this part of the Bill for the first time.

Sir Douglas Glover (Ormskirk)

I was astonished and appalled, on picking up the Notice Paper in the Vote Office, to notice how few Amendments have been tabled by the Government following our debates in Committee. I have a good deal of sympathy with the Minister of State, Board of Trade, because he was kept up until a very late hour in Committee. We sympathise with him, because we understood that he was stalling when trying to reply to many of our arguments.

If the Chancellor of the Exchequer has studied the debates in Committee, he will realise that the case for the exemption of chemicals, pharmaceuticals and wool was made so cogently that it is impossible to understand why he has not tabled on Report Amendments accepting our arguments. Our arguments were not advanced merely for the purpose of debating. They were advanced sincerely and with vigour and determination because we were trying to protect the fabric and balance of British industry.

We pointed out in the debates on item after item that the Chancellor's decision will be prejudicial to our export performance. It was shown time and time again that it would be impossible to isolate the raw materials when pharmaceutical products went for export and therefore they could not get the drawback. The export performance will be reduced rather than increased.

It is wise to reflect on why we are debating this Clause at all. The Clause is designed to reduce imports of things which we can produce or are producing. It is designed to reduce the import burden. In this I go a long way with the Chancellor of the Exchequer. It is shown, not with evenly balanced argument but almost overwhelmingly, that what is being done will prejudice our export trade. I know that the Chancellor has been busy, but, if he had had time to study the debates which took place in Committee, he would have tabled many more Amendments.

In our debates in Committee the Minister of State kept saying that there would be a review at an early stage. This is a bad way of legislating. If these things are wrong and if they are not in the interests of Britain, they should not be allowed to go into an Act of Parliament if they are to be removed afterwards. The Chancellor ought to look at these items. If he had done so, I am sure that he would have accepted many of the views expressed on this side of the Committee last week. If the Chancellor hardly moves himself at all on any of these vital matters, I am sure that my hon. Friends unitedly will go into the Lobby tonight to show how disastrous we think his present policy is.

Mr. Humphrey Atkins (Merton and Morden)

Like my hon. Friend the Member for Shipley (Mr. Hirst), I want to speak briefly about Amendment No. 4 with particular reference to machinery.

As the Financial Secretary may remember, I addresed myself to this point during the Committee stage and urged him to grant exemptions from this surcharge to items of machinery which are or would have been exempted from duty under the Import Duties Act. In his reply he said something that astonished me. He said: To apply a non-availability test only to these goods … would be indefensible."— [OFFICIAL REPORT, 1st November, 1964; Vol.703, c. 399.] I should have thought that it was easy to defend. When considering whether to charge duty under the Import Duties Act, 1958, the Government have applied this very test.

The avowed object of the Government in introducing the surcharge is surely to discourage people, be they manufacturers or consumers, from importing articles into the country which are not really needed. In the case of machinery, one can only qualify for exemption from duty if one can show that that machinery has some particular quality which is not obtainable in this country and that if it is imported and used in a factory one can do a particular job more efficiently than one could do it with the comparable British machinery. Otherwise one does not qualify for exemption under the 1958 Act.

It seems to me, as several of my hon. Friends have said, quite absurd for the Government, on the one hand, to say, "You must increase your efficiency, we want you to put in the most efficient machinery you can find and export as much as you can", and, on the other hand, to say, "We admit that this piece of machinery is essential to you and, therefore, we will not charge duty in that way. Nevertheless you must pay this surcharge." There can be no question of cancelling machinery for which orders are already placed, and so the machinery will come here anyway. The only possible effect is to increase the cost of production not only for home consumption but also for export.

Although one can claim drawback from the surcharge in certain circumstances, one can not claim drawback on the surcharge when it is part of the general production cost, which one has to meet because of the increased cost of machinery which one is importing. In the case of machinery which appears in the Fourth Schedule to the Import Duties Act, this surcharge is quite indefensible. It is destroying the avowed purpose of the Government. I hope the Government will think again and will accept at least one of these Amendments.

Mr. James Scott-Hopkins (Cornwall, North)

I support my right hon. Friend the Member for Taunton (Mr. du Cann) in the Amendment that he moved. I am particularly interested in Amendments Nos. 8 and 9 concerning raw materials and goods which are not available in the United Kingdom, with particular reference to agriculture and horticulture.

In Committee we had a long and exhaustive discussion of the various agricultural items which are not produced in this country, the essential trace minerals, items affecting the fertiliser industry as well as those affecting horticulture such as the rose and mushroom spawn. The case was extremely convincingly made out in Committee. It also seemed to me that right hon. Members opposite accepted the rightness of our case. Indeed, it seemed to me that the Minister without Portfolio accepted that we were correct in moving the Amendments relating to horticulture, that they were raw materials, and he conceded that point in columns 487 and 488 of the OFFICIAL REPORT of 2nd December.

7.45 p.m.

In exactly the same way the Minister of State, Board of Trade accepted arguments concerning the insertion of trace minerals. He accepted the suggestion that, as feedingstuffs are exempted from the impost, it is difficult to differentiate and to say that the trace elements should not also be exempted. He admitted also that they had caused him great difficulty. Reference to these matters is to be found in column 598 of the OFFICIAL REPORT of the same date. It seems that the Government have accepted that these items fulfil the criteria and that, therefore, the Amendment relating to raw materials which covers these items should be accepted.

I am in some doubt as to what the exact position is at the moment. My right hon. Friend, when moving the Amendment, said that he thought there would not be a review until the spring. But, as I understand it, we got the Government to move one stage further than that and say that there would be a special review before the spring review by the Chancellor into the working of this Bill. I understood from the Minister of State, Board of Trade that there would be a special review of those items which seem to fulfil the criteria but, as the Minister without Portfolio said, there had not been time for the Government to consider them properly. I thought I saw the Chancellor of the Exchequer shaking his head. Is there not going to be a special review? Does the Minister of State wish to clarify the point?

The Minister of State, Board of Trade (Mr. Edward Redhead)

I am sure the hon. Gentleman would not wish to misrepresent what I had tried to convey. I referred to my right hon. Friend's earlier statement in the Second Reading debate, that when anomalies were brought to his attention and when he had no doubt that there were anomalies, they would receive his consideration. It was those to which I referred. I said that at any time when an established case could be made out that there was an anomaly, it could be dealt with by invoking the provisions of Clause 3(9). I said repeatedly with regard to the others that these matters would be considered when we came to reconsider the coverage of the import surcharge.

Mr. Scott-Hopkins

I am obliged to the hon. Gentleman for having made the position clear. I understand that the items which are of particular concern to agriculture and horticulture fall into the category of items which cause anomalies. I am sure that my hon. Friends will put forward other examples.

As we have seen from HANSARD, the hon. Gentleman has accepted the fact that there are anomalies, since he mentioned that they would be included in the review of anomalies. I am glad that he has cleared up the point. It seems to me that unless the Chief Secretary is prepared to accept Amendments Nos. 8 and 9, the horticultural and agricultural industries will suffer by the incidence of this 15 per cent., surcharge. The raw materials of these industries will be charged. Trace elements will be charged. There will be an extra cost to the industry. The fertiliser industry will have to bear an extra charge as well, and so, indeed, will the horticultural industry unless the Government are prepared to accept Amendment No. 8.

It is the raw material of the grower which will be taxed under this impost unless the Government are prepared to exempt the raw materials which cause the anomaly. Mushrooms come into this country tax-free whereas the spawn does not. There are other examples. If the Government stand firm and do not accept the Amendment this will be an additional cost on the industry, and, heaven knows, agriculture and horticulture are suffering enough increased costs and they are ill-able to suffer an additional cost under the 15 per cent. surcharge.

I hope that when he replies to the debate the Chief Secretary to the Treasury will be able to accept Amendments Nos. 8 and 9. If not, I hope that there will be an early review of the anomalies which are being created for horticulturists and agriculturists. The Government accepted in Committee that there were anomalies. The present provisions are greatly to be deplored. Unless the Government are prepared to accept that raw materials must not be taxed, the agricultural and horticultural industries will suffer grievously.

Mr. Patrick Wolrige-Gordon (Aberdeenshire, East)

I should like to support my hon. Friends in their Amendments, but from an angle which has not yet been mentioned in the debate and that is the question of unemployment, particularly in the more distant areas and in the development districts. In any event, I find it difficult to understand how a surcharge on essential raw materials and goods which are not available in this country can affect our balance of payments favourably.

It seems to me that if firms are placed in a position where, suddenly, a 15 per cent. surcharge is levied on their essential raw materials, they will have one of two very unpleasant courses of action open to them. Either they will have to stop their importing and, therefore, the whole level of their production in so far as it is affected by those imports, which is to a very large extent in some firms, or they will have to slow down their imports in the hope of better days to come and therefore slow down their whole production programme. They cannot do otherwise.

My constituency is in a development area and there are firms in it, as I am sure there are in many parts of the country, which are now faced with a total cessation of their activities at the very time when we have begun to break through the problem of unemployment in the development areas, particularly in the north of Scotland. This seems to me very hard indeed.

I still do not see what else these firms can do. I hope that we shall have some advice for them from the Chief Secretary to the Treasury when he replies. Their goods have to be carried great distances and for that reason their costs are high. Now, when the country, in a paralysed condition, has elected a Labour Government, these firms have to face this surcharge. Add to this our difficulties with our trading partners abroad and we have a barrier which the export incentive provides no chance of surmounting. I hope, therefore, that the Government will accept the Amendments.

The Chief Secretary to the Treasury (Mr. John Diamond)

The hon. Member has asked me to give some information when I reply. I should like to do so very much. The hon. Member has made a serious charge. Could he give some indication of the nature of the business and how it comes about that a 15 per cent. surcharge will close the whole of his constituents' business in one form or another?

Mr. Wolrige-Gordon

I do not think that I should discuss names across the Floor of the House. I have particularly in mind two American-owned companies. They deal in machine-tools and in the gear industry.

Mr. Norman Cole (Bedfordshire, South)

My hon. Friend the Member for Shipley (Mr. Hirst) said that practically all of us on this side of the House felt strongly about some of the workings of the import levy. I should like to add that a great many industrialists also feel very strongly about the way in which the levy is working out.

I must say in all courtesy that an example I have under Amendment No. 4 has only come to my notice in the last few days and, therefore, there has been no opportunity to obtain the Government's reaction to it. The Amendment deals with articles which were exempted from duty under the Import Duties Act, 1958. I want to emphasise that there can never be justice without an element of flexibility. It is impossible to have the former without the latter, and this Clause in the Bill is a case of endeavouring to obtain the justice of regulation without the mercy of flexibility.

The case I have in mind is that of a machine for use by a firm in my constituency which is not available to the firm in this country. It is used in connection with the manufacture of paper board which is a vital part of industry here. As long ago as 4th August of this year, because the machine is not available in this country, it was given an import-free licence by the Treasury.

I now come to the real rub. The machine arrived in this country on 12th October, 15 days before the operation of the order imposing the 15 per cent. levy. My constituents say that owing to clerical queries raised by Customs and Excise concerning supplier documents the machine was not cleared until 27th October. I ask the House to note the date. I have also a letter from H.M. Customs and Excise. I am sure that that Department acted entirely within its rights and within the regulations. This is not the point of my plea. My point is that a regulation is not worth its salt unless there is authority to waive it when it is unjust in its application.

Customs and Excise said that the machine was not "presented", which I imagine is a technical term, until 27th October and, therefore, it is liable to the temporary charge. There may not always be machines which come into the country on the actual climatic day of application of a regulation, but this machine was "presented" on 27th October, the very day when the surcharge came into force. As a result there is a 15 per cent. surcharge on something costing over £10,000, which is not exactly a minimal amount.

Amendment No. 4 contains the words: … or on goods so exempted at a subsequent date". If the Government, through Customs and Excise, are not prepared to continue an exemption which seemed fair and good to the Government on 4th August when that something is presented on the actual operative date, what likelihood is there, unless there is a change of heart in the Government, that goods will be exempted under the 1958 Act at a date subsequent to 27th October.

I should like to say a few words, also, about what could possibly have been in the Government's mind when they evolved this 15 per cent. levy. I say, taking Amendments Nos. 8 and 9 together, that if the idea of the 15 per cent. levy was to limit the amount of imports coming into the country, that is clear and understood, but it is to be presumed that it was not intended also, at the same time, to limit exports accordingly. The idea was that exports should remain at least at the previous level and preferably should increase and that imports should be lessened.

8.0 p.m.

Amendment No. 8 would provide that Duty under section 3 of this Act shall not be charged on goods being raw materials used by manufacturing industry in the United Kingdom". How does the opposite of this, that is, the Government's view as expressed throughout so far, fit in with the definition which, in all sincerity, I have tried to evolve for what they have done? They are trying to limit imports and encourage exports, and they have given an earnest of this by the 1½ per cent. rebate for exports which, I understand, is as much as they are able to do under present international arrangements.

The term "raw material" is capable of definition in the Bill. Whether a raw material be concrete or the sort of things I spoke about in Committee, the point is capable of definition by a fairly watertight form of words. Such a definition would help the Government in their case and they could, by including such raw materials in the exemption Schedule, assist their whole purpose.

Similar considerations apply to Amendment No. 9. Again, the mind boggles to try to understand the Government's purpose in this matter. Are they trying to solve one major problem by creating half a dozen others? Are they trying to solve the import-export problem—good luck to them if they are—while at the same time leaving a train of repercussions which will cry out for attention? We were told many times in Committee that non-availability in this country was not a relevant criterion for exemption but, in an operation of this kind which everyone admits is an emergency and which the Government themselves say is temporary, the whole purpose being to reduce the amount of imports, why should not the fact that materials cannot be obtained anywhere in this country be a factor to be taken into account? If we were to pursue this to its logical conclusion, the whole of any industry which depended upon raw materials not available in this country would grind to a halt. I am trying to find some pattern in the Government's policy for the surcharge and, with all courtesy, I must say that I find none at all.

I suspect that what will happen—in view of what has happened up to now, I hope that it does—is that gradually every fortnight or every month, more and more goods will be exempted under Clause 3(9) as the Government find anomaly after anomaly or realise that they are cutting their own throat by insisting on the 15th per cent. surcharge. As my hon. Friend the Member for Ormskirk (Sir D. Glover) said, this is no way to draft legislation. I do not expect that the Government will accept any of these three Amendments tonight, but I am sure that, when the record comes to be read in two or three years, the result of this operation, an operation which could have been so much more beneficial and more efficient, will be seen to have been disastrous.

There is a good deal of sympathy in the country for the Government's broad intention, but it is being rapidly exhausted by the anomalous way in which items have been excluded. I despair of seeing anything better now. I do not think that it will work. The Government will have given themselves a lot of trouble in the next few months and they will miss their target. These things must be said and put on record and, at the appropriate time, we may have good cause to return to them.

Mr. Cyril Bence (Dunbartonshire, East)

I apologise for intervening, but, as an engineer, I resent some of the gross exaggerations which have come from the benches opposite. If the Opposition think that they have a good case in some of their arguments, why exaggerate? I have never heard such nonsense as was talked by the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon). The idea that the putting of a 15 per cent. surcharge on a machine tool of fine quality and high productive capacity will stop anyone importing it and will smash the industry is too nonsensical to be believed by anyone.

Mr. Wolrige-Gordon rose—

Mr. Bence

No, I shall not give way to the hon. Gentleman. He would not give way to me in Committee on the Bill last week.

Mr. F. A. Burden (Gillingham)

Childish.

Mr. Bence

Any modern manufacturer in this country is looking for a machine which will give him the greatest possible capacity. He is looking for quick delivery of a machine which is ahead of anything used by other manufacturers in the same business. If he can find such a machine, whether from Sweden, Switzerland, the United States or Britain, he will buy it. He will be right to buy it, wherever it comes from.

The hon. Member for Aberdeenshire, East talked about an industry in East Aberdeen which manufactures gears. No gear manufacturer in Britain buys his steel from abroad. He buys it from Sheffield, because the finest steels for gears, the best tensile steels and carbon steels, are made in Sheffield, and there is no need to go abroad for them. The hon. Gentleman is talking nonsense when he says that that factory in Peterhead which makes gears or cutting tools has to go abroad for its raw material and pay 15 per cent.

The hon. Member for Bedfordshire, South (Mr. Cole) spoke of a paper manufacturer who bought machine tools for the making of paper.

Mr. Cole

A machine.

Mr. Bence

A machine—that is a machine tool. A machine is a machine tool for the making of paper. The buyer is not likely to be concerned about a 15 per cent. surcharge on a very high capacity machine for his purpose. He wants to get a very high rate of production, and, although this machine cannot be obtained in this country—

Mr. Cole

I am sorry to interrupt the hon. Gentleman, but I must point out that I did not say anything about the 15 per cent. surcharge. I spoke about the justice of the date.

Mr. Bence

I am pointing out that the 15 per cent. surcharge, if the machine is so advanced over anything else, is no deterrent to a buyer who wants to increase his productive capacity.

Mr. Peter Emery (Reading)

Then why have the surcharge?

Mr. Bence

Because it is far better in this instance to have a blanket surcharge right across than try to discriminate among all sorts of products and machines.

The right hon. Member for Taunton (Mr. du Cann) said that the surcharge on raw materials had the worst effect on the most modern industries. Why? The most modern industries in this country are those which make the most out of their raw materials to the best economic advantage. The profitability from the raw material is so great that the cost of the raw material is nowhere near the biggest item in the resulting product. There is an enormous increase in value from the raw material to the finished product.

Mr. du Cann

If the hon. Gentleman's argument is true, imports will not be stopped, so the surcharge will have failed of its purpose. But will he look back at the discussions we had in Committee and read the arguments advanced by my right hon. and hon. Friends, particularly my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), which completely destroyed the case which he is now advancing?

Mr. Bence

I remember the argument put by the right hon. Member for Sutton Coldfield. There is always the assumption that the British manufacturer, especially in the highly technical industries, is incompetent to absorb the 15 per cent. In some cases this may be true. It may be true in some of our backward and out-of-date industries, but it is not true in the most modern industries which have highly advanced technical processes.

It is in those industries where the basic cost of the raw material is becoming a decreasing cost factor in the ultimate product. That is why I think it is wrong to throw in the most modern industries as being those which are most adversely affected. I do not believe it. The reverse is true.

Mr. Simon Wingfield Digby (Dorset, West)

During the early stages of the Bill I listened carefully to the arguments about the surcharge, and at the end of the day I rather agreed with the Minister without Portfolio that it was a blunt instrument. The more I see examples and hear about cases, the more convinced I am of that fact.

I want to speak about an industry in my constituency. I disagree with the hon. Member for Dunbartonshire, East (Mr. Bence) when he says that it is not the most modern industries which suffer. The industry I have in mind is an extremely modern one. It is a new one some of whose processes have just started up here. It is up against very severe competition from the industry in the United States which is very much more advanced. The industry comes under both Amendment No. 8 and Amendment No. 9 in that the raw material has to be imported and cannot be obtained in this country.

The raw material is a rather strange one—glass marbles, which are needed to manufacture glass yarn. The marbles are not obtainable in this country and have to be obtained from the United States. They are manufactured into glass yarn, which is then turned into glass cloth, and that is used for insulation and in aircraft. That is a very modern use. The material is used in various other ways as well. Its use for curtains is increasing in the United States, and the day may come when it will be used for dresses. These are all modern uses.

This little industry is of considerable importance. It is important to my constituency because it is the sort of industry that we want in the small country towns such as I have in my constituency. The industry is expanding, and I want to see it expand further. It is also important because it will enable us to cut imports of products such as curtains which at the moment come from the United States.

When I took up the case with the Board of Trade I received the somewhat strange reply that the purpose of the surcharge was a quick saving in the import bill. That may apply to many things, but I cannot believe that it applies to this industry. If fewer glass marbles are imported, production will be reduced, because glass marbles are the only raw material of the industry. If there is less production, it is equally obvious that there will be larger imports of the finished products from the United States. It so happens that the firm engaged in the manufacture here is controlled partly by a very large firm in this country and partly by a very large firm in America, but in a case like this one is defeating the object of the surcharge by encouraging more imports from the United States.

In passing, I would mention that, in any case, the glass marbles have to pay a 10 per cent. import duty, and so the 15 per cent. surcharge goes on top of that. It seems to me that in a case like this, where an industry is successfully developing in this country, the import surcharge, however necessary it may be for other reasons, can do nothing but harm. From the arguments I have heard this evening, I cannot help thinking that there are many similar cases where exactly this result is being obtained, and those cases are to be found in the modern industries referred to by my hon. Friend the Member for Taunton (Mr. du Cann).

Mr. Arthur Lewis (West Ham, North)

Is the hon. Gentleman telling us that one of the biggest companies in this country, and probably in the world, Pilkingtons, cannot make glass marbles? Surely there must be something more than glass marbles in this? We have wonderful firms in this country which can make marvellous things.

Mr. Wingfield Digby

That is correct. However, Pilkingtons was one of the firms from which my constituents attempted to get glass marbles, but the correct glass marbles were unobtainable here.

8.15 p.m.

Sir Harmar Nicholls (Peterborough)

The list of Amendments for the Report stage is one of the most disappointing I have seen. It is an unfair list. I do not think the Government have played the game. I listened to the arguments in Committee, and they were long and technical, and the Minister without Portfolio, the Chief Secretary and right hon. Friends of theirs gave every indication—without using the words, I admit—that thought would be given to all questions of this sort and that possibly something would be done on Report. They did not say so in those words, I grant.

Mr. Diamond

I am grateful to the hon. Gentleman for "granting" at once, but I should be glad if he would give us the reference in the OFFICIAL REPORT where any one of my right hon. or hon. Friends said that Amendments would be introduced on Report which have not been introduced.

Sir Harmar Nicholls

I know how pedantic the hon. Gentleman is in the use of words.

Mr. Diamond

Accurate.

Sir Harmar Nicholls

I saw how he gloated when one of my hon. Friends said that a factory might have to close down because my hon. Friend could not produce book and verse to substantiate the statement. Has a factory to be closed down before we can get second thoughts from the Treasury? Has the horse always to go out of the stable before we close the door?

My main point is—I agree that the words are not on the record, and so we cannot quote them—but the general demeanour and general impression—which is the way things are done in this House; it is not always the words used in Committee stage that indicates to hon. Members what is in the Government's mind—the impression was that some effort would be made by the Government to meet what were clearly the wishes of the Committee, and the wishes not only of this side. From my observations, I certainly gained that impression.

It is customary that in order to get Government business through supporters of the Government remain silent in Committee, but one got an impression from the general atmosphere and the way hon. Gentlemen opposite reacted when the arguments were being put by my hon. Friends that it was one of support. There was no doubt about the demeanour at the Despatch Box, which gave an indication that it was likely that something would be done which the whole House wanted. But in this list of Amendments hardly anything has come from the Government. Clause 4 aroused the emotions and feelings of both sides more than any other Clause in Committee.

The Minister without Portfolio (Sir Eric Fletcher)

The hon. Gentleman has made a serious charge. He has indicated to the House that certain assurances were given in Committee that Amendments would be tabled on Report and they have not been tabled. He has been challenged to give an example of any assurance given during the Committee stage which has not been honoured. It is perfectly true that assurances were given that certain things would be considered, and all those assurances have been honoured and everything has been considered. No assurance which was given has not been honoured. I hope the hon. Gentleman will withdraw his allegation.

Sir Harmar Nicholls

If any withdrawing has to be done, it is the right hon. Gentleman who must do it. His hon. Friend gave him the answer while he was speaking just now. I never said that the actual words had been used. What I referred to—and I repeat it with confidence—was the general impression and the use of such phrases as "the matter will be considered". The right hon. Gentleman knows that the word "considered" in the context of the general committee debate has a meaning beyond that of "considered" as defined in the dictionary.

Mr. Diamond

I would be grateful if an Opposition Front Bench spokesman would get up now and say whether he maintains that the Government have not honoured undertakings which they gave or seemed to give during any part of the Committee stage.

Sir Harmar Nicholls

The Chief Secretary knows the usage of the House very well. All I want to say at this stage is that if, for the rest of the Government's life, they give this sort of impression they will not have such an easy Committee stage in future.

Mr. John Hall (Wycombe)

Perhaps I can help my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) by referring to what was said by the Minister of State on 2nd December, for it is the kind of statement which gave the impression to which my hon. Friend refers. The Minister of State had been recalling something said by the Chancellor on 24th November. Then, the Chancellor had said: 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.] The Minister of State, after quoting those words, said on 2nd December: 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 a whole. I give this assurance."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 553.] I understood the Minister of State to be saying, in reply to various Amendments we were pressing at the time, that if, on consideration, the Government thought there was some substance in them, they would be prepared, even on Report, to put down Amendmentts which would give us what we asked for. Because of this feeling, many of the Amendments which were deployed with considerable and forceful argument by my right hon. and hon. Friends were not carried to the logical conclusion of a Division. We rested on that assurance. I think that is what my hon. Friend the Member for Peterborough has in mind.

Sir Harmar Nicholls

That is precisely an example of what I had in mind. I am only too sorry that I did not equip myself with that sort of argument in detail before I rose.

Mr. Diamond

I am glad that that is what the hon. Member for Peterborough (Sir Harman Nicholls) had precisely in mind, because it is precisely wrong. I will refer to the quoted passage again. The hon. Member for Wycombe (Mr. J. Hall) has misunderstood the words. The House, then in Committee, did not misunderstand them at the time. They are perfectly clear to anyone reading the whole column. My hon. Friend the Minister of State said particularly: … claims before this committee, either now or even on the Report stage … My hon. Friend was talking about the claims which the Opposition might advance either in Committee or now on Report stage. Of course, we are glad to hear and are willing to listen to representations. It is our function as the Government to listen to what the House of Commons has to say both in Committee and on the Report stage of a Bill. The matter is not ended at Committee stage. We must listen to representations on Report.

The Minister of State went on to make the point absolutely clear, as he did in the very last sentence: .. 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. My hon. Friend said special circumstances could arise out of argument either in Committee or on Report whereby, after consideration, adjustments might be made prior to the review of the scheme as a whole. That is the situation. I congratulate the hon. Member for Peterborough on his memory and on remembering these few words.

Sir Harmar Nicholls

I never laid claim to that. I laid claim to having formed an impression from what the Minister of State said. My impression was supported by the words quoted by my hon. Friend the Member for Wycombe (Mr. John Hall). The Government should be under no illusions. They did give that impression. I believe they gave this impression in order to help them over the Committee stage because of the particularly forceful arguments that were being put by my hon. Friends—arguments which brought support from hon. Members opposite, who remained silent but whose general demeanour showed that they supported us.

Mr. John Hall

It is not quite accurate to say that hon. Members opposite remained silent. There was one exception, and he supported arguments put from this side.

Sir Harmar Nicholls

That is perfectly true. But that intervention was very much an exception, and it was made to reinforce a point made by my hon. Friends.

I want to make it clear that the Government gave the impression in Committee of further consideration being given to certain points. Their consideration is reflected in the paucity of Amendments on Report. They have no Amendments at all to Clause 4, which is one of the key Clauses. When the Government have promised to consider, one expects to see that some consideration has been given.

These Amendments concern imports which were exempted by the 1958 Act because of their special quality and for them now to be subject to the obstacle of the surcharge makes nonsense of the efforts of those trying to keep general productivity at the highest level. To put the surcharge on commodities which are not manufactured here and which are imported only when necessary to improve efficiency is against the best interests of the country. We cannot argue on general lines now but I want to put it on record that it is not only disappointing but unfair of the Government, by their demeanour and general attitude, to give the impression that we shall see Amendments on the Report stage and then not produce them.

Sir Knox Cunningham (Antrim, South)

I want to say a few words about the second and third of the three Amendments under discussion. Both qualifications apply to the man-made fibre industry in Northern Ireland. This industry gets its raw material from abroad since it cannot be manufactured in the United Kingdom. The only result of the surcharge in this case will be a reduction in the production of manufactured goods and, therefore, a very serious unemployment situation. This is a new industry in Northern Ireland. These new factories were built to assist the employment situation.

I had hoped that the Chancellor himself would be here now—he was here earlier—so that he could hear my plea. He is the person who can make the decision. I very strongly request that, even at this late stage, some concession be made so that the raw material for this industry is exempted and employment in Ulster safeguarded. If a concession were given by the Government I would be happy. Otherwise, I am extremely unhappy about the situation from the point of view of the workpeople in Ulster.

8.30 p.m.

Miss J. M. Quennell (Petersfield)

I rise to remind the Government of the situation they will cause for universities and institutions of higher education if the full impact of the surcharge is left on all manufactured goods which are not available in this country. May I remind the Financial Secretary of a Question which I put to him some days ago. I asked him whether he would issue a direction for the remission of the is per cent. import levy on equipment required by universities, technical colleges and other such organisations working on fixed estimates for the equipment of their laboratories. We have heard almost ad nauseam for some years that the need of this country is to increase production—

Mr. Eric Lubbock (Orpington)

Before the hon. Lady leaves that point, may I ask whether it is not covered by paragraph 6 of the Second Schedule?

Miss Quennell

I hope to ensure that it will be.

As I say, we have heard for years about the need to increase our productive capacity and the emphasis which has been placed on training, and particularly that type of training which gives the modern scientific approach to industrial training and the automative processes which must come into this country's industry if we are to compete effectively. These techniques require the most modern and up-to-date installations in laboratories, and this must be emphasised more and more if we are to remodel our industries and enhance our productive capacity.

In his reply the Financial Secretary indicated some sympathy in the matter. He said: I am aware of the special problems which the temporary import charge creates for universities and other similar institutions and I am considering them."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 161.] What I am asking him tonight is whether he will consider the convenience of institutions of higher education. It is fair to say that technical colleges are enhancing and increasing the level of their work—

Mr. Charles Loughlin (Gloucestershire, West)

I can appreciate the need for the hon. Lady to read the speech, but will she read it more slowly, so that we can understand it?

Miss Quennell

The hon. Gentleman should do better than that.

Will the right hon. Gentleman announce his arrangements for these institutions as soon as it is conveniently possible since the difficulties in which they may find themselves in this part of this year will be acute?

Mr. Raymond Gower (Barry)

As has been said, it is very disappointing that the Government, at this stage of the Bill as in Committee, are showing themselves quite unwilling to budge on these matters. The Chief Secretary seemed to regard it as a sign of great virtue that they were, in his view, equally inflexible at an earlier stage. Inflexibility is one of the matters of which we complain. The hon. Member for Dunbartonshire, East (Mr. Bence) also regarded it as a virtue that these charges would have a blanketing effect on so much of our industry. Again that is something about which we complain.

Mr. Bence

Imports.

Mr. Gower

That is particularly a matter about which we complain.

The ultimate success of our exports is the surest way to solve our trading difficulties. These imposts, in their blanketing form, are designed ultimately to damage our ability to export. That is our criticism. [Interruption.] The hon. Gentleman says that we had protection. I cannot go into that in detail, because I should be out of order.

We had evidence at an earlier stage of the Bill that these charges are not to be as short term as we would wish. We are disturbed about this because the charges must affect a very large variety of those industries upon which we must rely if we are to succeed in our trade drive. If we are to succeed, we should be, as a nation, like an athlete about to enter a race. [HON. MEMBERS: "Oh."] This is a more competitive world than 13 years ago.

Mr. Loughlin

Six months ago.

Mr. Gower

It is a world which is becoming ever more competitive. Our manufacturing industries need their raw materials at the lowest possible price. Anything designed to prevent them getting them at the lowest possible price is fundamentally bad. As my hon. Friends have said, it is nonsense to extend these charges to raw materials which are not even available in the United Kingdom.

It is no virtue to be inflexible. It would have been a great virtue if the Government had taken extra time and produced a much more varied Bill in which the charges fell on those commodities which we had in this country and did not affect indiscriminately those which are here and those which are not here.

Mr. Diamond

The hon. Member for Barry (Mr. Gower) accused us of being inflexible. This does not tie up very closely with the shocking remarks made by the hon. Member for Peterborough (Sir Harmar Nicholls), who I am sorry is not here. It is normal to stay for the winding-up speeches in a debate in which one has made remarks of the kind which the hon. Gentleman made. I can only say that I regret that he is not with us. I believe that we have given every impression other than that of inflexibility. The hon. Member for Peterborough said that we gave every impression of being about to introduce Amendments which we never said we would introduce. He said that there was nothing in HANSARD to support what he was saying but that we had given a wrong impression of courtesy and willingness to listen to what was said. Are not we supposed to listen? I listen, and all my right hon. and hon. Friends listen.

We want this proposal to work. It needs to work, and we are anxious to hear of any glaring anomaly which is so substantial and so out of keeping with the scheme that we are putting forward that it should be put right immediately. Some Amendments have been tabled, but because they are tabled up pops the right hon. Member for Taunton (Mr. du Cann)—and let me be the first to congratulate him on his distinction of being made a Privy Councillor; nobody deserves the honour more—and says, "Why did you not consider the matter before putting down all these Amendments?" All I can say is that it is very difficult to please everybody.

I want to say to the hon. Member for Peterborough that we went out of our way to be courteous, to listen and to avoid the slightest possibility of misleading anybody into thinking that we would do more than we meant to do. I was present practically throughout the three days of the Committee stage, and certainly right up to half-past four on the Thursday morning, and many times right hon. and hon. Members opposite said, "We do not think that that consideration goes far enough, and we insist on dividing the Committee", and accordingly there were Divisions. Let me put that at rest straight away. The charge that even a slight impression of misleading has been given should be answered straight away, and that is why I am grateful to you, Mr. Deputy-Speaker, for the indulgence which you have shown in enabling me to answer it.

Perhaps I can answer the point raised by the hon. Lady the Member for Peters-field (Miss Quennell) first, because, although other hon. Members have complained about what is not in the Bill, I think that she referred to something which is in the Bill. If she will look at Clause 6(1), she will find everything that she wants there concerning noncommercial undertakings.

Mr. du Cann

Like the hon. Gentleman, I listened with great attention to what my hon. Friend said. I remember the Second Schedule discussion and I rather formed the impression that there were certain categories of case which my hon. Friend mentioned, although she spoke of a wide field, which probably are not covered by the Second Schedule. Can the Chief Secretary give an unqualified assurance either that every category which my hon. Friend has mentioned is covered or, alternatively, that he will be good enough to look into the matter again, if I may use the phrase a second time, in the cold light of dawn to ensure that that is so?

Mr. Diamond

I do not think that we want to look at matters in the cold light of dawn tonight. Certainly, as I understood the speech of the hon. Lady the Member for Petersfield, I can reply that these matters are already contained within the Bill; I am therefore sympathetic to what I understood her to be saying. If there is anything that the hon. Lady said which I have misunderstood, I must look into it more. As far as I heard the hon. Lady, everything which she requires is already covered, as I have indicated.

As we are discussing a number of Amendments together—and it is of great advantage to be able to do this, because one can relate a number of points which touch upon one another—perhaps I may start with the comments made by the right hon. Member for Taunton in opening the discussion on the first Amendment. I hope that what I say will not be taken as unduly stimulating, but in a tone of voice which indicated that he was trying to make himself as excited as he could be the right hon. Gentleman asked why we had to introduce what he called this wretched Measure. The answer is to deal with wretched situation which we found. [Interruption.] The reason for my saying this is not that it is something of which any Member of the House is unaware, but because, when discussing detailed points, hon. Members tend to forget the general background against which one has to fit the detail.

As every hon. Member knows, we had to deal with a problem of an adverse balance of payments running between an estimated £700 million and £800 million for the current year—an excess of imports over exports; and in addition to dealing with the stimulation of exports, we had to slow down the imports. That is what the Bill is about, the slowing down of imports generally.

I invite the House to be good enough to look at this matter in perspective. I am talking about the slowing down of imports. In 1963, imports amounted to £4,812 million. In 1964, they were running at the rate of £5,500 million. The charges which we are discussing are estimated and expected to reduce that import bill by an annual rate of about £300 million a year. If that estimate turns out to be completely accurate, the imports for the current year will have been reduced from an annual rate of £5,500 million to £5,200 million, a figure which is still £400 million in excess of the imports of the previous year.

If everything which the Government are saying is proved right, if the whole of the Bill in its present form is accepted and if none of the proposals which right hon. and hon. Members opposite are submitting are accepted, we will still have an import bill £400 million more than last year. To talk about that as if there is a static situation and that people are being denied imports is simply to show that right hon. and hon. Members opposite are no more considering the problem now than they considered it when they were in Government.

Mr. Peter Emery

It is important that we should fully understand the figures that the hon. Gentleman is giving us. He suggests that imports would run at the rate of £5,500 million a year until the end of the year, which, presumably, is 31st March. If that is so, we still have a period of five months to run.

Mr. Arthur Lewis

Three months.

Mr. Emery

I am told that it is foul months; at least, the year has a number of months to run. The Chief Secretary must realise that there was a vast buildup in industry of stocks up to the period of the election. It is criminally wrong to suggest to the country that that rate of growth will continue over the rest of the period.

Mr. Diamond

That was a rather lengthy intervention, but we are only too glad to listen to whatever the hon. Member has to say. I want to make it clear that I was talking about figures at an annual rate, and I said" at an annual rate". When imports are running at an annual rate miles in excess—to be precise, £700 million a year in excess—of the rate at which they were running the previous year, I repeat that it is nonsense to look at the situation as if there was a static, stable level of imports and that if we have any success in reducing imports we are subjecting all sorts of people and all sorts of businesses to all sorts of intolerable hardhip. That cannot possibly be the case.

8.45 p.m.

The hon. Gentleman's point is answered, in terms of balance of payments, by saying that we were running, as he knows, a deficit between £700 million and £800 million a year. If he wants to take the responsibility of saying that if his party had still been in the Government they would let it go on, he can say that, but I do not believe it. I believe that they would have only let it go on until the General Election was over and not after that. I think that they would have had the courage to do something about it after the General Election, although they lacked the courage to deal with it before.

Mr. Gower

The right hon. Gentleman has given the figures annually. Would he say to what extent he has taken any account of the possibility that these figures were inflated—blown up—because people were horrified at the thought of a Labour Government?

Mr. Diamond

The hon. Gentleman is suggesting that it was such a horrifying thought that it stimulated all businessmen, apparently, into importing goods at a fantastic rate in the belief that business would be fine and that they would sell more than they have ever done before. There is no limit to the arguments to which some hon. Members on the back benches opposite will descend in order to make their case.

Let me be more specific about it. Imports were running at a rate some 15 per cent. higher than in the previous year. But in terms of semi-manufactured and manufactured goods with which we are particularly concerned and which relate to many of the Amendments which were put forward in Committee and today, imports were running at a rate 25 per cent. higher than in 1963, and I invite the House to agree that when we have a situation like that we have to deal with it. The way we have been trying to deal with it is in this Bill. So all the proposals that are now being considered must be related to that background.

A number of hon. Members opposite have raised individual points affecting constituency matters which, quite frankly—and I have been listening very carefully—I am unable to understand. We want to help. We do not believe that businessmen are of the kind depicted by many hon. Members opposite. We do not believe that a businessman faced with a 15 per cent. import charge closes his factory doors. Let us be frank about it—we do not believe it. We have no official knowledge of any such closure taking place. But as it is such a serious matter to allege that, if the hon. Member would care to come to me afterwards, at any time convenient to him, or write to me and give me details of a case where one of his constituents is closing down his factory and putting all his people out of work, we shall be only too glad to do what we can to prevent that happening. All I can say is that we have had no official knowledge of that happening.

Mr. Wolrige-Gordon

If the right hon. Gentleman is addressing myself—[HON. MEMBERS: "He is addressing the Chair."] If the right hon. Gentleman is addressing the Chair in relation to my speech, I should withdraw, if those were the words that I used. I would withdraw that phrase because it was not what I meant to say, and I am sorry if my feelings on this matter led me to over-state the case in that way. The case that I was concerned about, and which I am still concerned about very deeply, is that the information I have from this factory is that as long as these import surcharges remain it will have to cut down on its expansion programme and therefore there will be a slackening off of employment.

Mr. Diamond

The hon. Member has been courteous enough to withdraw, and when an hon. Member withdraws that is the end of the matter. I merely make the point that this is the second withdrawal we have had so far in this series of debates.

I come now to the hon. Member for Torquay (Sir F. Bennett). I did not follow this one either. He has a constituent who makes a complicated item. He did not define it but said it was a complicated item, and he said he was able to sell this in competition with others abroad because the price was 6d. per item lower than that of his nearest competitor. The price then was increased by the import charge by 8d.—

Sir F. Bennett

That is right.

Mr. Diamond

—and it therefore became 2d. more than that of the price of the nearest competitor and he lost the whole business, and this particular businessman had no means either of absorbing the 2d. or reducing his profit margin by 2d., or doing anything at all which would deny to the hon. Member for Torquay this argument he could come to use here on Report of the Finance Bill.

Sir F. Bennett rose—

Mr. Diamond

I have not quite finished. As I say, I do not follow how any business man could find himself in that position. Particularly do I not follow it because of the drawback situation. Under the drawback he would be entitled to recover the whole of the 8d. and he could sell the item as before, at near 6d. less than the price of his nearest competitor.

Sir F. Bennett

The hon. Member is putting a glossy account of this. The figures I gave were after every possible competitive factor had been taken into account. What I was speaking about was the diversion and what would be lost to the export trade because of the pure obstinacy of hon. and right hon. Gentlemen opposite in putting on a surcharge on things solely used for export goods afterwards. If I may make another point—

Mr. Diamond rose—

Sir F. Bennett

No. I have not finished.

Mr. Deputy-Speaker (Sir Samuel Storey) rose—

Sir F. Bennett

I was still on my feet, Mr. Deputy-Speaker.

Mr. Deputy-Speaker

Order. An intervention in an hon. Member's speech is for the purpose of clarification and not an excuse to make another speech.

Sir F. Bennett

The Chief Secretary is just running away.

Mr. Diamond

When the hon. Gentleman said "if I may make another point" it seemed to me he had left his intervention and was inviting me to get on with my speech, which I propose to do.

Sir F. Bennett

May I make one final point, please?

Mr. Diamond

I deferred to the hon. Gentleman. I gave him full opportunity to reply.

Sir F. Bennett

No.

Mr. Diamond

If the hon. Gentleman does not think I have given him full opportunity, let him carry on.

Sir F. Bennett

Very shortly, the point is this. If the hon. Gentleman thinks that is such a convincing argument, will he tell me why he has not replied to the letter I sent him over a month ago on this subject?

Mr. Bence

Is that in the Amendment?

Mr. Diamond

I do not know what letter the hon. Gentleman is referring to. He can easily put down a Question if he is not getting replies to his letters. I do not think that affects the argument very much. I have no knowledge of a letter from the hon. Gentleman which has not been answered.

Sir F. Bennett

Perhaps that is because there are too many Ministers.

Mr. Diamond

There may be too many Ministers, but the point we are dealing with is whether or not any seriousness is to be attached to the allegation made by the two hon. Members as to the damage which would result from the Government's legislative proposals. I am sorry, but I cannot understand what the hon. Gentleman the Member for Torquay is referring to, and I cannot believe that there is any serious damage or loss to the export trade deriving from it.

I now come to the reason why it is not possible to accept broadly the Amendments put forward. I have explained that this tax is necessarily one which must be broadly spread. The suggestions made by right hon. and hon. Gentlemen opposite are continually to restrict it so much that it would become a tax on consumer goods only. It is only by spreading it as broadly as it is spread now that a level of 15 per cent. will have the necessary effect. If we reduce the coverage again and again, then either we must increase the rate from 15 per cent. to a figure which would be intolerable or we shall not achieve the reduction in imports which is vital if we are to get ourselves out of the jam which we have inherited.

Each hon. Member opposite has some constituent whose interests he wants, quite properly, to protect by excluding him from the scope of the Bill. If everyone is excluded from the scope of the Bill we shall find that virtually only consumer goods are included, and these would have to bear a penal rate of charge in order to have any effect in reducing imports. This is the broad argument and I will come to the details.

Mr. Hirst rose—

Mr. Diamond

This is the Report stage, but I shall be happy to give way in a moment.

It is no good picking out a single item and saying, "There are problems about this. This is not available in this country". We must consider that if the duty is to do its work it must apply very broadly indeed.

Mr. Hirst

The hon. Member says that if we make these exceptions we shall need a penal rate of duty to keep exports down. Our argument has been that, broadly speaking, these materials will still be imported in any event and the surcharge will thus have no effect on the balance of payments.

Mr. Diamond

I have said that I was dealing with the matter broadly and that later I should come to the details of the Amendments. I thought it right first to put the broad argument because otherwise hon. Members might not be satisfied of the wisdom and justice of the Government's proposals.

There are, in effect, three categories dealt with in the proposed Amendments —the first dealing with protection; the second dealing generally with raw materials; and the third dealing with goods which are not available elsewhere. These are the three categories of materials which hon. Members opposite wish to have excluded from the Bill. First, I must point out that to exclude all these would result either in a penal rate of duty on what remains or in a stultifying effect on the Bill.

Let me deal specifically with these three cases. On the subject of protection, I can only repeat what has been said before—and I do not think that I need refer to the actual document: we were anxious to avoid any possible appearance of protection, which would not have been acceptable at all. We were faced with the necessity of reducing imports. Everybody has agreed that the method which we chose was better than that of quantitative restrictions.

The latter would have done what hon. Members opposite say should not be done. They say that we must not penalise the modern and newest industries, but a system of quantitative restrictions would have done that, because it would have been based on the standard of previous years and the new, expanding and modern industries, as hon. Members opposite have called them, would have been limited in terms of quantity in a way similar to that of other firms, instead of being able to go into the open market and, if they were able to pay an extra price, to do so in competition with older industries and to beat them on grounds of efficiency.

It therefore is not possible to consider this proposal in terms of protection. That would be out of the question. Moreover, these very articles which have been withdrawn from the protective duties already have an advantage, and that advantage persists. If 15 per cent. is put on everybody and someone has a basic advantage to begin with, then that advantage will remain, as long as the 15 per cent. is on everybody. The position is, therefore, being made no worse at all.

9.0 p.m.

I can only repeat what has been said from this side time and again; that this is not a basis for excluding these items from the charge. Nor is what was said about raw materials, which to hon. Members opposite mean the raw materials of the particular industries they have in mind.

Glass marbles were referred to as being a raw material. I am sure that the firm with which the hon. Member who spoke about this commodity is concerned regards glass marbles as one of its raw materials, but there is hardly a material which could not be called a raw material. A finished material in one case is often a raw material in the next.

It would have been impossible to define "raw material" in that sense, and if one excluded from the duty everything that could possibly be called a raw material one would be back at the starting point, with a few goods left which would be subject to the charge while all the others would be excluded; and on the few remaining there would have to be a penal rate of duty, otherwise we could not possibly achieve what we are trying to achieve.

Sir D. Glover

Has the Chief Secretary thought, to cite one example, about the 15 per cent. surcharge being placed on such articles as timber for house building?

Mr. Diamond

That will arise on a later Amendment.

Sir Knox Cunningham

Why did the Government say in their White Paper that basic raw materials would be excluded?

Mr. Diamond

Basic raw materials are, by and large, excluded. The White Paper makes it clear that these were broad definitions and that one could not in any circumstances deal with it other than on a very wide basis indeed, otherwise one would be selective or discriminatory and, as I pointed out, one might reduce it to such negligible proportions that the industries which had to bear the duty would have to bear a fantastic rate of duty. I hope that that is at last beginning to get home.

Mr. Edward Heath (Bexley)

Surely those industries would bear a penal rate of duty only if the object of the Government is to raise revenue. We are told that this is not the object of the Government's policy. The object is to keep items out. If 15 per cent. is placed on the remaining items, surely the duty can remain at 15 per cent. for those remaining items?

Mr. Diamond

This is a simple arithmetical point—[Interruption.] I am surprised that the right hon. Gentleman intervened about it. I agree that the purpose is not to raise revenue. [HON. MEMBERS: "Oh."] Nobody has said that it was. The purpose is to reduce imports. If a certain rate of duty applies over a broad sphere—say, £300 million on imports—then if one reduces the number of goods on which the charge bites one will obviously have to place a higher rate of duty to keep out £300 million worth in that limited category.

Mr. Heath

This is not true in this case, because the items will come in anyway. This is the whole argument.

Mr. Diamond

The right hon. Gentleman now changes his ground. He now says that the goods will come in anyway and will be chargeable. They are not goods which will come in anyway.

Mr. Heath

They are.

Mr. Diamond

Perhaps the right hon. Gentleman will allow me to explain.

I come to the last Amendment, which is concerned with availability. I have been dealing with the two earlier Amendments. A good example to explain my point is to consider those glass marbles again. That is a commodity which, if I may say so, easily remains in the mind. What was said in regard to the marbles was not that they were not available at all, but that they were not of the kind the hon. Member's constituent wanted—no suitable marbles were available.

That illustrates the difficulty perfectly, because what does "availability" mean? It means that one must have available goods of the particular kind, the particular size, the particular quality and the particular function. All that sort of thing comes into "availability" and it requires no stretch of logic to demonstrate that once an item has been imported one can show that every single imported item was imported because it was not available. One would thereby exclude the whole range of everything that was imported, because no one will import something if it is available here at the same price, in the same quality, with the same delivery date, the same service—the same everything that is required. We will not seek abroad goods that are available here at the same price.

What I am demonstrating is that this definition gets us no further at all, and the hon. Gentleman was quite right in saying that what his constituent wanted was a particular kind of marbles, and that the marbles were not at the moment satisfactory to his constituent.

Mr. Wingfield Digby

I must interrupt the hon. Gentleman here, because this matter was set out in a letter to the Board of Trade three weeks ago, and the Department has not challenged the fact that glass marbles for this kind of manufacture are not available in this country. That has not been challenged up to this moment.

Mr. Diamond

I do not say that those particular glass marbles can be duplicated anywhere, but what I want to make absolutely clear is that when people say that a particular item is not available, what they mean is an item of that precise nature, that quality, that size, and all the other things that go to determine what is available. And to say "suitable for the purpose" does not help us in the slightest, because although there may be none suitable for the purpose at the moment, a little stimulation to the manufacturer might encourage him to make them suitable. I do not know why these particular goods were not satisfactory—it may be that they were not of the right size—but I should be astonished if a firm

like Pilkingtons would allow itself to be defeated by these marbles.

Therefore, I must repeat that the essence of this duty is to restrict imports—

Sir F. Bennett

For three months.

Mr. Diamond

We can only restrict imports without doing serious damage by spreading the charge over a considerable area, and attempts by right hon. and hon. Members opposite to restrict and restrict would only make the scheme totally unworkable. We are compelled to introduce a scheme like this, to limit imports, in order to help with the shocking balance-of-payments problem that we inherited. I therefore invite the House to reject the Amendment.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 201, Noes 219.

Division No. 28.]	AYES	[9.10 p.m.
Agnew, Commander Sir Peter	Curran, Charles	Hornby, Richard
Alison, Michael (Barkston Ash)	Currie, G. B. H.	Hornsby-Smith, Rt. Hn. Dame P.
Allan, Robert (Paddington, S.)	Dalkeith, Earl of	Howe, Geoffrey (Bebington)
Allason, James (Hemel Hempstead)	Dance, James	Hunt, John (Bromley)
Astor, John	Davies, Dr. Wyndham (Perry Barr)	Hutchison, Michael Clark
Atkins, Humphrey	d' Avigdor-Goldsmid, Sir Henry	Irvine, Bryant Godman (Rye)
Awdry, Daniel	Dean, Paul	Johnston, Russell (Inverness)
Baker, W. H. K.	Digby, Simon Wingfield	Jones, Rt. Hn. Aubrey (Hall Green)
Balniel, Lord	Drayson, G. B.	Jopling, Michael
Barlow, Sir John	du Cann, Rt. Hn. Edward	Joseph, Rt. Hn. Sir Keith
Batsford, Brian	Eden, Sir John	Kaberry, Sir Donald
Beamish, Col. Sir Tufton	Emery, Peter	Kerby, Capt. Henry
Bell, Ronald	Errington, Sir Eric	Kerr, Sir Hamilton (Cambridge)
Bennett, Sir Frederic (Torquay)	Fell, Anthony	Kershaw, Anthony
Bennett Dr. Reginald (Gos & Fhm)	Fletcher-Cooke, Sir John (S'pton)	Kilfedder, James A.
Berkeley, Humphry	Forrest, George	Kimball, Marcus
Berry, Hn. Anthony	Foster, Sir John	King, Evelyn (Dorset, S.)
Bessell, Peter	Fraser, Rt. Hn. Hugh (St'fford & Stone)	Lancaster, Col. C. G.
Biffen, John	Fraser, Ian (Plymouth, Sutton)	Legge-Bourke, Sir Harry
Biggs-Davison, John	Gammans, Lady	Litchfield, Capt. John
Bingham, R. M.	Giles, Rear-Admiral Morgan	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Birch, Rt. Hn. Nigel	Gilmour, Sir John (East Fife)	Lloyd, Ian (P'tsm'th, Langstone)
Black, Sir Cyril	Glover, Sir Douglas	Longden, Gilbert
Box, Donald	Goodhew, Victor	Loveys, Walter H.
Boyd-Carpenter, Rt. Hn. J.	Gower, Raymond	Lubbock, Eric
Boyle, Rt. Hon. Sir Edward	Gresham-Cooke, R.	Lucas, Sir Jocelyn
Brinton, Sir Tatton	Grieve, Percy	Lucas-Tooth, Sir Hugh
Bromley-Davenport,Lt.-Col.Sir Walter	Griffiths, Peter (Smethwick)	McAdden, Sir Stephen
Brooke, Rt. Hn. Henry	Grimond, Rt. Hn. J.	Mackenzie, Alasdair(Ross & Crom'ty)
Bruce-Gardyne, J.	Gurden, Harold	Mackie, George Y. (C'ness & S'land)
Bullus, Wing Commander Sir Eric	Hall, John (Wycombe)	Macleod, Rt. Hn. Iain
Butcher, Sir Herbert	Hall-Davis, A. G. F.	McMaster, Stanley
Campbell, Gordon	Hamilton, Marquess of (Fermanagh)	McNair-Wilson, Patrick
Channon, H. P. G.	Harris, Frederic (Croydon, N.W.)	Maginnis, John E.
Chichester-Clark, R.	Harris, Reader (Heston)	Mathew, Robert
Clark, William (Nottingham, S.)	Harrison, Brian (Maldon)	Maude, Angus E. U.
Clarke, Brig. Terence (Portsmth, W.)	Harvey, John (Walthamstow, E.)	Maudling, Rt. Hn. Reginald
Cole, Norman	Hawkins, Paul	Mawby, Ray
Cooke, Robert	Heald, Rt. Hn. Sir Lionel	Maxwell-Hyslop, R. J.
Cooper-Key, Sir Neill	Heath, Rt. Hn. Edward	Maydon, Lt.-Cmdr. S. L. C.
Corfield, F. V.	Higgins, Terence L.	Meyer, Sir Anthony
Costain, A. P.	Hiley, Joseph	Mills, Peter (Torrington)
Craddock, Sir Beresford (Spelthorne)	Hill, J. E. B. (S. Norfolk)	Mills, Stratton (Belfast, N.)
Crawley, Aidan	Hirst, Geoffrey	Mitchell, David
Crosthwaite-Eyre, Col. Sir Oliver	Hobson, Rt. Hn. Sir John	More, Jasper
Cunningham, Sir Knox	Hogg, Rt. Hn. Quintin	Morrison, Charles (Devizes)
Mott-Radcliffe, Sir Charles	Rees-Davies, W. H.	Thorpe, Jeremy
Murton, Oscar	Ridley, Hn. Nicholas	Tilney, John (Wavertree)
Nicholls, Sir Harmar	Ridsdale, Julian	Vaughan-Morgan, Rt. Hn. Sir John
Nicholson, Sir Godfrey	Robson Brown, Sir William	Vickers, Dame Joan
Noble, Rt. Hn. Michael	Rodgers, Sir John (Sevenoaks)	Walder, David (High Peak)
Onslow, Cranley	Roots, William	Walker, Peter (Worcester)
Orr, Capt. L. P. S.	Royle, Anthony	Walker-Smith, Rt. Hn. Sir Derek
Osborn, John (Hallam)	Russell, Sir Ronald	Wall, Patrick
Osborne, Sir Cyril (Louth)	Scott-Hopkins, James	Walters, Dennls
Page, R. Graham (Crosby)	Sharples, Richard	Ward, Dame Irene
Pearson, Sir Frank (Clitheroe)	Shepherd, William	Weatherill, Bernard
Peel, John	Sinclair, Sir George	Webster, David
Percival, Ian	Smith, Dudley (Br'ntf'd & Chiswick)	Whitelaw, William
Pike, Miss Mervyn	Spearman, Sir Alexander	Wilson, Geoffrey (Truro)
Pitt, Dame Edith	Stainton, Keith	Wise, A. R.
Pounder, Rafton	Stanley, Hn. Richard	Wolrige-Gordon, Patrick
Powell, Rt. Hn. J. Enoch	Summers, Sir Spencer	Woodhouse, Hn. Christopher
Price, David (Eastleigh)	Taylor, Edward M. (G'gow,Cathcart)	Woodnutt, Mark
Prior, J. M. L.	Taylor, Frank (Moss Side)	Younger, Hn. George
Quennell, Miss J. M.	Thatcher, Mrs. Margaret
Ramsden, Rt. Hn. James	Thomas, Rt. Hn. Peter (Conway)	TELLERS FOR THE AYES:
Rawlinson, Rt. Hn. Sir Peter	Thompson, Sir Richard (Croydon,S.)	Mr. MacArthur and
		Mr. R. W. Elliott.
NOES
Abse, Leo	Foot, Sir Dingle (Ipswich)	MacDermot, Niall
Allaun, Frank (Salford, E.)	Foot, Michael (Ebbw Vale)	McGuire, Michael
Armstrong, Ernest	Fraser, Rt. Hn. Tom (Hamilton)	Mclnnes, James
Atkinson, Norman	Freeson, Reginald	MacKenzie, Gregor (Rutherglen)
Bagier, Gordon A. T.	Galpern, Sir Myer	MacPherson, Malcolm
Barnett, Joel	Garrow, A.	Mahon, Peter (Preston, S.)
Baxter, William	George, Lady Megan Lloyd	Mahon, Simon (Bootle)
Bence, Cyril	Ginsburg, David	Mallalieu, E. L. (Brigg)
Bennett, J. (Glasgow, Bridgeton)	Gourlay, Harry	Mallalieu, J.P.W. (Huddersfield,E.)
Binns, John	Gregory, Arnold	Manuel, Archie
Blackburn, F.	Grey, Charles	Mapp, Charles
Blenkinsop, Arthur	Griffiths, David (Rother Valley)	Marsh, Richard
Boardman, H.	Griffiths, Rt. Hn. James (Llanelly)	Mason, Roy
Bowden, Rt. Hn. H. W. (Leics S.W.)	Hale, Leslie	Maxwell, Robert
Boyden, James	Hamilton, James (Bothwell)	Mendelson, J. J.
Braddock, Mrs. E. M.	Hamling, William (Woolwich, W.)	Mikardo, Ian
Bradley, Tom	Hannan, William	Millan, Bruce
Bray, Dr. Jeremy	Harper, Joseph	Miller, Dr. M. S.
Broughton, Dr. A. D. D.	Harrison, Walter (Wakefield)	Milne, Edward (Blyth)
Brown, Hugh D. (Glasgow, Provan)	Hart, Mrs. Judith	Molloy, William
Brown, R. w. (Shoreditch & Fbury)	Hayman, F. H.	Monslow, Walter
Buchan, Norman (Renfrewshire, W.)	Hazell, Bert	Morris, Alfred (Wythenshawe)
Buchanan, Richard	Herbison, Rt. Hn. Margaret	Morris, John (Aberavon)
Butler, Herbert (Hackney, C.)	Hobden, Dennis (Brighton, K'town)	Murray, Albert
Butler, Mrs. Joyce (Wood Green)	Holman, Percy	Neal, Harold
Callaghan, Rt. Hon. James	Horner, John	Noel-Baker, Rt.-Hn. Philip(Derby,S.)
Carmichael, Neil	Houghton, Rt. Hn. Douglas	Norwood, Christopher
Carter-Jones, Lewis	Howarth, Harry (W ellingborough)	Oakes, Gordon
Castle, Rt. Hn. Barbara	Howarth, Robert L. (Bolton, E.)	Ogden, Eric
Coleman, Donald	Howell, Denis (Small Heath)	O'Malley, Brian
Conlan, Bernard	Howie, W.	Oram, Albert E. (E. Ham S.)
Corbet, Mrs. Freda	Hoy, James	Orbach, Maurice
Craddock, George (Bradford, S.)	Hughes, Emrys (S. Ayrshire)	Orme, Stanley
Cullen, Mrs. Alice	Hughes, Hector (Aberdeen, N.)	Oswald, Thomas
Dalyell, Tam	Hunter, Adam (Dunfermline)	Owen, Will
Darling, George	Hunter, A. E. (Feltham)	Page, Derek (King's Lynn)
Davies, G. Elfed (Rhondda, E.)	Irving, Sydney (Dartford)	Pannell, Rt. Hn. Charles
Davies, Harold (Leek)	Jackson, Colin	Pargiter, G. A.
Davies, S. O. (Merthyr)	Janner, Sir Barnett	Park, Trevor (Derbyshire, S.E.)
Delargy, Hugh	Jeger, George (Goole)	Pavitt, Laurence
Dell, Edmund	Jeger,Mrs.Lena(H'b'n&St.P'cras.S.)	Pentland, Norman
Diamond, John	Jenkins, Hugh (Putney)	Popplewell, Ernest
Dodds, Norman	Jenkins, Rt. Hn. Roy (Stechford)	Price, J. T. (Westhoughton)
Donnelly, Desmond	Jones, Rt. Hn. Sir Elwyn(W.Ham,S.)	Probert, Arthur
Driberg, Tom	Jones, J. Idwal (Wrexham)	Pursey, Cmdr. Harry
Duffy, Dr. A. E. P.	Jones, T. W. (Merioneth)	Rankin, John
Edelman, Maurice	Kelley, Richard	Redhead, Edward
Edwards, Rt. Hn. Ness (Caerphilly)	Kenyon, Clifford	Rees, Merlyn
Edwards, Robert (Bilston)	Kerr, Dr. David (W'worth, Central)	Rhodes, Geoffrey
Ennals, David	Lawson, George	Richard, Ivor
Ensor, David	Leadbitter, Ted	Roberts, Albert (Normanton)
Evans Albert (Islington, S.W.)	Lever, L. M. (Ardwick)	Roberts, Goronwy (Caernarvon)
Evans, Ioan (Birmingham, Yardley)	Lewis, Arthur (West Ham, N.)	Robertson, John (Paisley)
Finch, Harold (Bedwellty)	Lewis, Ron (Carlisle)	Robinson, Rt.Hn. K. (St.Pancras,N.)
Fitch, Alan (Wigan)	Lomas, Kenneth	Rodgers, William (Stockton)
Fletcher, Sir Eric (Islington, E.)	Loughlin, Charles	Rogers, George (Kensington, N.)
Fletcher, Ted (Darlington)	Mabon, Dr. J. Dickson	Ross, Rt. Hn. William
Fletcher, Raymond (Ilkeston)	McBride, Neil	Rowland, Christopher
Floud, Bernard	MacColl, James	Sheldon, Robert

Shore, Peter (Stepney)	Stewart, Rt. Hn. Michael	Warbey, William
Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)	Stones, William	Watkins, Tudor
Short, Mrs. Renée (W'hampton,N.E.)	Stross,Sir Barnett(Stoke-on-Trent,C.)	Weitzman, David
Silkin, John (Deptford)	Swain, Thomas	Wells, William (Walsall, N.)
Silkin, S. C. (Camberwell, Dulwich)	Symonds, J. B.	Whitlock, William
Silverman, Julius (Aston)	Taverne, Dick	Wilkins, W. A.
Silverman, Sydney (Nelson)	Thomas, George (Cardiff, W.)	Williams, Alan (Swansea, W.)
Slater, Mrs. Harriet (Stoke, N.)	Thornton, Ernest	Wilson, William (Coventry, S.)
Slater, Joseph (Sedgefield)	Tinn, James	Winterbottom, R. E.
Small, William	Tomney, Frank	Woof, Robert
Snow, Julian	Urwin, T. w.	Wyatt, Woodrow
Solomons, Henry	Varley, Eric G.	Yates, Victor (Ladywood)
Soskice, Rt. Hn. Sir Frank	Wainwright, Edwin
Spriggs, Leslie	Walker, Harold (Doncaster)	TELLERS POR THE NOES:
Steele, Thomas	Wallace, George	Mr. Ifor Davies and Mr. McCann.

Lord Balniel (Hertford)

I beg to move Amendment No. 5, in page 4, line 35, at the beginning to insert: (1) Duty under section 3 of this Act shall not charged on goods imported into the United Kingdom and used in the manufacture of pharmaceuticals (as comprised in Chapter 30). In Committee last week my right hon. and hon. Friends and I moved some Amendments to try to exempt from the surcharge the raw and semi-processed materials, technically known as intermediates, used by the pharmaceutical industry in the production of drugs. In the absence of the Chancellor of the Exchequer and the President of the Board of Trade, who were abroad explaining their policies, the junior Ministers rejected those Amendments. I regret the Chancellor of the Exchequer is not attending this particular debate, because it was clear from the junior Ministers' answers that the briefs were marked "Reject" and that they did not feel at liberty to exercise any discretion.

In the Amendment we return to the subject and deal with drugs and medicaments covered by Chapter 30 of the tariff list. We are discussing drugs and medicaments of inestimable value to the community. These are drugs of great value in eradicating disease and alleviating suffering. These are drugs which help the mentally and physically sick. These are drugs which are used in hospitals and in the home of every family when sickness strikes.

During the past few years there have been a number of inquiries into the cost of drugs. The Guillebaud Committee inquired into the cost of the Health Service. The Hinchliffe Committee inquired into the cost of prescribing. In 1962 and 1963 the Public Accounts Committee inquired into the price structure of the pharmaceutical industry. So far, we have not had to have an inquiry into a deliberate act by the Government artificially to increase the cost of drugs in this country. This debate is on that precise issue—an act of the Government which will artificially increase the cost of drugs used in the National Health Service or paid for by private patients when they are sick and medicines are prescribed for them by their doctors.

I do not think that there is any doubt on either side of the House that the surcharge will increase the cost of manufacturing drugs and medicaments. I accept that it will not be an immediate increase. The price of certain drugs will be immediately increased. I am thinking of those drugs brought into this country free of import duty which are used for clinical trials by British doctors. In general terms, however, I accept that there will not be an immediate increase in price. I have consulted two of the great pharmaceutical companies which lie within my constituency—Roche Products Ltd. and Smith Kline and French Laboratories Ltd. I understand that they, in common with other pharmaceutical companies, are doing their utmost to absorb the surcharge within their costs. Also, there will not be an immediate increase in the price of the drugs, because the price of drugs prescribed under the Health Service is fixed by the Voluntary Price Regulation Scheme.

Is the Voluntary Price Regulation Scheme to be renegotiated, because the prices at which the drugs were fixed were based on data which are no longer relevant? The drug prices were based on manufacturing costs which did not take the surcharge into account. It is reasonable, before we leave the Amendment, to 'inquire whether the voluntary price regulation will be renegotiated in the light of the surcharge.

There is no doubt that this will work through the Health Service and will increase the cost of that Service. We know that in any case during the coming year it will be substantially increased as a result of the decision of hon. Members opposite to abolish the prescription charge. At a modest estimate that will cost about £20 million. There will now be a further increase following the imposition of the 15 per cent. surcharge. I think that the House will realise that the net effect on the Health Service will be more than 15 per cent. Indeed, for every £1 which the Government will collect as a result of the surcharge, the additional cost in the Health Service will be £1 6s. 9d. The reason for this is the structure of pharmacists' pay, the wholesalers' discount and the chemists' on-costs.

I should like the Government to answer the crucial question which can be answered "Yes" or "No". Is the purpose of this surcharge on the raw materials and the partly processed materials used for the manufacture of drugs designed to reduce the amount of imports into this country? I understand that the general purpose of the surcharge is to reduce the amount of imports into this country. Does that argument apply to the drug industry? Does it apply to the raw materials and to the intermediates used in the manufacture of drugs?

The Minister of State, Board of Trade, on 2nd December, winding up the debate, said: I am sure that when we consider any modification of the surcharge it is in this area that we are bound to feel the greatest degree of sympathy. I am bound to tell him that, whilst he spoke in his usual considerate and courteous way, we are not seeking sympathy; nor is the pharmaceutical industry. What we are asking is that action shall be taken in the interests of the Health Service, in the interests of those who are sick and who have to pay higher charges as a result of the surcharge, and in the interests of the pharmaceutical industry which is one of the great exporting industries of this country.

The hon. Gentleman continued: I cannot promise that this will be reflected on Report, but I undertake to draw to the Chancellor's attention the contentions and feelings expressed by hon. Members and to make known to him the feelings of the Committee." —[OFFICIAL REPORT, 2nd December. 1964: Vol. 703, c. 630.] We are very fortunate in that the Chancellor has now returned to the Chamber and I should like to know what action he is taking as a result of the information which was passed to him by the Minister of State, Board of Trade. He took a political decision, so far as one could gather, without any consultation with the industries concerned. The Minister of State, Board of Trade undertook to call the arguments to his attention. I hope that we shall be given some information about the result of the representations which must have been made by the Board of Trade to the Chancellor of the Exchequer.

I should like to refer to the effect of the surcharge on individual companies, so that hon. Members opposite can measure the scale of the charge which they are imposing on the drug industry and the effect that it will have on various drugs which are prescribed—life-saving drugs, drugs to alleviate suffering and to eradicate disease. Before I do so, I should like to quote from the Hinchliffe Report. Paragraph 83 is directly relevant to the Amendment which we are now discussing, and it reads as follows: The National Health Service was introduced at a time when rapid advances in pharmacology led to the discovery and development of many expensive new drugs. The large-scale production of penicillin during the war opened the way to the discovery and marketing of a large and ever-growing range of antibiotics. The range of synthetic drugs has widened and the use of cortisone and other corticosteroids is increasing. These new preparations are all extremely complex substances"— and this is the reason why so many of the pharmaceutical companies will find it impossible to reclaim on the surcharge— and the costs of research and of the intricate plant and equipment involved in their production are inevitably very high. Many of the new preparations are of inestimable value and have added considerably to the general practitioner's armamentarium. Diseases which were formerly unresponsive to other forms of treatment have been brought under effective control by their use in patients' homes, saving innumerable hospital beds. Tuberculosis and pneumonia are examples that readily come to mind. The same applies to many cases of severe asthma, while patients with chronic bronchitis can be kept in better health and more able to continue or resume work. It adds to the drug bill, but treatment in hospital is many times more expensive. Hon. Members opposite may like to know that every single one of these drugs is having a surcharge of 15 per cent. imposed upon the raw materials used in its manufacture. They may like to know that in the case of the diseases referred to in the Report, a 15 per cent. surcharge is being imposed on the materials which have to be imported if the drugs are to be made to attack it.

9.30 p.m.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

I am sure that the whole House appreciates the point which the noble Lord is making. We appreciate that, according to him, the 15 per cent. surcharge will increase the price of the drugs. In fairness to the House and to the nation, will the noble Lord, when he talks about a 15 per cent. increase in the cost of the drugs, also tell us what are the profits of the pharmaceutical firms, in particular the two which he mentioned as being in his constituency, so that we may form a correct assessment of the situation? Will he provide the profit and loss accounts so that we can judge how much trust we can put in this story of the effect of the 15 per cent. surcharge?

Lord Balniel

The hon. Member was not present to hear the opening part of my speech, in which I said that the pharmaceutical companies in my constituency are absorbing the cost. The hon. Gentleman clearly does not know that the prices of drugs prescribed in the National Health Service are agreed by the Minister of Health, whose absence from this and previous debates I find slightly distressing. These prices are agreed by the Ministry with the pharmaceutical companies concerned.

I want to show hon. Members the effect on the cost of manufacturing these drugs. The Hinchliffe Report referred to the corticosteroids, the raw materials of which have to be imported. I do not believe that the hon. Gentleman is suggesting that they should not be imported. The annual import value of the raw materials and partly processed materials of one firm which makes these corticosteroids is £300,000, and the firm would have to pay a surcharge of £45,000 on it. There are six firms working on new antibiotics. The annual import value of the raw materials and intermediates which they need—and they are not produced in this country—for these new antibiotics amounts to £665,000, and the Chancellor of the Exchequer is imposing a surcharge of £99,000. There is a firm which makes a drug for diabetes. Its annual import value of raw materials is £300,000 and the surcharge will be £45,000.

The most dramatic advance in medicine in recent years has been the way in which tuberculosis, which used to be one of the killer diseases in this country, has been reduced to an illness still of severity, undoubtedly, but one which no longer presents a major national problem. There are two firms whose annual import value for raw materials and partly processed substances for use in the manufacture of drugs for the treatment of tuberculosis amounts to £200,000, and the Chancellor is imposing a surcharge of £30,000 on that.

Mr. Loughlin

The noble Lord has spoken about two firms in his constituency which are absorbing the cost of the surcharge.

Lord Balniel

Temporarily.

Mr. Loughlin

This is as I understand his statement; he can correct me later if I am wrong. The noble Lord went on to say that there was an existing agreement as regards the Health Service which meant that there would be no increase to the Service in the cost of drugs consequent upon the 15 per cent. surcharge. If this is the point which he was making, does it not defeat the whole of his case that the surcharge would mean an additional cost to the Health Service?

Lord Balniel

The company I referred to is temporarily able to absorb the cost. It is quite possible, for all I know, that it is now having to sell the drugs at a loss. It is quite probable that it is selling with its profit margin completely eliminated. Plainly, additional costs at that rate cannot be absorbed for any prolonged period.

Mr. Albert Evans (Islington, South-West)rose

Lord Balniel

The hon. Gentleman must make his own speech.

The general argument for the surcharge which has been advanced time and again by the Treasury Bench is that its purpose is to reduce imports. Will the Chancellor answer "Yes" or "No" to this question: is it his desire to reduce the imports of the pharmaceutical industry? The right hon. Gentleman has now been able to attend the debate. I ask him to give the most urgent consideration to the Amendment, which affects the Health Service, which affects private patients when they are sick and have to purchase medicines, and which affects the well-being of the pharmaceutical industry.

On this Amendment I cannot advance the argument of exports, but I may mention that this is one of our great exporting industries. It exports £54 million worth a year. I suspect that the surcharge, far from facilitating its task of exporting in a highly competitive market, will make it even more difficult.

Mr. Loughlin

I shall devote my remarks to the single point which I raised with the noble Lord the Member for Hertford (Lord Balniel). I accept that the pharmaceutical industry is a great industry, and I acknowledge all the praise which we give to it, but certain facts remain unaltered. The pharmaceutical industry, generally speaking, could absorb the whole of the additional 15 per cent. surcharge without batting an eyelid. There have been some scandalous charges made and enormous advantage of the National Health Service has been taken by the pharmaceutical industry.

The hon. Member for Hertford began by pleading that the surcharge involved additional costs for the National Health Service and castigated the Government about what was an apparent contradiction in that the Government were imposing the surcharge on the National Health Service and the Government themselves would have to pay the bill. That point was made in the debate in Committee. Today, after arguing the same case, the hon. Member said that two firms in his constituency were prepared to absorb the 15 per cent. Therefore, so far as they are concerned there will be no additional cost to the Health Service.

Sir Harmar Nicholls

Is the hon. Gentleman giving an answer on behalf of the Chancellor of the Exchequer and saying that the 15 per cent. is imposed on the pharmaceutical industry because it has made too large profits?

Mr. Loughlin

I am not saying anything of the sort. It is no good the right hon. Member for Bexley (Mr. Heath) constantly nodding. The implications of what I say may well be as his hon. Friend has inferred. Is there something wrong with the right hon. Gentleman's neck?

Mr. Heath

If the hon. Gentleman is to pursue the argument, he must accept that the goods will not be kept out. This is merely an impost on the pharmaceutical industry in order to get more tax from it.

Mr. Loughlin

The right hon. Gentleman mistakes my argument. I am merely pointing out the contradictions in the statement made by the hon. Member for Hertford, who apparently did not wish to make any correction when I made an intervention. He cannot argue that the 15 per cent. imposes an additional burden on the National Health Service if in the instance from his own constituency he admits that the firms are not only able but willing to absorb the surcharge. In addition, he argues that because of a prior agreement—he asks whether it will be renegotiated—no additional burden can be imposed on the Health Service. [Interruption.] The hon. Member for Ormskirk (Sir D. Glover) constantly bawls things out, but I do not know what he said. I am quoting the words of his hon. Friend.

Sir D. Glover

If the hon. Gentleman is saying that his Government are the sort of Government who would negotiate an agreement on certain prices and then put a 15 per cent. surcharge on the prices and expect the agreement to stand, we know what sort of Government we have.

Mr. Loughlin

I remember the times that we had to protest about the things that the previous Government did. An agreement was negotiated for nurses, which came within the National Health Service, but right hon. Gentlemen opposite repudiated it. I could give other instances, but I should be ruled out of order.

If the hon. Member for Hertford argues this type of case, he cannot at the same time argue the case that the Government are imposing an additional burden on the National Health Service. If the drug firms increase the cost of drugs, the Government will be responsible for the increased cost of the National Health Service. If the industry absorbs the extra cost—and the hon. Member for Hertford says that it will—and if an increase in cost is prohibited under any other arrangement, then the case he presented falls to the ground.

9.45 p.m.

Mr. Gower

My hon. Friend the Member for Hertford (Lord Balniel), both in Committee and tonight, has put forward clearly and fairly a very strong case. Whatever hon. Members opposite may say, one point he made is unanswerable. It is that if this charge is sustained beyond a very short period then the ultimate effect must be to add to the overall cost of the National Health Service. I cannot see how anyone could gainsay that. That must be the effect unless the surcharge is to be maintained for a lesser period than we have been led to expect.

As we see when we look at this Finance Bill certain items have been exempted, mostly food. There is surely as strong a case for taking a similar view of materials which go into the preparation and manufacture of valuable drugs. Food was exempted because the surcharge would have affected so closely the personal spending of all our citizens. Had there not been a fully comprehensive Health Service the Government would not have dared to impose the surcharge on the pharmaceutical industry. They would never had thought of imposing it on merit.

The only reason the Government have risked putting the surcharge on pharmaceutical imports is that they feel that the full effect will be cushioned from people by the existence of the Health Service. But that is not dealing with the matter as one of principle. They simply feel that there is a special reason why they can do it without apparent ill effects in this case.

My hon. Friend also stressed the effect on our export trade. As in the case of other commodities we have discussed, the very measures the Government are taking to restrict some of these exports may hamper or defeat them in their long-term job, which is to maintain and increase exports of this manufacturing country. I have no doubt that hon. Members on this side will support the Amendment moved so persuasively by my hon. Friend.

Mr. Stanley Orme (Salford, West)

The hon. Member for Hertford (Lord Balniel) gave us harrowing examples of suffering and the manner in which drugs are used. My hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) has pointed out how the pharmaceutical industry can absorb most of the extra cost through the profits made in recent years. But if there is an increased cost on the National Health Service the attitude of hon. Members on this side of the House is that the nation as a whole and not the sick alone should bear it.

If, for some reason, the party opposite had introduced import restrictions during their previous "stop-go" policy, their answer would have been to increase prescription charges. Our answer is to remove these charges in difficult times and let the nation and not the sick bear the cost.

Mr. Heath

Will the hon. Member say when, in our so-called "stop-go" policy, we imposed import restrictions?

Mr. Orme

The right hon. Gentleman knows very well what I am referring to—all the previous increases in Bank Rate and the other charges which were imposed by him and his right hon. Friends.

The moral which the nation should draw from this is that in a time of serious financial difficulty the Labour Government are removing prescription charges and allowing the cost to fall on the whole nation, particularly those who can afford it.

Sir Alexander Spearman (Scarborough and Whitby)

Is the hon. Gentleman defending this surcharge on the ground that it is a good revenue producer, or on the ground that it will prevent imports?

Mr. Orme

I am not defending this as a good revenue producer because, as those on the Government Front Bench stated, this is a temporary measure which will be removed at the earliest possible opportunity. The pharmaceutical industry should take this into account. It is well able to absorb the surcharge. We will let it fall, not on the sick and needy, but on the nation as a whole.

Miss Quennell

Before the hon. Gentleman sits down, could he clarify one point which I find hard to follow? He said that the nation as a whole should bear this and not the sick. But this levy is an impost on the sick and not on the nation as a whole.

Mr. Speaker

I think that the hon. Gentleman has sat down.

Mr. Fell

What I find so incredible is the misunderstanding of hon. Members opposite about the whole basis of the surcharge. I might be wrong, and I should be delighted if the Chancellor of the Exchequer would put me right, but I understood that the surcharge was introduced in order to cut imports. It is simply that. Therefore, it is not a question of whether the price of drugs will go up and who will pay for them. In so far as the surcharge is successful, it will stop drugs coming into this country. It is as simple as that. If the drugs made with imported materials are essential to the sick, this is a tax on sickness.

The Financial Secretary to the Treasury (Mr. Niall MacDermot)

We have had a rather shorter debate on this Amendment than we had on the similar Amendment in Committee. No doubt that is because hon. Members do not wish to deploy at the same length the arguments which were fully canvassed in that debate.

It is perfectly understandable, however, that hon. Members should have raised this matter again. My hon. Friend the Minister of State, Board of Trade assured hon. Members that he had listened with great sympathy to the arguments which had been adduced and that he would report them to the Chancellor of the Exchequer. While making it quite clear that he could not promise that that would be reflected on Report—[Interruption.] The hon. Member for Peterborough (Sir Harmar Nicholls) did not have the courtesy to wait to the end of the last debate to listen to the answer to the speech which he made.

Sir Harmar Nicholls

The convention is that somebody who has spoken should listen to the speech which follows. I did that. The speech of the Chief Secretary was, I understand, two speeches away. I only saw that on the annunciator, otherwise I would have been here.

Mr. MacDermot

The convention is that one waits until the person one has attacked has replied. The hon. Gentleman attacked all the members of the Government Front Bench. The hon. Member did not have the courtesy to wait for my hon. Friend the Chief Secretary to answer his attack. Perhaps, therefore, he will contain himself at this stage. My hon. Friend the Minister of State, Board of Trade said: I am sure that when we consider any modification of the surcharge it is in this area that we are bound to feel the greatest degree of sympathy."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703. c. 630.] These Amendments, particularly when persuasively argued, as we have heard, evoke sympathy. We have examined them closely and I will answer some of the questions which have been put to us. First, we were asked whether it is the intention of the Government through the surcharge to reduce the volume of imports of drugs. Let me answer that directly. It is not our intention to reduce the volume of imports of drugs. I qualify that at once, however, by saying that it is necessary to apply the brake throughout the field of our imports. What has been happening is that our imports have been rising, in this field as in others. It must be understood by hon. Members that it is the whole purpose of this Measure to apply a brake over the field of our imports generally. We do not wish to see, and I am sure that hon. Members opposite do not wish to see, the import bill for drugs running away, out of control, without any relation to the economic situation and to our balance of payments.

I have said, and I do not wish to withdraw from it in any way, that it is not our object to try to reduce the import bill in relation to drugs. Let me also say that if it had been possible for us to extract from the field of imports those materials and chemicals which are used for the pharmaceutical industry, we would have been happy to do so.

The hon. Member for Barry (Mr. Gower) asked why we cannot treat drugs in the same way as we have treated food and why we cannot regard this as a category which should be exempted. I assure hon. Members that if it was as simple as that, there would be an Amendment on the Order Paper tonight in the name of my right hon. Friend the Chancellor of the Exchequer. I have been into this matter in great detail, and with great care, with my hon. Friends since the debate in Committee. For reasons which I hope to explain, at not too great length, I assure hon. Members that it would not be possible to exclude drugs which are used for the pharmaceutical industry without, at the same time, excluding similar materials which are used, and in many cases to a much greater extent, in other industries. If those chemicals were exempted for a whole range of other industries, it would confer a quite unwarranted benefit for those industries in comparison with other similar industries which happen to be using slightly different chemicals.

Lord Balniel

In the Amendment, we are dealing with Chapter 30. May I ask whether the hon. and learned Gentleman's argument applies to Chapter 29? My information is that the substances listed in Chapter 29 are used overwhelmingly by the pharmaceutical industry and not in other industries.

Mr. MacDermot

It does apply to it, and I will give examples presently.

Before I explain in detail what I have just advanced in argument, I remind the House that there is no need for this charge to have any adverse effect upon any patient. The National Health Service is open to anyone who chooses to use it and it caters for anyone who is in serious need of medication. I appreciate that that does not necessarily relieve the private patients who prefer not to use the National Health Service. The National Health Service is, of course, available to every patient, and it is not going to mean any obstruction in any way of the treatment of any patient. It does not follow, as my hon. Friends who have intervened in this debate have stated, that the effect of the charge is going to mean some enormous increase in the National Health Service bill.

10.0 p.m.

The noble Lord the Member for Hertford, who moved the Amendment, very fairly told us that two distinguished firms in his constituency have decided themselves to absorb the charge. I hope and believe that other firms will follow that excellent example, and as my right hon. Friend said at the very outset, in presenting his Budget, it is certainly the Government's hope and belief that it is not necessary, and will not be the practice, that a great many industrial firms will pass this charge on automatically, still less impose a profit charge on it when they do pass it on.

Before I leave this subject, the noble Lord asked me a specific question about the voluntary price regulation scheme. The position is that that scheme is in constant negotiation. It is, therefore, open to manufacturers at any stage to ask, if necessary, for the charge to be taken into account in those negotiations, and that argument will, of course, be fully considered in the negotiations, if it is done. As yet, I am told, there has been no request to that effect.

Turning to the Amendment itself, the Amendment differs somewhat from that which the noble Lord moved in Committee. Firstly, because it seeks to exempt from the temporary charge on imports all materials used in the manufacture of pharmaceutical products and not merely the organic chemicals in Chapter 29. Secondly, it does not attempt to limit the exemption, as the previous Amendment did, to materials which are permanently or temporarily exempt from the protective duties. It is, therefore, wider in scope than the Amendment we considered before.

In many cases it is not possible to determine at importation whether or not goods will be used in the manufacture of pharmaceuticals. It is here that the practical difficulty arises in applying the suggested Amendment. Nor does the Amendment provide a definition which could be operated as an exemption at import, or institute any mechanism by which the ultimate use of the goods could be followed up and controlled, as there is, for instance, in the case of the shipbuilding relief scheme. Therefore the Amendment, as put forward, would be unworkable even in relation to pharmaceutical chemicals

Pharmaceutical products in Chapter 30 range a great deal wider than is generally appreciated. Actual drugs and medicines are covered under the headings 30.01 to 30.03. Heading 30.04 includes wadding and bandages, and heading 30.05 a whole miscellany of medical and surgical goods including first-aid boxes and kits, dental fillings, and surgical catgut and other sutures. To exempt the materials which are used in the manufacture of goods under these two latter headings would have a serious effect on the charge on, for example, plastics, manufactured wood, and textiles, because, of course, the materials which go into wadding and bandgaes and first-aid boxes include materials which are used in a host of other industries.

Sir Harmar Nicholls

One sees the force of the argument being used about Chapter 30 articles—one appreciates that—but would the hon. and learned Gentleman concede the point that for the most part Chapter 29 is used by the pharmaceutical industry, and as such a surcharge as this has by its very nature an element of rough justice about it, would it not be possible in the case of Chapter 29 to put the exemptions is so many words?

Mr. MacDermot

We have considered that point very carefully indeed, because we hoped we might find a solution on those lines, but I am afraid we did not, for reasons I will make clear in a moment.

As the noble Lord made clear, he is concerned particularly, as he was in Committee, with trying to take out of charge partly processed intermediates from which drugs are manufactured. It was this possibility which we examined exhaustively after Committee stage. The importation of finished medicaments is a relatively minor aspect. There are very few finished products which are imported. On the whole, we are concerned with goods manufactured here out of imported chemicals.

The use of these imported chemicals is substantial, and many of them are the same as those used in greater quantity for other industrial purposes. May I give a few examples? Titanium oxide, under heading 28.25, is a whitening agent used in the manufacture of pills and tablets but it has a far greater use in cosmetics and synthetic textiles. I will come in a moment to Chapter 29. Another example from Chapter 28 is zinc oxide, which is in general pharmaceutical use for ointments and surgical dressings, but its major use is industrial, largely in the rubber industry.

Coming to Chapter 29, phenol, under 29.06, is used as a disinfectant and medicament but industrially as an ingredient in plastics and synthetics. Urea, in 29.25, is pharmaceutically used for the treatment of some kidney troubles but its use for that purpose is small compared with its industrial use for plastics. Ammonia is used in pharmaceutical processing but mainly in general heavy chemical processes. There are three other examples which I will give from Chapter 29—triethanolamine, lactose and nitroglycerine. I could tell hon. Members the industries in which they are used if they were interested.

The result, therefore, we found, of trying to apply the exemption to Chapter 29 would be that a very substantial quantity of chemicals would be exempt which were not primarily used in the pharmaceutical industry but were used in other industries such as the rubber and plastics industries. This would at once provoke a chain reaction which, as we have made clear throughout, is one of the tests which must be applied before we can make an exemption. I hope that hon. Members have appreciated that this is a real difficulty.

Sir Harmar Nicholls

My information was that while a proportion of the materials in Chapter 29 were used in that way, percentage-wise they were mostly used for medicaments. Is that correct?

Mr. MacDermot

The majority of the headings relate to chemicals which for the most part are used in the pharmaceutical industry. I do not accept the hon. Member's argument, but I am not in a position to give a categorical answer one way or the other. My advice is that there are many of these chemicals which are partly used for pharmaceutical purposes but of which a much greater bulk is used in industry. It is because of these difficulties that we are unable to provide by way of straight exemption for the chemicals in Chapter 29.

It may partly answer the hon. Member to be told that the value of imports of organic chemicals under Chapter 29 in 1963 was about £55 million and the value of inorganic chemical imports was about £20 million. To exempt all those would have had a major effect on import savings and would have affected many other industries as well as pharmaceutical manufacture. To exempt only the particular headings in which most of the goods are know to go to the pharmaceutical industry would fail to cover much of the intended field, although it would arbitrarily benefit a number of users outside it. Thus to exempt throughout the Chapter those chemicals which are of a kind used in pharmaceutical manufacture would cover items whose pharmaceutical use is quite negligible.

An alternative could be to set up a vast administrative machine to try to follow through the chemicals and to repay the charge to pharmaceutical manufacturers where it was established that the chemicals they were using had borne the charge. It is unnecessary for me to go into this because hon. Members will appreciate the impracticability of setting up a bureaucratic machine of that kind for what is, after all, a purely temporary charge.

The question of the effectiveness of drawback on the export trade was again repeated with force. Hon. Members expressed their views based on their experience of the operation of drawback and expressed the fear that the drawback would be an empty offer. As I sought to explain in Committee, the Customs and Excise is proposing to devise a far more flexible scheme for drawback for this temporary charge and appreciates that there are rigidities in the scheme devised for the purpose of drawback of the protective duty.

Where there is an established right to drawback it is simpler to apply that machinry. That will be done because it has already been worked out. In other cases, if an exporter thinks that any material he is using to make export goods has borne the charge, he should take this up with his supplier. I appreciate the point made in debate a number of times that because the supplier is sometimes reluctant to supply this information to his purchasers, it is not easy for the exporter to obtain detailed information about exactly how much of his material has borne the surcharge, and the amount of charge made.

However, if exporters check to see if a charge has been made and then report that matter to their local Customs officer, the intention is that the matter will be taken up with the supplier who will often be more ready to disclose the information, which does not involve the commercial difficulties which might be involved if he supplied it to this purchasers. In that way the Customs officer will be able to assist exporters to obtain the drawback to which the are entitled.

These matters will be covered by regulations and I ask hon. Members and manufacturers to accept the assurance that it is our intention to apply this scheme very flexibly and to give every assistance to manufacturers to obtain the drawback to which they are properly entitled.

I hope that what I have said is sufficient to convince the House that it is in no spirit of obstinacy that we have felt unable to bring forward the Amendment which hon. Members would like. I repeat that when we come to consider modifications of the imposition of the charge it may be easier for us to meet such points, that we will give early consideration to this matter and that we will treat it with the greatest degree of sympathy.

Mr. Heath

The Financial Secretary gave a detailed explanation of the view of the Government on this matter, a far more detailed explanation than we were able to obtain in Committee. The Amendment was moved in a reasoned way and I wish to express the gratitude of my hon. Friends to the Financial Secretary for trying to meet the point with a similarly reasoned explanation.

It was a rather pleasant experience not to hear the vicious circle of arguments which the Chief Secretary gave us. The Financial Secretary approached the matter in a detailed and practical way, for which we thank him. It was an explanation far unlike some of the speeches made by some of his hon. Friends, who have demonstrated that they are governed more by prejudice against the pharmaceutical industry and by political dogma than they are by the interests of the people who buy the drugs. I thank the hon. and learned Gentleman, the Chancellor and the Board of Trade Ministers for the consideration they have abviously given to the matter in the meantime, and I want now to deal with some of the points mentioned by the Financial Secretary.

First of all, the hon. and learned Gentleman has given an assurance that it is not the intention of the Government to reduce the import of these drugs and, particularly, the import of the life-saving drugs. But he also said, in very carefully worded sentences, that it was the desire of the Government to apply the brake generally to any increase that was going on. In many ways, that is just as bad. The Government do not wish actually to cut back the drugs coming in to below the present level, but wish to prevent any increase in the drugs coming in. Is that not just as bad? These drugs are not being brought in just for the fun of it, but because they are needed as lifesaving drugs, and the Financial Secretary's use of that expression in relation to drugs, that the object is to prevent an increase of drugs coming into the country, causes considerable anxiety.

10.15 p.m.

Mr. Archie Manuel (Central Ayrshire)

Does not the right hon. Gentleman think that he is overstating his case? The words used in the Amendment are … shall not be charged on goods imported into the United Kingdom and used in the manufacture of pharmaceuticals" … My hon. and learned Friend the Financial Secretary explained at length that in regard to some, at any rate, of the imports, a rather lesser proportion was used in drug manufacture and a greater proportion in industrial processes.

Mr. Heath

That is true as to part, but the Financial Secretary also said that the Government wanted to prevent growth in these items and that, of course, will affect the growth of items for drugs. He also said, using a very telling expression, that he did not want the drug bill to run away with itself. I can quite appreciate him saying that, as Financial Secretary. That has always been a very sound Treasury view, and I would hope that the Chancellor himself would share it, but it causes perplexity as to why in this case the Chancellor should have allowed his colleagues to abolish the prescription charges, because that is one thing that will allow the drug bill to run away with itself, as everyone knows. So in one case he puts on a 15 per cent. surcharge to prevent the drug bill increasing, if not cutting it back, yet, in the other case, he allows the abolition of the prescription charges. The view of the Treasury and of other Departments in this matter is well known, and I am sorry to see that on this occasion the Chancellor has lost.

The Financial Secretary went on to say that it need have no adverse effects on the Health Service from the point of view of the Health Service bill. That was because my hon. Friend said that the firms in his constituency would do their best to absorb the charge—I have no doubt that other firms will do the same—and emphasised, quite naturally, that it would be on a temporary basis. But the question was raised whether the Chancellor would be prepared to renegotiate the Voluntary Price Regulation Scheme. I was glad to hear the hon. and learned Gentleman say that if it proved impossible for firms to absorb the charge, they could come along, and would be sympathetically heard in the matter.

The Financial Secretary then dealt with the very important point of exports, raised tonight and in the Committee debate. He described the obviously sincere method by which the Treasury and the Department concerned, and the Customs, will try to deal with this point, but he impressed us all with the tremendous trouble to which everyone has to go, or the pharmaceutical industry has to go, to try to trace through these items in an attempt to get a drawback.

There is no doubt that it will be a cumbrous, complicated and difficult process involving a great deal of work for the firms, as well as for the Customs and the Departments. So it comes back to the fundamental question: if the Financial Secretary is not trying to cut back the amount of drugs, but is prepared to go to all these lengths to help people get the drawback, and not interfere with exports, what is the purpose of putting this surcharge on these items at all?

At this point I will come to his argument that it is practically impossible to separate in these items other uses to which they could be put. We do not argue about the wording of this Amendment—the Financial Secretary has not done so, but has considered Chapter 29 as well as Chapter 30—so we come to the practical question: is it possible to separate the items Here we come to the difficulty of the Government's definition of raw material. The Government have made their own definition, so they are adhering to it as a matter of principle, without showing why, in practice, it is the only acceptable definition.

I was very interested in the list which the Financial Secretary read. It did not include most of the items to which my hon. Friend referred, but it indicated the uses to which these other items are put. They were all fundamental industrial uses of raw materials. As we have constantly said, the cost of these products will be increased. Leaving aside the question of drawback, the increased cost will have repercussions on wages, and so on. Would it not have been better, rather than going to the trouble of putting the surcharge on pharmaceuticals and, at the same time, on all those items which are used in industry, to take off the surcharge on pharmaceuticals while recognising that those industries which use these goods would have the benefit of not paying surcharge?

We had already thought of the suggestion put forward by the Financial Secretary that an alternative would be for the pharmaceuticals to have a drawback on the chemicals used. The hon. and learned Gentleman suggested that that would mean a large bureaucratic machinery, but I should have doubted that. I should have thought that an accountant's certificate from the firm concerned would be sufficient. That is normally accepted by the Board of Trade.

We have examples of that when carrying through procedures on chemicals and fertilisers with reference to the Monopolies Commission. An accountant's certificate showing the amount of these goods used by a pharmaceutical firm, I should have thought, would have been satisfactory to the Chancellor and to the Board of Trade for drawback. I should have thought it would have been possible to take these surcharges off even though we would give the benefit of not having to pay surcharge to industries concerned.

I am grateful for the fact that the Chancellor and his colleagues are to give consideration to this matter, but we do not find the position satisfactory. We are grateful for the assurances about the application which exporters can make to Customs and for the reconsideration which will be found possible, but because we do not believe that the surcharges should have been placed on these goods and that it would have been better that other industrial users should benefit or that an accountant's certificate should be accepted for rebate, I must advise my hon. and right hon. Friends to divide the House on this Amendment.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 181, Noes 203.

Division No. 29.]	AYES	[10.23. p.m.
Agnew, Commander Sir Peter	Bruce-Gardyne, J.	Fletcher-Cooke, Sir John (S'pton)
Alison, Michael (Barkston Ash)	Bullus, Wing Commander Sir Eric	Forrest, George
Allan, Robert (Paddington, S.)	Butcher, Sir Herbert	Foster, Sir John
Allason, James (Hemel Hempstead)	Carr, Rt. Hn. Robert	Fraser,Rt.Hn.Hugh(St'fford & Stone)
Astor, John	Channon, H. P. G.	Gammans, Lady
Atkins, Humphrey	Chichester-Clark, R.	Giles, Rear-Admiral Morgan
Awdry, Daniel	Clark, William (Nottingham, S.	Gilmour, Sir John (.East Fife)
Baker, W. H. K.	Cole, Norman	Glover, Sir Douglas
Balniel, Lord	Cooke, Robert	Gower, Raymond
Barlow, Sir John	Cooper-Key, Sir Neill	Gresham-Cooke, R.
Batsford, Brian	Corfield, F. V.	Grieve, Percy
Beamish, Col. Sir Tufton	Costain, A. P.	Griffiths, Peter (Smethwick)
Bell, Ronald	Craddock, Sir Beresford (Spelthorne)	Grimond, Rt. Hn. J.
Bennett, Sir Frederic (Torquay)	Crawley, Aidan	Gurden, Harold
Bennett, Dr. Reginald (Gos & Fhm)	Cunningham, Sir Knox	Hall, John (Wycombe)
Berkeley, Humphry	Curran, Charles	Hall-Davis, A. G. F.
Berry, Hn. Anthony	Currie, G. B. H.	Hamilton, Marquess of (Fermanagh)
Bessell, Peter	Dalkeith, Earl of	Harris, Frederic (Croydon, N. w.)
Biffen, John	Dance, James	Harris, Reader (Heston)
Biggs-Davison, John	Davies, Dr. Wyndham (Perry Barr)	Harvey, John (Walthamstow, E.)
Bingham, R. M.	d'Avlgdor-Goldsmid, Sir Henry	Hawkins, Paul
Birch, Rt. Hn. Nigel	Dean, Paul	Heald, Rt. Hn. Sir Lionel
Black, Sir Cyril	Digby, Simon Wingfield	Heath, Rt. Hn. Edward
Box, Donald	Doughty, Charles	Higgins, Terence L.
Boyd-Carpenter, Rt. Hn. J.	du Cann, Rt. Hn. Edward	Hiley, Joseph
Boyle, Rt. Hn. Sir Edward	Eden, Sir John	Hill, J. E. B. (S. Norfolk)
Brinton, Sir Tatton	Emery, Peter	Hirst, Geoffrey
Bromley-Davenport,Lt.-Col.SirWalter	Errington, Sir Eric	Hobson, Rt. Hn. Sir John
Brooke, Rt. Hn. Henry	Fell, Anthony	Hogg, Rt. Hn. Quintin
Hornby, Richard	Maxwell-Hyslop, R. J.	Sharpies, Richard
Hornsby-Smith, Rt. Hn. Dame P.	Maydon, Lt.-Cmdr. S. L. C.	Shepherd, William
Howe, Geoffrey (Bebington)	Meyer, Sir Anthony	Smith, Dudley (Br'ntf'd & Chiswick)
Hunt, John (Bromley)	Mills, Peter (Torrington)	Spearman, Sir Alexander
Hutchison, Michael Clark	Mills, Stratton (Belfast, N.)	Stainton, Keith
Irvine, Bryant Godman (Rye)	Mitchell, David	Stanley, Hn. Richard
Johnston, Russell (Inverness)	More, Jasper	Summers, Sir Spencer
Jones, Rt. Hn. Aubrey (Hall Green)	Morrison, Charles (Devizes)	Taylor,Edward M. (G'gow,Cathcart)
Jopling, Michael	Mott-Radclyffe, Sir Charles	Taylor, Frank (Moss Side)
Joseph, Rt. Hn. Sir Keith	Murton, Oscar	Thompson, Sir Richard (Croydon,S.)
Kaberry, Sir Donald	Nicholls, Sir Harmar	Thorpe, Jeremy
Kerr, Sir Hamilton (Cambridge)	Nicholson, Sir Godfrey	Tiley, Arthur (Bradford, W.)
Kilfedder, James A.	Noble, Rt. Hn. Michael	Vaughan-Morgan, Rt. Hn. Sir John
Kimball, Marcus	Onslow, Cranley	Walder, David (High Peak)
King, Evelyn (Dorset, S.)	Orr, Capt. L. P. S.	Walker, Peter (Worcester)
Lancaster, Col. C. G.	Osborn, John (Hallam)	Walker-Smith, Rt. Hn. Sir Derek
Litchfield, Capt. John	Page, R. Graham (Crosby)	Wall, Patrick
Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)	Pearson, Sir Frank (Clitheroe)	Walters, Dennis
Lloyd, Ian (P'tsm'th, Langstone)	Peel, John	Ward, Dame Irene
Longden, Gilbert	Peyton, John	Weatherill, Bernard
Loveys, Walter H.	Pitt, Dame Edith	Webster, David
Lubbock, Eric	Pounder, Rafton	Whitelaw, William
Lucas-Tooth, Sir Hugh	Powell, Rt. Hn. J. Enoch	Wilson, Geoffrey (Truro)
McAdden, Sir Stephen	Price, David (Eastleigh)	Wise, A. R.
MacArthur, Ian	Prior, J. M. L.	wolrige-Gordon, Patrick
Mackenzie, Alasdair(Ross & Crom'ty)	Ramsden, Rt. Hn. James	Woodhouse, Hn. Christopher
Mackie, George Y. (C'ness & S'land)	Rawlinson, Rt. Hn. Sir Peter	Woodnutt, Mark
Macleod, Rt. Hn. Iain	Rees-Davies, W. R.	Younger, Hn. George
McMaster, Stanley	Ridley, Hn. Nicholas
McNair-Wilson, Patrick	Ridsdale, Julian	TELLERS FOR THE AYES:
Maginnis, John E.	Roots, William	Mr. Ian Fraser and
Maude, Angus E. U.	Russell, Sir Ronald	Mr. R. W. Elliott.
Maudling, Rt. Hn. Reginald	Scott-Hopkins, James
NOES
Abse, Leo	Edwards, Rt. Hn. Ness (Caerphilly)	Hunter, A. E. (Feltham)
Allaun, Frank (Salford, E.)	Edwards, Robert (Bilston)	Irving, Sydney (Dartford)
Allen, Scholefield (Crewe)	English, Michael	Jackson, Colin
Armstrong, Ernest	Ennals, David	Janner, Sir Barnett
Atkinson, Norman	Ensor, David	Jeger, George (Goole)
Bagier, Gordon A. T.	Evans, Albert (Islington, S.W.)	Jenkins, Hugh (Putney)
Barnett, Joel	Evans, Ioan (Birmingham, Yardley)	Johnson, Carol (Lewisham, S.)
Baxter, William	Finch, Harold (Bedwellty)	Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)
Bence, Cyril	Fitch, Alan (Wigan)	Jones, J. Idwal (Wrexham)
Bennett, J. (Glasgow, Bridgeton)	Fletcher, Sir Eric (Islington, E.)	Jones, T. W. (Merioneth)
Binns, John	Fletcher, Ted (Darlington)	Kelley, Richard
Blackburn, F.	Fletcher, Raymond (Ilkeston)	Kenyon, Clifford
Blenkinsop, Arthur	Floud, Bernard	Kerr, Dr. David (W'worth, Central)
Boardman, H.	Foot, Sir Dingle (Ipswich)	Leadbitter, Ted
Bowden, Rt. Hn. H. W. (Leics S.W.)	Foot, Michael (Ebbw Vale)	Lever, L. M. (Ardwick)
Boyden, James	Fraser, Rt. Hn. Tom (Hamilton)	Lewis, Arthur (West Ham, N.)
Braddock, Mrs. E. M.	Freeson, Reginald	Lewis, Ron (Carlisle)
Bradley, Tom	Galpern, Sir Myer	Lomas,Kenneth
Bray, Dr. Jeremy	Garrow, A.	Loughlin, Charles
Broughton, Dr. A. D. D.	George, Lady Megan Lioyd	Mabon, Dr. J. Dickson
Brown, Hugh D. (Glasgow, Provan)	Ginsburg, David	McBride, Neil
Brown, R. W. (Shoreditch & Fbury)	Gourlay, Harry	McCann, J.
Buchan, Norman (Renfrewshire, W.)	Gregory, Arnold	MacColl, James
Buchanan, Richard	Grey, Charles	MacDermot, Niall
Butler, Herbert (Hackney, C.)	Griffiths, David (Rother Valley)	McGuire, Michael
Butler, Mrs. Joyce (Wood Green)	Hale, Leslie	McInnes, James
Callaghan, Rt. Hn. James	Hamilton, James (Bothwell)	MacKenzie, Gregor (Rutherglen)
Carmichael, Neil	Hamling, William (Woolwich, W.)	MacPherson, Malcolm
Carter-Jones, Lewis	Hannan, William	Mahon, Peter (Preston, S.)
Castle, Rt. Hn. Barbara	Harper, Joseph	Mahon, Simon (Bootle)
Coleman, Donald	Harrison, Walter (Wakefield)	Mallalieu, E. L. (Brigg)
Conlan, Bernard	Hart, Mrs. Judith	Mallalieu,J.P.W.(Huddersfield,E.)
Craddock, George (Bradford, S.)	Hayman, F. H.	Manuel, Archie
Cullen, Mrs. Alice	Hazell, Bert	Mapp, Charles
Dalyell, Tam	Herbison, Rt. Hn. Margaret	Marsh, Richard
Davies, G. Elifed (Rhondda, E.)	Hobden, Dennis (Brighton, K'town)	Mason, Roy
Davies, Harold (Leek)	Holman, Percy	Maxwell, Robert
Davies, Ifor (Gower)	Horner, John	Mendelson, J. J.
Davies, S. O. (Merthyr)	Houghton, Rt. Hn. Douglas	Mikardo, Ian
Delargy, Hugh	Howarth, Harry (Wellingborough)	Millan, Bruce
Dell, Edmund	Howarth, Robert L. (Bolton, E.)	Miller, Dr. M. S.
Diamond, John	Howell, Denis (Small Heeath)	Milne, Edward (Blyth)
Dodds, Norman	Howie, W.	Molloy, William
Donnelly, Desmond	Hoy, James	Morris, Alfred (Wythenshawe)
Driberg, Tom	Hughes, Emrys (S. Ayrshire)	Morris, Charles (Openshaw)
Duffy, Dr. A. E. P.	Hughes, Hector (Aberdeen, N.)	Murray, Albert
Edelman, Maurice	Hunter, Adam (Dunfermline)	Neal, Harold

Norwood, Christopher	Rogers, George (Kensington, N.)	Thornton, Ernest
Oakes, Gordon	Ross, Rt. Hn. William	Tinn, James
Ogden, Eric	Rowland, Christopher	Urwin, T. W.
O'Malley, Brian	Sheldon, Robert	Varley, Eric G.
Oram, Albert E. (E. Ham, S.)	Shore, Peter (Stepney)	Wainwright, Edwin
Orbach, Maurice	Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.)	Walker, Harold (Doncaster)
Orme, Stanley	Short, Mrs. Renée(W'hampton,N.E.)	Wallace, George
Oswald, Thomas	Silkin, John (Deptford)	Warbey, William
Page, Derek (King's Lynn)	Silkin, S. C. (Camberwell, Dulwich)	Watkins, Tudor
Pargiter G. A.	Silverman, Julius (Aston)	Weitzman, David
Park, Trevor (Derbyshire, S.E.)	Slater, Mrs. Harriet (Stoke, N.)	Wells, William (Walsall, N.)
Parkin, B. T.	Slater, Joseph (Sedgefield)	Wilkins, W. A.
Pavitt, Laurence	Small, William	Williams, Alan (Swansea, W.)
Pentland, Norman	Snow, Julian	Wilson, William (Coventry, S.)
Popplewell, Ernest	Solomons, Henry	Winterbottom, R. E.
Probert, Arthur	Soskice, Rt. Hn. Sir Frank	Woof, Robert
Redhead, Edward	Spriggs, Lesile	Wyatt, Woodrow
Rees, Merlyn	Stewart, Rt. Hn. Michael	Yates, Victor (Ladywood)
Richard, Ivor	Stones, William
Robertson, John (Paisley)	Symonds, J. B.	TELLERS FOR THE NOES:
Robinson, Rt.Hn. K.(St.Pancras,N.)	Taverne, Dick	Mr. Whitlock and Mr. Lawson.
Rodgers, William (Stockton)	Thomas, George (Cardiff, W.)

Mr. Heath

I beg to move Amendment No. 6, in page 4, line 35, at the beginning to insert: (1) Duty under section 3 of this Act shall not be charged on newsprint and printing paper. Of all the many confusions into which the Government have fallen in the imposition of the surcharge, that which relates to newsprint and printing paper, with which this Amendment deals, is probably the greatest of all.

We had a brief debate in Committee on this subject at a very late hour which was answered by the Minister without Portfolio. Let me make it plain that I am not suggesting that he gave any assurances on this point. In fact, he was quite clear at the end that he had given consideration to the matter but that he could not do anything about it.

At the same time, I thought that I detected in his manner when we were putting the arguments to him that it was a point with which he had considerable sympathy because he saw the inherently ridiculous situation to which he had reduced himself. This is shown in his remarks. He referred to our intervention in the debate on the Address and he then recalled that contrary to the Government's first intention they had now removed books, newspapers, maps, charts, manuscripts, typescripts, stamps, and so on … and it was agreed in Committee that this meant that the final manufactured product in its entirety was now removed from the surcharge. This we welcomed. This showed that considerable progress had been made by any standards of this Government.

The Minister without Portfolio then went on to point out that raw paper-making materials, pulp and waste paper, were also excluded from the surcharge. We have now reached a situation therefore where the final product is excluded and the waste paper and pulp are excluded and the only items that receive the surcharge are the middle group of newsprint and paper for making books.

It was to this point that the Minister without Portfolio had to address himself, and all he could say was: While it is true that there is an element of anomaly it is inevitable, having regard to the circumstances in which the exemptions are made."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 672.] And "element of anomaly" was a most modest understatement even for the Minister with Portfolio.

We say that there is nothing inevitable about this. It is a deliberate act by the Government to impose these surcharges on material for making books and newsprint for newspapers. As this newsprint has to be imported, most of it from Canada or E.F.T.A. countries under long-term contracts, it means that newsprint has to bear the 15 per cent. surcharge.

We do not regard this as in any way inevitable. I suggest that the Government should reconsider this deliberate act on their part and remove these items. I hope that whoever answers the debate—and I may be forgiven for hoping after the last performance that it will be the Financial Secretary to the Treasury with at least a reasoned argument—will address himself to this point.

The justification so far produced by the Government is that to omit these would lead to an anomaly. I suppose that the argument is that other items of processed raw materials would then claim to be excluded, but I do not think that the Financial Secretary would claim that these items are used in other products. We have discussed on many occasions the point that items which are processed raw materials ought not to carry the surcharge, which will be a charge on industry and will raise prices. We would say in any case that as raw materials these items should be excluded.

The Financial Secretary has further justification for agreeing. He could say that on one item of policy in 52 days the Government will be absolutely consistent, in not putting a surcharge on the basic raw material, the pulp, in not putting the surcharge on the halfway house of newsprint and paper for making books, and in not putting it on the finished products, the books and newspapers themselves. I therefore offer to him this glorious opportunity of establishing fame for himself in this all too long-lived Administration by being absolutely consistent on one item in this scheme of things. Let him say for once that we shall not have the surcharge on one particular item, because to say that we must not have it on the basic material nor on the finished product but must have it half-way is the most inconsistent of any attitude which he could possibly take on any item in this whole scheme. We appealed last time, for the first time in a hundred years, that a Government should not put a tax on knowledge. This is a fundamental matter of principle. But let him also, for the first time in 52 days, be completely consistent and remove the surcharge from these items.

Mr. MacDermot

Fifty-two days is quite long enough for me to learn to avoid the temptations and seductions of flattery. I assure the right hon. Member for Bexley (Mr. Heath) that I shall try to give him a reasoned argument, and I hope to persuade him that the Government, on the 52nd as on all other days, are being absolutely consistent in what they do.

The Amendment is similar in scope to one which was rejected in Committee without a Division after a firm rejection by the Government explained by my hon. Friend the Minister without Portfolio. The Opposition rest their case on the alleged anomaly that books and other printed matter are exempted. This exemption itself was an anomaly in that it is one of the very few cases in which finished goods as opposed to raw materials are exempted, but there were special grounds for that anomalous exemption. These grounds, which do not apply to the subject matter of the Amendment, namely, newsprint and printing paper, were the existence of an international agreement reached within U.N.E.S.C.O. for exempting these items from all import duties.

That exemption, therefore, was defensible, and it was defensible abroad as well as at home. The House will not need me to stress the importance of that consideration. But the agreement did not extend to newsprint or to printing paper, nor can the exemption of newsprint and printing paper be justified on the ground that they are raw materials in the sense in which we have made clear we apply the words, meaning materials in their natural state or crudely processed. These are fully manufactured products which are all machine-made.

As the right hon. Gentleman said, we have exempted the true raw materials, within the definition, for paper making, namely, pulp and waste paper. If we were to make the further exemptions in the Amendment, we should have to find a principle on which we could do so which would not lead to irresistible pressure from many of the other hard cases which are all pressing for favoured treatment. If we were to accept the Amendment, we should immediately create an anomaly which would open the door to a far wider round of claims that we had exempted a processed material without the assistance of any existing international agreement or anything of that kind to justify it, and a vast number of other industries could claim that the anomaly should not be allowed to remain but that other processed materials should be exempted.

No such principle has been advanced save that finished products in the form of books and other printed matter are exempted. But they are covered by the international agreement whereas paper and newsprint are not. For these reasons, we feel unable to advise the House to accept the Amendment. We see no ground upon which we could justify the exemption, and we are sure that we should be storing up trouble for ourselves if we were to make it.

Mr. Heath

I believe, Mr. Deputy-Speaker, that I have the right of reply.

Mr. Deputy-Speaker (Dr. Horace King)

The right hon. Gentleman must have the leave of the House to speak again.

Mr. Heath

If I may speak again, by leave of the House, I would mention two things. First, I am disappointed that the Financial Secretary to the Treasury should be adhering to the previous decision of the Minister without Portfolio. I am even more disappointed to learn that the Government took the surcharge off not because they believed it to be right to do so on its merits but as a belated attempt to comply with the U.N.E.S.C.O. Agreement. It is a grievous disappointment because I thought the Government were saying that they ought not to tax knowledge, as they had begun to do. It is a retrograde step.

Secondly, the Financial Secretary says that he would be open to irresistible pressure. I do not know that he need worry about that. He has so far resisted every pressure put on him in connection with the surcharge by Parliamentary or extra-parliamentary means. Why he should be worried in this case I cannot imagine, particularly when he could say to anyone who challenged him that for more than 100 years of British

history every Government has accepted the principle of not taxing knowledge.

Because we believe it wrong in principle and avoidable in practice, I shall advise my hon. Friends to press the Amendment to a Division.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 159, Noes 179.

Division No. 30.]	AYES	[10.45 p.m.
Agnew, Commander Sir Peter	Gresham-Cooke, R.	More, Jasper
Alison, Michael (Barkston Ash)	Grieve, Percy	Morrison, Charles(Devizes)
Allan, Robert(Paddington, S.)	Griffiths, Peter(Smethwick)	Mott-Radclyffe, Sir Charles
Allason, James (Hemel Hempstead)	Grimond, Rt. Hn. J.	Murton, Oscar
Astor, John	Gurden, Harold	Nicholls, Sir Harmar
Awdry, Daniel	Hall, John(Wycombe)	Nicholson, Sir Godfrey
Baker, W. H. K.	Hall-Davis, A. G. F.	Noble, Rt. Hon. Michael
Balniel, Lord	Hamilton, Marquess of (Fermanagh)	Onslow, Cranley
Batsford, Brian	Harris, Frederic (Croydon, N. W.)	Orr, Capt. L. P. S.
Beamish, Col. Sir Tufton	Harris, Reader (Heston)	Osborn, John (Hallam)
Berkeley, Humphry	Harvey, John (Walthamstow, E.)	Page, R. Graham (Crosby)
Berry, Hn. Anthony	Hawkins, Paul	Pearson, Sir Frank (Clitheroe)
Bessell, Peter	Heald, Rt. Hn. Sir Lionel	Peel, John
Biffen, John	Heath, Rt. Hn. Edward	Peyton, John
Biggs-Davison, John	Higgins, Terence L.	Pitt, Dame Edith
Bingham, R. M.	Hiley, Joseph	Pounder, Rafton
Birch, Rt. Hn. Nigel	Hill, J. E. B. (S. Norfolk)	Powell, Rt. Hn. J. Enoch
Black, Sir Cyril	Hirst, Geoffrey	Price, David (Eastleigh)
Box, Donald	Hogg, Rt. Hn. Quintin	Prior, J. M. L.
Boyd-Carpenter, Rt. Hn. J.	Hornby, Richard	Ramsden, Rt. Hn. James
Boyle, Rt. Hn. Sir Edward	Hornsby-Smith, Rt. Hn. Dame P.	Rawlinson, Rt. Hn. Sir Peter
Brinton, Sir Tatton	Howe, Geoffrey (Bebington)	Ridley, Hn. Nicholas
Brooke, Rt. Hn. Henry	Hunt, John (Bromley)	Roots, William
Bruce-Gardyne, J.	Irvine, Bryant Godman (Rye)	Russell, Sir Ronald
Butcher, Sir Herbert	Johnston, Russell (Inverness)	Smith, Dudley (Br'ntf'd & Chiswick)
Carr, Rt. Hn. Robert	Jones, Rt. Hn. Aubrey (Hall Green)	Spearman, Sir Alexander
Channon, H. P. G.	Jopling, Michael	Stainton, Keith
Chichester-Clark, R.	Joseph, Rt. Hn. Sir Keith	Stanley, Hn. Richard
Clark, William (Nottingham, S.)	Kaberry, Sir Donald	Summers, Sir Spencer
Cole, Norman	Kerr, Sir Hamilton (Cambridge)	Taylor, Edward M. (G'gow, Cathcart)
Cooke, Robert	Kilfedder, James A.	Taylor, Frank (Moss Side)
Cooper, A. E.	Kimball, Marcus	Thompson, Sir Richard (Croydon,S.)
Cooper-Key, Sir Neill	King, Evelyn (Dorset, S.)	Thorpe, Jeremy
Corfield, F. V.	Lancaster, Col. C. G.	Tiley, Arthur (Bradford, W.)
Costain, A. P.	Litchfield, Capt. John	Vaughan-Morgan, Rt. Hn. Sir John
Crawley, Aldan	Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)	Walder, David (High Peak)
Cunningham, Sir Knox	Lloyd, Ian (P'tsm'th, Langstone)	Walker, Peter (Worcester)
Curran, Charles	Longden, Gilbert	Walker-Smith, Rt. Hn. Sir Derek
Currie, G. B. H.	Loveys, Walter H.	Wall, Patrick
Dance, James	Lubbock, Eric	Walters, Dennis
Davies, Dr. Wyndham (Perry Barr)	Lucas-Tooth, Sir Hugh	Ward, Dame Irene
d'Avigdor-Goldsmid, Sir Henry	MacArthur, Ian	Weatherill, Bernard
Dean, Paul	Mackenzie, Alasdair (Ross & Crom'ty)	Webster, David
Digby, Simon Wingfield	Mackie, George Y. (C'ness & S'land)	Whitelaw, William
du Cann, Rt. Hn. Edward	Maclean, Sir Fitzroy	Wilson, Geoffrey (Truro)
Eden, Sir John	Macleod, Rt. Hn. Iain	Wise, A. R.
Emery, Peter	McMaster, Stanley	Wolrige-Gordon, Patrick
Errington, Sir Eric	McNair-Wilson, Patrick	Woodhouse, Hn. Christopher
Fletcher-Cooke, Sir John (S'pton)	Maginnis, John E.	Woodnutt, Mark
Forrest, George	Maudling, Rt. Hn. Reginald	Younger, Hn. George
Foster, Sir John	Maxwell-Hyslop, R. J.
Fraser, Rt. Hn. Hugh (Stlfford & Stone)	Maydon, Lt.-Cmdr. S. L. C.	TELLERS FOR THE AYES:
Giles, Rear-Admiral Morgan	Meyer, Sir Anthony	Mr. Ian Fraser and
Glover, Sir Douglas	Mills, Stratton (Belfast, N.)	Mr. R. W. Elliott.
Gower, Raymond	Mitchell, David
NOES
Abse, Leo	Baxter, William	Braddock, Mrs. E. M.
Allaun, Frank (Salford, E.)	Bence, Cyril	Bradley, Tom
Allen, Scholefield (Crewe)	Bennett, J. (Glasgow, Bridgeton)	Bray, Dr. Jeremy
Armstrong, Ernest	Binns, John	Broughton, Dr. A. D. D.
Atkinson, Norman	Blackburn, F.	Brown, Hugh D. (Glasgow, Provan)
Bagier, Gordon A. T.	Blenkinsop, Arthur	Brown, R. W. (Shoreditch & Fbury)
Barnett, Joel	Bowden, Rt. Hn. H. W. (Leics S. W.)	Buchan, Norman (Renfrewshire, W.)
Buchanan, Richard	Horner, John	Orbach, Maurice
Callaghan, Rt. Hn. James	Howarth, Harry (Wellingborough)	Orme, Stanley
Carmichael, Neil	Howell, Denis (Small Heath)	Oswald, Thomas
Carter-Jones, Lewis	Howie, W.	Page, Derek (King's Lynn)
Castle, Rt. Hn. Barbara	Hoy, James	Pargiter, G. A.
Coleman, Donald	Hughes, Emrys (S. Ayrshire)	Parkin, B. T.
Conlan, Bernard	Hughes, Hector (Aberdeen, N.)	Pavitt, Laurence
Cullen, Mrs. Alice	Hunter, Adam (Dunfermline)	Popplewell, Ernest
Dalyell, Tam	Irving, Sydney(Dartford)	Probert, Arthur
Davies, G. Elfed (Rhondda, E.)	Jackson, Colin	Redhead, Edward
Davies, Harold (Leek)	Janner, Sir Barnett	Rees, Merlyn
Davies, Ifor (Gower)	Jeger, George (Goole)	Richard, Ivor
Davies, S. O. (Merthyr)	Jenkins, Hugh (Putney)	Robertson, John (Paisley)
Delargy, Hugh	Johnson, Carol (Lewisham, S.)	Robinson, Rt. Hn. K. (St. Pancras, N.)
Dell, Edmund	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Rodgers, William (Stockton)
Diamond, John	Jones, J. Idwal (Wrexham)	Rogers, George (Kensington, N.)
Dodds, Norman	Jones, T. W. (Merioneth)	Ross, Rt. Hn. William
Donnelly, Desmond	Kelley, Richard	Rowland, Christopher
Driberg, Tom	Kenyon, Clifford	Sheldon, Robert
Duffy, Dr. A. E. P.	Kerr, Dr. David (W'worth, Central)	Shore, Peter (Stepney)
Edelman, Maurice	Lawson, George	Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Edwards, Rt. Hn. Ness (Caerphilly)	Leadbitter, Ted	Short, Mrs. Renée (W'hampton, N. E.)
Edwards, Robert (Bilston)	Lever, L. M. (Ardwick)	Silkin, John (Deptford)
English, Michael	Lewis, Ron (Carlisle)	Silkin, S. C. (Camberwell, Dulwich)
Ennals, David	Lomas, Kenneth	Slater, Mrs. Harriet (Stoke, N.)
Evans, Albert (Islington, S. W.)	Loughlin, Charles	Slater, Joseph (Sedgefield)
Evans, Ioan (Birmingham, Yardley)	McBride, Neil	Snow, Julian
Fitch, Alan (Wigan)	MacColl, James	Solomons, Henry
Fletcher, Sir Eric (Islington, E.)	MacDermot, Niall	Soskice, Rt. Hn. Sir Frank
Fletcher, Ted (Darlington)	McGuire, Michael	Spriggs, Leslie
Fletcher, Raymond (Ilkeston)	Mclnnes, James	Stewart, Rt. Hn. Michael
Floud, Bernard	MacKenzie, Gregor (Rutherglen)	Taverne, Dick
Foot, Sir Dingle (Ipswich)	MacPherson, Malcolm	Thomas, George (Cardiff, W.)
Foot, Michael (Ebbw Vale)	Mahon, Peter (Preston, S.)	Thornton, Ernest
Fraser, Rt. Hn. Tom (Hamilton)	Mahon, Simon (Bootle)	Tinn, James
Freeson, Reginald	Mallalieu,J.P.W.(Huddersfield,E.)	Urwin, T. W.
Galpern, Sir Myer	Manuel, Archie	Varley, Eric G.
Garrow, E.	Mapp, Charles	Wainwright, Edwin
Ginsburg, David	Marsh, Richard	Walker, Harold (Doncaster)
Gourlay, Harry	Maxwell, Robert	Wallace, George
Gregory, Arnold	Mendelson, J. J.	Warbey, William
Grey, Charles	Mikardo, Ian	Watkins, Tudor
Griffiths, David (Rother Valley)	Millan, Bruce	Wells, William (Walsall, N.)
Hale, Leslie	Miller, Dr. M. S.	Wilkins, W. A.
Hamilton, James (Bothwell)	Milne, Edward (Blyth)	Williams, Alan (Swansea, W.)
Hamilton, William (West Fife)	Molloy, William	Wilson, William (Coventry, S.)
Hannan, William	Morris, Alfred (Wythenshawe)	Winterbottom, R. E.
Harper, Joseph	Morris, Charles (Openshaw)	Woof, Robert
Harrison, Walter (Wakefield)	Murray, Albert	Wyatt, Woodrow
Hayman, F. H.	Norwood, Christopher	Yates, Victor (Ladywood)
Hazell, Bert	Oakes, Gordon
Herbison, Rt. Hn. Margaret	Ogden, Eric	TELLERS FOR THE NOES:
Hobden, Dennis (Brighton, K'town)	O'Malley, Brian	Mr. Whitlock and Mr. McCann.
Holman, Percy	Oram, Albert E. (E. Ham, S.)

Mr. John Hall

I beg to move Amendment No. 7, in page 4, line 35, at the beginning to insert: (1) Duty under section 3 of this Act shall not be charged on wood and wood products used in the building of homes or the manufacture of furniture. My right hon. and hon. Friends and I have been moved to table the Amendment, first, because during the debate on this subject in Committee the only two hon. Members on the Government side who spoke were both in favour of doing exactly what we now seek to do, and, secondly, because of a rather sympathetic reply that we were fortunate enough to receive from the Minister of State, Board of Trade, in which he said: We are sensitive to the arguments used about wood and wood products, and we have already undertaken that this shall be one of the fields which will be included in early consideration of the review of the coverage."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 667.] I hope that the Minister has become so sensitive to the question of wood and wood products that he will be prepared to accept our Amendment, but in case he has not, if he has not quite reached the degree of sensitivity which we would like to see in him, I should, perhaps, deploy a few more arguments to help him reach that desirable stage of receptiveness.

I do not propose to go into detail, because the details were fully covered in Committee, although one would, perhaps, like to draw attention to some of the extraordinary anomalies existing between woods which are subject to surcharge and those which are not. One which I have in mind particularly is the exemption from surcharge of wood to be used for golf clubs and umbrella handles. I fail to understand why that should be exempted. Nevertheless, I want to deal not with detail, but with the basic principles which have led us to table the Amendment.

We must assume that the Government did not wish, in the first place, to reduce the rate of house building. They cannot have wanted to do that, because they have accepted, perhaps reluctantly, the target for house building that we on this side established. We must assume that the Government did not wish to discourage the development of the non-traditional type of housing, the kind of housing which uses, fortunately or unfortunately, rather more wood than the traditional type of housing but, nevertheless, the kind of housing which can be erected much more quickly than the more traditional type. I assume that the Government wish to encourage the continuation of that type of development.

One must assume that the Government did not wish to reduce the availability of furniture, without which any of the new houses being built would be useless. It is no use having a house without furniture to put into it. We must assume that the Government did not wish to cause unemployment in the furniture industry or to create greater difficulties for the small man. I stress that latter phrase because, in furniture particularly, as the Minister of State knows, the industry is made up largely of small firms.

If we are right in that assumption, we can only assume that the Government must have believed, first, that the wood imported in its rough state—that is, the wood covered by headings 44.01 to 44.12, which is exempt—could be processed in this country and that thereby the needs of the building and furniture industries would be met. That must have been one of the Government's assumptions. Secondly, they must have believed that few, if any, forward contracts had been entered into, so that the measures which they have taken to impose the surcharge would, to use their own expression, bite immediately and would have the effect of restricting imports. I suggest that both of those beliefs are demonstrably false.

11.0 p.m.

In the first place, many of the products which are covered by the headings which are not excluded from the impact of the surcharge cannot be replaced in this country. Let me take some examples. Imported plywood cannot be replaced by British production. The furniture industry imports nearly 100 per cent. of its plywood requirements. Practically 100 per cent. of block board which is used in the furniture industry has to be imported, and about 90 per cent. of the veneers which are used in the furniture industry have to be imported. British production is quite inadequate to meet the demands put upon it by the furniture and building industries of this country.

If it is suggested that the placing of the surcharge on the importation of these products will stimulate production in this country, it must mean, presumably, that the surcharge is to remain much longer than we had been led to believe, because, quite clearly, it is useless for anybody to set up and establish facilities to provide these products which are now imported if the surcharge is to be taken off in a matter of months; it would be wasted capital development. Therefore, it cannot be anticipated that British production will be increased by any appreciable extent to meet the requirements of both the furniture and building industries.

Thirdly, there have been many forward contracts already placed, and therefore the new duty—this particularly applies to softwoods and to plywoods—cannot affect the import of materials for some months. If, again, we are correct in assuming that the surcharge is temporary, and, indeed, is likely to be reviewed at a very early date, and sympathetically reviewed, we gather from the Minister of State, we can hope the surcharge will be removed in a matter of months. So the total effect of the surcharge will not be to discourage imports, because they will come in because of the forward contracts which have already been placed. It will merely mean increased cost to the users in this country and, of course, increased revenue accruing to the Treasury.

Let me stress emphatically that both the building and furniture industries must continue importing their raw materials at the same rate as they are now importing them unless they are drastically to reduce output. If they are not going to reduce output but are to continue to import at the same rate, then it is inevitable that prices will increase. In the furniture industry the situation is worsened by the fact that upholstery materials are subject to the surcharge as well, and a large quantity of the upholstery material used in the furniture industry comes from Belgium. So to that extent the situation will be worsened in that industry. We take it—one must take it—that the Government do not want to reduce the provision of homes; that they do not want to reduce the provision of furnished homes for the people of this country. Presumably also, they do not want increased prices. I assume they do not want this, but the very action they are now taking will have just this effect.

I hope that in his answer the Chief Secretary, who, I gather, is to reply, will not use the argument he used earlier and which was first advanced, I think, by the Minister without Portfolio in a debate on 2nd December, when he said: My argument was that if one extends the exemption and then narrows the field on which the surcharge is to operate, to any considerable extent, the same result in reducing our balance of payments position would not be achieved unless the same rate of surcharge was increased."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 482.] This was the argument the Chief Secretary was using.

The Amendments which were moved in Committee and have been moved now were designed to lift the burden from materials which must be imported if industry is to expand economically, and, in some cases, must be imported if the health, education, and housing of this country's people are not to be penalised.

If the Minister's arguments, deployed in Committee and again by the Chief Secretary today, mean anything, they mean either that the Government are prepared to accept reduced industrial activity and the harm which may be done to the social life of the people or, knowing that these imports must continue, that they wish to obtain the same estimated revenue by imposing an additional tax on the people. It must be one or the other.

I prefer to believe that the Government did not give themselves sufficient time to think out the implications of what they were doing, and I am sufficiently optimistic to believe that the Minister of State, who expressed himself as being sensitive to the case deployed for wood and wood products, will come to the conclusion, as will his hon. and right hon. Friends, that perhaps a mistake was made in this case and that there is an overwhelming argument for removing surcharge from the rest of the wood products covered by the Amendment and by other Amendments discussed in Committee. This would remove from house building and the furniture industry a severe surcharge which could only increase the cost of living.

Sir D. Glover

I will not detain the House for more than a moment because I deployed in Committee most of the arguments which I shall deploy on this occasion, but I take this opportunity to intervene because when I spoke in Committee I was incorrectly reported in HANSARD and I should like the record corrected. In Committee I said that this surcharge would put up the cost of a house and the furniture in it by £150. I was reported as having said that it would put up the cost of a house by £150 and the cost of the furniture by another £150. I should like to put on record that I said that the increase would be £150 for the house and furniture.

I am sure that the Amendment ought to be accepted unless the Government admit that the whole object of the surcharge on wood and wood products for house building and furniture is to be deliberately deflationary. We have been told that that is not the Government's object. The right hon. Gentleman the Minister of Public Building and Works in the House said, with great pride, that his Department had arranged with the brick-making industry to increase the production of bricks by 7,000 million so that the target of 400,000 houses-plus could be reached next year. In another speech he said that nothing, not even an £800 million deficit, would affect his determination to increase the production of the construction industry, particularly in house building. That is the position of one Department.

Here we have another Department putting a 15 per cent. surcharge on wood. If the industry are to build more houses, it will obviously import more wood. I should have thought that this point was so simple as not to need discussing. If the people who move into the houses are to do other than sit on empty tea chests, they will buy more furniture. Therefore the surcharge on wood and wood products will increase the price of both houses and furniture—the production of which the Government are determined shall be increased.

The only way in which the Chancellor can justify this is by saying, "This is part of my stop-go policy. This is deflationary, and it is meant to be deflationary. The houses will cost more, the furniture will cost more, and therefore people will not be able to spend their money on some other things which we want exported." I could understand that argument, but in Committee the argument was that the Government could not remove the surcharge from these products because to do so would open the floodgates to all sorts of things, which I believe to be nonsense. We have got to the position when one can import firewood without the surcharge but not wood for house building. One can import foie gras and caviar without the surcharge but not drugs to cure people. This has been so ill thought out that the Chancellor should take this part of the Bill back and have a good look at it because many of its provisions are just nonsense.

Mr. A. P. Costain (Folkestone and Hythe)

The attitude of the Government towards the Amendment gives an indication of how long the surcharge will remain because the House will appreciate that at this time of the year most of our imports of softwoods come from the Baltic ports, which will soon be frozen up. There will be no other imports of softwoods between now and next May or June, so we have a good indication of how long the surcharge will be with us.

I agree with the remarks of my hon. Friend the Member for Ormskirk (Sir D. Glover) about our being able to import firewood without surcharge. Indeed, we can make firewood in this country, which is more than can be said of many other lumber products. If we are forced again to say, "We have altered our designs to allow timber to be manufactured prefabricated here," there is a danger that we will return to the old mistakes in the timber industry.

I fear that the Government have forgotten that nature does not produce timber of all the same length. There is a great deal of wastage in the timber industry because of this and, as I mentioned, we now have an indication of how long the surcharge will last.

Mr. Hirst

Like my hon. Friend the Member for Ormskirk (Sir D. Glover), I will not detain the House for long, because I, too, spoke about this subject in Committee. It is not as simple a matter as my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) indicated, although I know that he appreciates that a vast range of woods comes into this, and not merely the softwoods to which he referred.

I have a constituency interest in this matter because I have in my area one of the largest joinery firms in the country. Great concern has been expressed to me about the surcharge because of the extremely short supply of certain woods here, one of them being plywood. By far the greater part of this, and other woods, is imported—from ports which will not be frozen up, my hon. Friend the Member for Folkestone and Hythe will be pleased to hear. This material must be imported if we are to have any-think like the completion of house building already started. I feel sure that the Government do not want that work to stop.

This leads on to the question of availability and essentiality. I still maintain—and I will go on maintaining this long after this miserable Bill has become an Act—that these are perfectly valid points which should receive the Chancellor's consideration. It is shocking that the Government have obviously not taken these matters properly into account.

There is another wide range of items about which we have received no comment from the Government. There is, for example, the special type of timber used as the raw material for light packing cases. In Committee, I spoke of fluting in reels and other materials. I also spoke of the manufacture of 30-dozen egg crates, how the import surcharge will increase their cost by 10 per cent. and how we use 20 million or more of them. Although, in this case, the 30-dozen packing case is vital for getting this type of food to the consumer—remembering, of course, that the food itself is not subject to the charge—the packing case is and will be increased in price by about 10 per cent.

It is obvious that the Government have not thought this out. What is the sense in putting a heavy surcharge on an article which is vital to enable manufacturers to get the food to the people? I have given just this one example of how unfair the surcharge is. Government policy agrees that the food must be made available to the public, yet the crates which are vitally necessary to get the food to them have this heavy surcharge placed on them.

I sought in Committee to explain to the Government how severely the surcharge will affect the cost of fibre board, the goods made from it, and so on. I do not know about furniture, but I do know that there may still be a chance, even at this late stage, that Government spokesmen will get away from their pre-marked "reject" briefs, "come clean" and realise that we have made such a good case that the Bill should be altered.

11.15 p.m.

Sir Harmar Nicholls

I want merely to ask if there have been any representations from local councils about this because, in recent years, Labour-controlled councils, in particular, have been very vocal about the need for keeping down the cost of council housing. At no previous time has the cost of council house building been put up as a direct result of this sort of Government action. I submit that if representations on these lines have been made they should be taken into account, and, if not, the hon. Gentleman should realise the pain which the Government's action will cause and keep that fact well in mind.

Mr. Diamond

I can answer that point by the hon. Member for Peterborough (Sir Harmar Nicholls) straight away. No such representations have been made, but, of course, I cannot say whether any will be. If they were made, then one would draw the attention of the delegation to the facts of the case; and I would like to tell the Committee—although I think that it is a fact, which has already been made clear —that the cost of the ordinary, three bedroom council house will, as a result of the Government's proposal, go up by about one-half of 1 per cent.

Of course, the Government do not want the cost of any council house to rise by half of 1 per cent., but we really must keep a sense of proportion. One does not believe—I certainly do not believe it—that the building industry of this country is quite incapable of absorbing a figure of that kind, be it in terms of housing or furniture.

Is it suggested that by redesigning, especially of furniture, by the simplification of design, by greater efficiency in machining, or by greater accuracy in machining, such an amount cannot be absorbed? I do not believe that our furniture industry, or our house builders, would be unwilling, much less incapable, of attempting to meet that charge without passing it on to the purchaser of the furniture or the house.

Mr. John Hall

Does the hon. Gentleman not realise that to redesign furniture, or anything else, takes time? One has to prepare prototypes, and so on. We have repeatedly been told that this surcharge is temporary in its incidence. If that is so, what encouragement is there for manufacturers to get down to redesigning when the need for it may have passed within, say, a couple of years?

Mr. Diamond

Hon. Members opposite are always acting as if all people have minds as inflexible as their own, that British industry is not willing to seek greater efficiency, to show greater energy, to make greater investment, and so on. I do not believe that our businessmen behave in that way. Even if that was so, we say that this is a stimulus, and, I would add, that the fact should be brought to their attention.

The hon. Gentleman talks of a temporary surcharge. That being so, I cannot agree with him that businessmen worth their salt will not attempt to meet this situation. I just do not agree with him. Redesigning is going on all the time. The total of the timber content of a house is something which is being studied all the time.

Sir Harmar Nicholls

The hon. Gentleman is in a dilemma. He is lost in a welter of words, but the fact is that local authorities have their plans passed and are ready for building. Then, if there is to be a new plan, redesigning takes up to 12 months. Redesigning and all the other considerations will mean that it will take that time to get things going again. If this charge is only temporary, planning permission will have to be sought again if councils follow what the hon. Gentleman says, although, eventually, it may not have been necessary.

Mr. Diamond

The situation is moving forward the whole time. There are some houses at the building stage, some houses at the planning stage. It is quite unrealistic to say that the situation is static as every hon. Member opposite seems to envisage. They imply that we are frozen in our position; that all imports are frozen, and that one cannot bring timber in from Canada or elsewhere. The impression has been given by hon. Members opposite, I am sure not deliberately, that, at the moment, all timber coming in both for housebuilding and furniture is affected by these charges. That is not the case, as was made perfectly clear in Committee.

All the timber that comes in in bulk, the vast majority of which is for house-building, is not affected by the charge at all, provided that it is not planed—and it mostly is not. What might be called the rough-hewn timber is not affected by the charge. All that we are considering here is the further manufactured timber, and I can only repeat that if we are to exclude all wood and wood products—and this is a much wider Amendment than we discussed in committee—and then proceed on that basis with a whole variety of things, we would shortly have practically nothing left on which to base the charge, and it would have to be a penal charge to have any effect at all.

The hon. Member for Wycombe (Mr. John Hall) has not understood the situation at all. He keeps on repeating, basically, that there is a fixed situation; that we have a certain amount of goods coming in and we must not do anything to stop that. But, by and large, imports are coming in at a rate 15 per cent. greater than last year. Semi-manufactured and manufactured goods are being imported at a rate of 23 per cent. higher than the figures for last year. One cannot claim that it is precisely an increase of 15 per cent. that is essential to keep business exactly as it is now.

What we say is that producers and manufacturers must look carefully at their plans once more to see whether it is necessary to import as much as they are importing. One cannot continue to import if one cannot pay the bill, and it is our job to bring it to everyone's attention that during the term of the previous Administration imports were going on at such a rate that this year to the extent of about £700 or £800 million annually, we were not meeting our commitments on current and capital account.

That is a very serious situation. We have to relate our proposals to that situation, not to a static situation, but to one in which imports are coming in at an ever-increasing rate—1963 more than 1962, 1964 at a greater rate than 1963—[Interruption.] I will give the figures. In 1962, our total imports ran at £4,487 million; 1963, £4,812 million; 1964, £5,500 million. If this duty is successful, and reduces these imports, as we would wish, at a rate of £300 million, we still have £5,200 for the current year, which rate is £400 million in excess of the previous year—

Mr. Reginald Maudling (Barnet)

The Chief Secretary said that imports were coming in at an increasing rate, but if he looks at the latest trade returns he will see that, in spite of obvious forestallment, imports have, in fact, been falling.

Mr. Diamond

We will see what the figures show when they come out, as they shortly will.

Sir D. Glover

At the moment, we are not discussing the whole field, but wood, and the whole argument about wood is, as he said, that imports are going on. Our housing target this year is higher than it was last year, and the housing target for next year is higher than it is for this year. That is why the imports of wood have been going on. If they are to be stopped, the houses will not be built; if they are not stopped, the prices will go up.

Mr. Diamond

The answer is that those who have the responsibility of producing, building, whatever it is, must turn their minds to the difficulty which is facing the whole nation, that we cannot go on importing forever at a rate at which we cannot meet the bills. They must turn their minds, as I am sure they will be willing to do, to new methods of production, to greater efficiency, to redesigning, and to all means by which a reduced amount of timber can produce the same number of houses and furniture. That is the challenge which faces the industry, a challenge we should attempt to meet, and not to ride off the whole time, as the hon. Member for Wycombe has done, by saying that precisely the same amount of imports has to come in.

Mr. Costain

Will the hon. Gentleman ask the Minister of Public Building and Works to alter the building regulations so that we can alter designs?

Mr. Diamond

The hon. Member suggests that although it is possible to alter designs that is held up because of some formalities. If that is so I should be glad to look at the formalities, but my experience is that it is not that which causes this problem but that time and time again excessive amounts of timber, concrete, steel and all the rest are put into building, far in excess of what is needed if modern designs are accepted.

That illustrates the difficulty. We are trying to bring home to the House the seriousness of the situation and the fact that we have, therefore, to subject to this tax planed wood, finished, semi-manufactured and manufactured articles. Otherwise, we shall not succeed in achieving

the purpose of this charge. Otherwise, we shall only exclude until we have such a small base left that the tax would have to be penal to be at all effective. For these reasons I am sorry, but we cannot accept the Amendment.

Mr. John Hall

I thank the Chief Secretary for his courteous and patient reply to the points that we put to him. He has made one thing clear—that he knows very little about the furniture industry and nothing about the building industry. He has also made clear the intention of the Government that this surcharge will limit imports and that if it fails to do so it will fail in its purpose. That, apparently, means that the Government are prepared to accept a reduction in building and standards for building. This, obviously, is an attack on the homes of the people. I therefore recommend my right hon. and hon. friends to divide the House.

Question put, That those words be there inserted in the Bill:—

The House divided: Ayes 147, Noes 168.

Division No. 31.]	AYES	[11.28 p.m.
Agnew, Commander Sir Peter	Digby, Simon Wingfield	Kaberry, Sir Donald
Alison, Michael (Barkston Ash)	du Cann, Rt. Hn. Edward	Kerr, Sir Hamilton (Cambridge)
Allan, Robert (Paddington, S.)	Eden, Sir John	Kilfedder, James A.
Allason, James (Hemel Hempstead)	Elliott, R. W. (N'c'tle-upon-Tyne, N.)	Kimball, Marcus
Astor, John	Emery, Peter	King, Evelyn (Dorset, S.)
Baker, W. H. K.	Errington, Sir Eric	Lancaster, Col. C. G.
Balniel, Lord	Fletcher-Cooke, Sir John (S'pton)	Litchfield, Capt. John
Batsford, Brian	Forrest, George	Lloyd, Rt. Hn. Geoffrey(Sut'nC'dfield)
Beamish, Col. Sir Tufton	Foster, Sir John	Lloyd, Ian (P'tsm'th, Langstone)
Berkeley, Humphry	Fraser, Rt.Hn.Hugh(St'fford & Stone)	Longden, Gilbert
Berry, Hn. Anthony	Giles, Rear-Admiral Morgan	Loveys, Walter H.
Bessell, Peter	Glover, Sir Douglas	Lubbock, Eric
Biffen, John	Gresham-Cooke, R.	Lucas, Sir Jocelyn
Biggs-Davison, John	Grieve, Percy	MacArthur, Ian
Bingham, R. M.	Griffiths, Peter (Smethwick)	Mackenzie, Alasdair (Ross & Crom'ty)
Birch, Rt. Hn. Nigel	Grimond, Rt. Hn. J.	Mackie, George Y. (C'ness & S'land)
Black, Sir Cyril	Gurden, Harold	McNair-Wilson, Patrick
Box, Donald	Hall, John (Wycombe)	Maginnis, John E.
Boyd-Carpenter, Rt. Hn. J.	Hall-Davis, A. G. F.	Maudling, Rt. Hn. Reginald
Boyle, Rt. Hn. Sir Edward	Hamilton, Marquess of (Fermanagh)	Maswell-Hyslop, R. J.
Brinton, Sir Tatton	Harris, Frederic (Croydon, N. W.)	Maydon, Lt.-Cmdr. S. L. C.
Brooke, Rt. Hn. Henry	Harris, Reader (Heston)	Meyer, Sir Anthony
Bruce-Gardyne, J.	Harvey, John (Walthamstow, E.)	Mitchell, David
Butcher, Sir Herbert	Hawkins, Paul	Morrison, Charles (Devizes)
Carr, Rt. Hn. Robert	Heald, Rt. Hn. Sir Lionel	Mott-Radclyffe, Sir Charles
Channon, H. P. G.	Heath, Rt. Hn. Edward	Murton, Oscar
Chichester-Clark, R.	Higgins, Terence L.	Nicholson, Sir Godfrey
Clark, William (Nottingham, S.)	Hiley, Joseph	Noble, Rt. Hon. Michael
Cooke, Robert	Hill, J. E. B. (S. Norfolk)	Onslow, Cranley
Cooper, A. E.	Hirst, Geoffrey	Osborn, John (Hallam)
Cooper-Key, Sir Neill	Hogg, Rt. Hn. Quintin	Page, R. Graham (Crosby)
Corfield, F. V.	Hornby, Richard	Pearson, Sir Frank (Clitheroe)
Costain, A. P.	Hornsby-Smith, Rt. Hn. Dame P.	Peel, John
Crawley, Aidan	Howe, Geoffrey (Bebington)	Peyton, John
Curran, Charles	Hunt, John (Bromley)	Pounder, Rafton
Currie, G. B. H.	Irvine, Bryant Godman (Rye)	Powell, Rt. Hn. J. Enoch
Dance, James	Johnston, Russell (Inverness)	Price, David (Eastleigh)
Davies, Dr. Wyndham (Perry Barr)	Jones, Rt. Hn. Aubrey (Hall Green)	Prior, J. M. L.
d'Avigdor-Goldsmid, Sir Henry	Jopling, Michael	Pym, Francis
Dean, Paul	Joseph, Rt. Hn. Sir Keith	Rawlinson, Rt. Hn. Sir Peter
Ridley, Hn. Nicholas	Thorpe, Jeremy	Webster, David
Roots, William	Tiley, Arthur (Bradford, W.)	Whitelaw, William
Russell, Sir Ranald	Vaughan-Morgan, Rt. Hn. Sir John	Wilson, Geoffrey (Truro)
Smith, Dudley (Br'ntf'd & Chiswick)	Walder, David (High Peak)	Wise, A. R.
Spearman, Sir Alexander	Walker, Peter (Worcester)	Wolrige-Gordon, Patrick
Stanley, Hn. Richard	Walker-Smith, Rt. Hn. Sir Derek	Woodhouse, Hn. Christopher
Summers, Sir Spencer	Wall, Patrick	Woodnutt, Mark
Taylor, Edward M. (G'gow,Cathcart)	Walters, Dennis
Taylor, Frank (Moss Side)	Ward, Dame Irene	TELLERS FOR THE AYES:
Thompson, Sir Richard (Croydon, S.)	Weatherill, Bernard	Mr. Ian Fraser and Mr. More.
NOES
Abse, Leo	Harper, Joseph	Oakes-Gordon
Allaun, Frank (salford, E.)	Harrison, Walter (Wakefield)	Ogden, Eric
Armstrong, Ernest	Hayman, F. H.	O'Malley, Brian
Atkinson, Norman	Hazell, Bert	Oram, Albert E. (E. Ham, S.)
Bagier, Gordon A. T.	Herbison, Rt. Hn. Margaret	Orbach, Maurice
Barnett, Joel	Hobden, Dennis (Brighton, K'town)	Orme, Stanley
Baxter, William	Holman, Percy	Oswald, Thomas
Bennett, J. (Glasgow, Bridgeton)	Horner, John	Page, Derek (King's Lynn)
Binns, John	Houghton, Rt. Hn. Douglas	Pargiter, G. A.
Blackburn, F.	Howarth, Harry (Wellingborough)	Parkin, B. T.
Blenkinsop, Arthur	Howell, Denis (Small Heath)	Pavitt, Laurence
Bowden, Rt. Hn. H. W. (Leics S. W.)	Howie, W.	Popplewell, Ernest
Bradley, Tom	Hoy, James	Probert, Arthur
Bray, Dr. Jeremy	Hughes, Emrys (S. Ayrshire)	Redhead, Edward
Brown, Hugh D. (Glasgow, Provan)	Hughes, Hector (Aberdeen, N.)	Rees, Merlyn
Brown, R. W. (Shoreditch & Fbury)	Hunter, Adam (Dunfermline)	Richard, Ivor
Buchan, Norman (Renfrewshire, W.)	Irving, Sydney (Dartford)	Robertson, John (Paisley)
Callaghan, Rt. Hn. James	Jackson, Colin	Robinson, Rt. Hn. K. (St. Pancras, N.)
Carmichael, Neil	Janner, Sir Barnett	Rodgers, William (Stockton)
Castle, Rt, Hn. Barbara	Jeger, George (Goole)	Rogers, George (Kensington, N.)
Coleman, Donald	Jenkins, Hugh (Putney)	Ross, Rt. Hn. William
Conlan, Bernard	Johnson, Carol (Lewisham S.)	Rowland, Christopher
Cullen, Mrs. Alice	Jones, Rt. Hn. SirElwyn(W. Ham, S.)	Sheldon, Robert
Dalyell, Tam	Jones, J. Idwal (Wrexham)	Shore, Peter (Stepney)
Davies, G. Elfed (Rhondda, E.)	Jones, T. W. (Merioneth)	Short, Rt. Hn. E. (N'c'tle-on-Tyne,C.)
Davies, Harold (Leek)	Kelley, Richard	Short, Mrs. Renée (W'hampton, N. E.)
Davies, S. O. (Merthyr)	Kenyon, Clifford	Silkin, John (Deptford)
Delargy, Hugh	Kerr, Dr. David (W'worth, Central)	Silkin, S. C. (Camberwell, Dulwich)
Dell, Edmund	Lawson, George	Slater, Mrs. Harriet (Stoke, N.)
Diamond, John	Leadbitter, Ted	Slater, Joseph (Sedgefield)
Dodds, Norman	Lever, L. M. (Ardwick)	Snow, Julian
Donnelly, Desmond	Lewis, Ron (Carlisle)	Solomons, Henry
Driberg, Tom	Lomas, Kenneth	Soskice, Rt. Hn. Sir Frank
Duffy, Dr. A. E. P.	Loughlin, Charles	Spriggs, Leslie
Edelman, Maurice	McBride, Neil	Stewart, Rt. Hn. Michael
Edwards, Robert (Bilston)	McCann, J.	Taverne, Dick
English, Michael	MacColl, James	Thomas, George (Cardiff, W.)
Ennals, David	MacDermot, Niall	Thornton, Ernest
Evans, Albert (Islington, S. W.)	McInnes, James	Tinn, James
Evans, Ioan (Birmingham, Yardley)	MacKenzie, Gregor (Rutherglen)	Urwin, T. W.
Fletcher, Ted (Darlington)	MacPherson, Malcolm	Varley, Eric G.
Fletcher, Raymond (Ilkeston)	Mahon, Simon (Bootle)	Wainwright, Edwin
Floud, Bernard	Mallalieu,J.P.W.(Huddersfield, E.)	Walker, Harold(Doncaster)
Foot, Sir Dingle (Ipswich)	Manuel, Archie	Wallace, George
Foot, Michael (Ebbw Vale)	Mapp, Charles	Warbey, William
Fraser, Rt. Hn. Tom (Hamilton)	Marsh, Richard	Watkins, Tudor
Freeson, Reginald	Maxwell, Robert	Wells, William (Walsall, N.)
Galpern, Sir Myer	Mendelson, J. J.	Whitlock, William
Garrow, A.	Mikardo, Ian	Williams, Alan (Swansea, W.)
Gourlay, Harry	Millan, Bruce	Wilson, William(Coventry, S.)
Gregory, Arnold	Miller, Dr. M. S.	Winterbottom, R. E.
Grey, Charles	Milne, Edward (Blyth)	Woof, Robert
Griffiths, David (Rother Valley)	Molloy, William	Wyatt, Woodrow
Hale, Leslie	Morris, Alfred (Wythenshawe)	Yates, Victor (Ladywood)
Hamilton, James (Bothwell)	Morris, Charles (Openshaw)
Hamling, William (Woolwich, W.)	Murray, Albert	TELLERS FOR THE NOES:
Hannan, William	Norwood, Christopher	Mr. Fitch and Mr. Ifor Davies.