§ The Chancellor of the Exchequer (Mr. James Callaghan)
It was against this background that immediate action was required to correct the balance of payments. In the first three-quarters of 1964 imports of such manufactures were no less than 30 per cent. higher, that is, at an annual rate almost £200 million higher, than in the corresponding period 12 months earlier. We believe that the import charges are the least objectionable—the Committee will notice the terms I use—of all the methods that lay open to us. To have imposed quotas would have been more rigid, required more elaborate machinery, would have interfered more with the normal flow and pattern of trade and might well have been construed as being more of a permanent feature.
I stress again that the charges are of a temporary character and that we regard their protective effect as a serious disadvantage. It is not our objective to cushion British industry from competition; if British producers should use the protective effect to raise their prices unwarrantably, then we shall ensure that the Price Review Body which is about to be set up will investigate and adjudicate on their actions. I think that the Committee as a whole would agree that that should be done. [HON. MEMBERS: "Postal charges."] That was another undiscovered skeleton.
The legislation which I shall introduce will provide for a temporary charge of 15 per cent., effective from 27th October last, on substantially all imports except—and these are very important exceptions— food, feedingstuffs, fuel, unmanufactured raw materials and unmanufactured tobacco. The Government have decided that books and periodicals should also be exempted from the charge. This is in conformity with our obligations to U.N.E.S.C.O. and because the Government do not wish to impose a charge which would be widely regarded as a tax on culture. The Government have also decided that the charge should not be levied on large ships, which, for this purpose, are those of 80 tons or more—some of us in former years would have regarded these as very small ships—on the ground that it could be avoided with relative ease and, even if paid, would have to be refunded when the ship left a United Kingdom port. 1028 Components used by British shipbuilders in the manufacture, repair or refitting of large ships in registered shipping yards will also be exempt.
Considerations similar to those in respect of large ships also arise in the case of large aircraft, and we have accordingly decided that they should be relieved of the charge if they are of a maximum total weight exceeding 18,000 lbs. The exemptions for raw materials have also been widened slightly: details of the exemptions will be set out in the Ways and Means Resolution.
The powers which will be taken in the Finance Bill will run until 30th November, 1965, but will be renewable for a further period of not more than a year by affirmative Resolution. It is, however, our intention to review the arrangements well before next November; indeed, I expect to make a first review in the spring of next year. The powers will also enable the Government—and that is an important point to note—to reduce the rates or the coverage of the charges at any time before November, 1965, by an Order subject to negative resolution.
It is the Government's intention that drawback of the charge will be available for re-exported goods and for all exported goods which can be shown to the Customs to contain components or materials which have borne the charge. The revenue expected from the charge, if it stayed unchanged throughout a full year—I must emphasise that point—would be of the order of £200 million.