§ The Chancellor of the Exchequer (Mr. James Callaghan)With permission of the House, I wish to make a statement about the renewal of the Government's powers to impose the temporary import charge.
The charge has had considerable effect in curtailing our import bill and has thus played a valuable part in improving our balance of payments. The House is familiar with the measures which the Government have taken to achieve this objective. We have made considerable progress, but we still have a long way to go. Although confidence in sterling is markedly greater, we still face a substantial deficit this year. Full recovery from so serious an imbalance as that which confronted us last October cannot be achieved in 12 months. The Government have accordingly decided that they cannot yet dispense with the import charge, and that to reduce the present rate of 10 per cent. would be premature and might hamper our recovery and delay the removal of the charge.
I reaffirm that the charge will be removed as our progress warrants it; that is to say, when we have corrected the imbalance of the economy and in our external payments.
As the House knows, the powers to impose the charge were provided by the Finance (No. 2) Act, 1964, and extend in the first instance until the end of next month. They may be further extended by Order approved in draft by the House of Commons. A draft will be laid before the House next Monday, 1st November, and there will be an opportunity for debate in the new Session.
The draft Order will provide for the continuation of the charge until the end of November 1966. This date is required by the wording of the 1964 Act. But the Government will, of course, contittue to 496 have power under that Act to reduce or remove the charge at any earlier time if our economic circumstances permit.
§ Mr. Iain MacleodIs the Chancellor aware that it is extremely inconvenient for the House of Commons to have statements made to it on a Friday, particularly when, as in this case, it could well have been made at a more normal time in the week? Is the right hon. Gentleman also aware that the consideration which the House is prepared to give to statements varies directly with the consideration which the Government are prepared to show to the House?
Would the Chancellor answer one question now, since I see that there will be a debate on the Order? He will recall the estimate of £300 million which he gave in connection with this surcharge. He has the figures for a considerable part of this year, so would he now like to revise that figure? Would he tell us what the figures are in comparison with that £300 million so that we can estimate how far short of the promise the Government's performance in this sphere has been?
§ Mr. CallaghanOn the question of consideration to the House, the right hon. Gentleman may not recall our debates a year ago, when we were told very strongly that we should be consulting our E.F.T.A. allies before we took any steps. I am not in a position wholly to influence the dates of E.F.T.A. meetings, and, as the House will be aware, they have been taking place yesterday and today. It was not until yesterday afternoon that discussions on this matter were concluded. I have, therefore, taken the first opportunity of notifying the House, and I think that the right hon. Gentleman will therefore wish to withdraw the comment he made on this point.
As to the £300 million, the right hon. Gentleman will remember—I do not know whether he does—that I said at the time that this was a largely speculative figure, and it has obviously been influenced in a downward direction by the reduction of the import charge from 15 per cent. to 10 per cent. The latest estimates are somewhere between £150 million and £200 million, as far as we can see from the figures available. Of course, what no one can judge, not even the right hon. Gentleman, I think—it is 497 not solely a matter of figures—is what influence this has had on our total import bill. We can only look at the total import bill and see from it that, whereas our total imports over the whole field, not in relation to the import charge alone, went up by £718 million throughout the whole of 1964, they have over the whole field gone up by only £24 million in the first nine months of this year. In that the import charge has played a considerable part in relation to the 30 per cent. of our total imports which are covered.
§ Mr. LubbockWill the Chancellor give us some information about the effect of the reduction of the surcharge from 15 per cent. to 10 per cent.? Does his statement now mean that in no circumstances could there be a further interim reduction to 5 per cent. between now and complete removal of the surcharge? Second, what criteria have to be satisfied for complete removal of the surcharge? Must we be in the black on our balance of payments before it is removed altogether?
§ Mr. CallaghanAs regards the last part of the hon. Gentleman's question, this must be a matter of judgment. It is the Government's desire to reduce and remove it. Turning to the first part of his question, there is nothing in what I have said which hinders a further reduction, if our economic progress warrants it, before November, 1966, assuming, of course, that the House gives us power to continue the charge over the next 12 months. But I should not care to give a definite statement now—I think that it would be wrong to do so—as to the exact circumstances in which the charge would be removed. I prefer to stand by what I said in my statement, "when we have corrected the imbalance of the economy and in our external payments".
§ Mr. LubbockWill the Chancellor reply to my first question about the reduction from 15 to 10 per cent.?
§ Mr. CallaghanThe reduction from 15 to 10 per cent. affected in a downward direction the original estimate I made, but this is not a field in which one can give a precise estimate, because one does not know how many imports have been literally stopped altogether. It is not wholly a matter of raising revenue.
§ Mr. Peter EmeryDoes not the Chancellor of the Exchequer recall that both he and the President of the Board of Trade on many occasions have referred to this surcharge as temporary? Does he recall also that Members of Parliament on both sides, at meetings of E.F.T.A. Parliamentarians, have defended the Government's position by taking as true the statements made by the Chancellor and the President of the Board of Trade that this is temporary? What does he now mean by the word "temporary"? Is not this another illustration of the Government's saying one thing and doing another?
§ Mr. CallaghanIt is for the House, during the next few weeks, to decide whether to give the Government power to continue the import charge. It is in the hands of the House, and to that extent it is clearly a temporary matter. If the Opposition choose to vote against the import charge, they will no doubt do so. As regards the legislation itself, this expires 12 months from now, and therefore the meaning of the word "temporary"—the hon. Gentleman can take what definition he likes—must be that it cannot go on beyond a year from now unless fresh legislation is introduced.
§ Mr. SpeakerOrder. I understand that we shall be debating this. We must move on now.