SYNTHETIC DETERGENTS (IMPORT DUTY) (Hansard, 23 June 1966)

§ Mr. John Cordle (Bournemouth, East and Christchurch)

I am grateful for the fact that I have been able to obtain this Adjournment debate. I am glad to see the Minister of State, Board of Trade, in his place to hear what I have to say on this important subject. I have committed what I wish to say to paper. I trust that it will be dealt with as quickly as possible so that we can get away, because the hour is late.

I raise tonight a matter which is essentially somewhat technical and which strays into the world of complicated chemical formulae. Although the question of feedstocks for biodegradable synthetic detergents may seem a more suitable subject for a learned paper to the Royal Society than a matter for an Adjournment debate, it has a very real relevance, both to the millions of users of detergents and to Britain's modernisation and competitive position in the world.

The manufacture of detergents is a complicated process. A desirable raw material, if that is the right description, is straight chain fatty alcohols. These can be derived in two ways—either from natural feedstocks consisting of palm kernel oil, coconut oil and tallow, or synthetically from ethylene. Since 1953 there has been a Standing Committee on Synthetic Detergents which reports to the Ministry of Housing and Local Government. The Committee's instructions are to examine and report on the effects of the increasing use of synthetic detergents and to make any recommendations that seem desirable, with particular reference to the functioning of the public health services. The Standing Committee is primarily concerned with two problems: first, foam, and, secondly, the biodegradafion in sewerage plants. It has produced seven progress reports and I understand that shortly the eighth is to be published. Both from the trend of these reports and the excellent results obtained by the laboratory of the Government Chemist, confirmed by work in privately-owned 1098 laboratories in the United States, it would appear that synthetically derived straight chain fatty alcohols are equal to naturally derived fatty alcohols in all respects and that such straight chain primary alcohols are 100 per cent. degradable in three to five days and that, by their incorporation in both domestic and industrial detergents, foam on rivers and in sewage plants can be virtually eliminated. Similarly, the amoebic degradation sewerage plants would not be jeopardised.

This is a very real problem as witnessed by the experience of Birmingham a few years ago. This, then, gives a satisfactory answer to the justifiable protesting anglers and fishermen that the life of fish, otters and other water dwellers would not be impaired.

I understand that the principal detergent manufacturers in this country are all looking towards synthetically derived fatty alcohols for a number of reasons. The price of natural oils fluctuates sharply from month to month, but the general trend, particularly for tallow, is upwards and there is little doubt that prices will continue to rise in the foreseeable future. On the other hand, ethylene has had a more stable price level and the greatly increased ethylene capacity building at the moment means that it is an almost foregone conclusion that the price of ethylene will come down and remain at a lower level than the current price.

Further, I am informed, although I am no expert, that the manufacture of fatty alcohols by hydrogenation of natural oils is already out of date and will become an increasingly old-fashioned and inefficient process.

Having, I hope, effectively established the case for synthetic fatty alcohols, I turn to the current manufacturing position. The principal manufacturer of straight chain fatty alcohols in Britain is Messrs. Marchon Products, Ltd., of Whitehaven, who use natural feed stocks. As far as I am aware, there is no United Kingdom manufacturer of synthetically derived fatty alcohols, although a number of European countries, particularly Germany, are well established in this manufacture. A German company began their selling operation of the synthetic produce in this country a year or two ago. This apparently prompted 1099 Messrs. Marchon to make various applications to the Board of Trade to raise various import duties on synthetically derived products, no doubt with the legitimate and understandable reason of protecting its own market and interests.

Messrs. Marchon made a successful application for discontinuance of exemption from the duty of C8, C14, C16 and C18 alcohols as from 1st January, 1964. Also in January, 1964, Messrs. Marchon made application for the imposition of a 20 per cent. ad valorem import duty on ethoxylated alcohol under tariff heading 34.02. This is unresolved at the moment. A parallel application was made at the same time by the Association of British Chemical Manufacturers, which may be coincidence but I doubt it. This, too, is unresolved at the moment.

In March, 1964, Marchon Products made an application which was successful and culminated in the Import Duties (General No. 4) Order, 1965, S.I. No. 1170, effective from 31st May, 1965, and had the effect of raising the ad valorem import duty on synthetically derived fatty alcohols from 10 per cent. to 20 per cent.

When I raised the matter with the Minister of State last November, he was good enough to tell me that it was at that time too soon to judge whether the Board of Trade was right or wrong to raise the import duty. That may well have been a reasonable attitude after less than six months' operation of the increased duty. But after a year perhaps the Board of Trade is in a position to give a considered judgment. I hope that the Minister of State will be able to give us his fair comment on that.

The whole question of import duties is complex and by no means as clear-cut as some people would imagine. But I believe that in this instance Marchon Products has not acted in the best interests of either the country or, indeed, the British chemical industry. First, Marchon Products is not a small firm struggling manfully against overwhelming and unfair international competition. It is a company with an excellent industrial record which is part of the giant Albright and Wilson group, which I should have thought was more than able to hold its own against all comers.

1100 Secondly, although I am not competent to judge on this matter, it appears that the overwhelming weight of technical opinion is in favour of synthetically derived fatty alcohols rather than those from natural products.

Thirdly, all the indications are that the synthetic raw materials will fall in price while the natural materials will continue to rise in price. This must have an adverse effect on the price of the finished product, and surely anything that helps to keep prices down should be a first priority of this and any other Government.

Fourthly, it would appear that an out-of-date and increasingly inefficient manufacturing process is being artificially protected. This is not the way, surely, to develop science or carry out the technological revolution that we hear so much about.

Finally, there is no question of continuing the present arrangements on social grounds, because, while I recognise and pay tribute to the excellent job Marchon Products has done in bringing work to an area of high unemployment, my information is that its alcohol plant employs about 35 people, including all shift working.

I recognise that the importation of raw materials from Germany can add in the short term to our balance of payments problems—goodness knows they are bad enough—but if the British industry is to meet the challenge of constantly changing processes and markets, it must be subject to the prod and spur of sensible and fair competition. As the President of the Board of Trade remarked just over two months ago in a letter to the Confederation of British Industry about the import charge: I wish to take this opportunity of emphasising that the charge is in no sense intended to operate as a protective measure and that there could be no question whatever of continuing it. or replacing it by other forms of restriction, in order to afford protection to specific British industries. It is in that spirit that I have ventilated this case, and it is in that spirit that I ask the Minister to think again.

§ The Minister of State, Board of Trade (Mr. George Darling)

First, I thank the hon. Member for Bournemouth, East 1101 and Christchurch (Mr. Cordle) for letting me know in some detail the points that he was going to raise. This has been most helpful.

The hon. Member has attempted to make out a strong case for the removal of import duties on certain fatty alcohols that are used mainly to produce the base for detergents, which, as he says, is a socially desirable thing to do, even though the economics of the operation may be in question, because it helps to produce detergents which do not clog our drains or pollute our rivers with foam.

The hon Member asserts with some justification that the increase in the import duties about which he is complaining—the Orders which raised the tariffs on these fatty alcohols from 10 per cent. to 20 per cent.—was introduced and approved by the House mainly to benefit one firm, Marchon Products Ltd., of Whitehaven. He has named this firm and described it—quite properly; I am not complaining about that. But it would be as well to put on record the firm whose case against the tariff he has presented. The hon. Member has been expressing views which are strongly held by a joint United States-German firm, Condea, who, wishing to export more of their products to this country, complain that we are protecting certain firms in Britain and one firm in particular and that we are stifling their efforts to expand their market.

In the few minutes we have available on an Adjournment debate we ought to examine the problem which is thus presented. The 1965 Order increased the import duty on these fatty alcohols from 10 per cent. to 20 per cent. The alcohols concerned are feedstocks for what are called biodegradable detergents. I will not spell out the formula which appears in the Order but we know that the materials about which we are talking are the key ingredients in the soft powder and liquid detergents. As I have said, these are detergents which do not produce the lasting foam about which there are so many complaints.

When the tariff was imposed it was partially designed to protect a British industry which had, as I am sure the hon. Member agrees, invested large sums of money in research and new processes to produce what was then and is still 1102 considered to be an urgently needed product. Secondly, the firm, Marchon Products Ltd., is situated in a development district, where employment considerations are also of considerable importance. In fact, the firm employs one-fifth of the male workers in the town in which it is situated. I do not know whether the hon. Member's figure is correct. I am taking his word for it that only 35 people are directly employed in this process. But even though this is so, or may be so, this is only a beginning and the employment may well increase. In any case, from the national point of view it is more desirable to keep an operation, even though it is a capital intensive operation, going and a product which has a good chance of expansion in a development district than to close it down and to import the products that it makes from overseas.

The 35 people do not tell the whole story. There are subsidiary occupations which depend upon the prosperity of the firm and its employees in that area. The position is that a new industry has been established at considerable initiative and foresight on the part of a British firm and at considerable cost to make a product for which, I am advised, there should be a growing demand throughout the world. If it is successful it may be expected to make a valuable contribution to our balance of payments, both by exports and by import saving. I agree with the hon. Member that the industry is socially desirable both because of the contribution which it can make to eliminating pollution of rivers and maintaining a pure water supply and also because it gives much-needed employment in a development district.

As the hon. Member said, the British firm's fatty alcohols are derived from animal and vegetable oils and fats and these compete directly with similar or somewhat similar alcohols made by other producers by different methods from different basic materials. Any protective duty, therefore, to be effective must apply to all the alcohols concerned without regard to the material from which they are derived. I am advised that it would be extremely difficult, perhaps impossible, for Customs to distinguish between alcohols derived from natural materials and those derived from mineral or synthetic feedstocks. I do not know 1103 enough about the chemical processes involved to say whether the hon. Member's technical arguments for ending these duties are sound.

The hon. Member, for instance, asserts that synthetically derived alcohols are superior to naturally derived alcohols, but I am advised that even if that argument is correct—and it is by no means established—it may be without substance so far as the tariff is concerned, because relatively soft detergents are being made from sources not requiring fatty alcohols. Also, the imposition of the tariff does not prevent anybody from importing synthetically derived products, and detergents are not the only products made from fatty alcohols.

The hon. Member asserts that vegetable oil prices are going up and will continue to go up and that the duties will deprive us of cheaper alternatives. But there is no sound evidence for that. It is true that vegetable oil prices fluctuate. They have recently been going down, and that rather conflicts with and perhaps disposes of the price argument, but even if the hon. Member is correct in his estimate of future price trends upwards, clearly the tariff or synthetically based fatty alcohols will become less and less important. The hon. Member said that the natural process is becoming out of date and inefficient. I am told that this is a matter of opinion and, because it is, it is a factor which the market itself will decide.

There is always room for research and adaptation and detergents are not the only use of fatty alcohols. The protection given by the tariff on fatty alcohols would cover any production from synthetics that any chemical firm decide to establish. To remove or reduce the present duty would not only diminish the protection given to existing production from vegetable oils, but would be a disincentive to a manufacturer who might consider production from synthetics in this country.

The hon. Member says that the Board of Trade has had plenty of time to judge 1104 the effects of the change. The reasons for the change last year have not altered in our opinion and all the arguments he has advanced were advanced a year ago. It is true that he argues that Marchon Products Ltd. is a large and successful firm associated with a large group, but I am sure he is not suggesting that only small and unsuccessful firms should be entitled to any kind of tariff protection. He says that British industry must be subject to sensible and fair competition. Our view is that this tariff seems to set a reasonable level of fair competition with imports.

None of the circumstances which led to our decision last year has significantly changed. There is a substantial productive capacity of fatty alcohols in Britain which, in our view, in present circumstances, deserve this 20 per cent. tariff protection.

We are not in principle protecting the manufacture of detergents from vegetable oils against the imports of products derived from synthetics. This is, perhaps, the practice as it would appear at the moment, but any producers from synthetics would enjoy the same protection now going to the producer of these detergents from a natural base.

Of course, we are always prepared to reconsider import duties or tariffs at any time—Indeed, the Board of Trade has a statutory duty to keep tariffs and import duties regularly under review—and we shall continue to do this in the hope and expectation of making changes, which will have approval, to reduce and, perhaps later, abolish quite a number of protective tariffs by agreement. But we have still a long way to go in that direction. As I have said, we have given this matter great consideration, and we do not think that the circumstances that led us to increase the tariff a year ago have, in fact, changed.