Commons Sitting of 3 December 1968

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  ADVOCATES' WIDOWS AND ORPHAN'S FUND ORDER CONFIRMATION BILL
  Considered; to be read the Third time Tomorrow.
ORAL ANSWERS TO QUESTIONS
  PUBLIC BUILDING AND WORKS

    Palace of Westminster
    1. Mr. Boyd-Carpenterasked the Minister of Public Building and Works why he spent £140,000 on work in the Palace of Westminster this summer.
    The Minister of Public Building and Works (Mr. Robert Mellish): Because it is more economical, and more convenient to hon. Members, for as much as possible of the annual programme of essential maintenance and other approved work to be carried out during the Summer Recess.
    Mr. Boyd-Carpenter: Did not this work also include such additional features as putting television annunciators into private rooms? Does he justify spending this large sum of money on this Palace when, for example, the school programme has been cut back?
    Mr. Mellish: With respect, the right hon. Gentleman is asking the wrong Minister. I did not put in these television annunciators because I thought that they would be a good idea. I was instructed to do so by the House of Commons Services Committee, upon which the right hon. Gentleman's Front Bench is represented.
    Mr. John Smith: Is the right hon. Gentleman aware that, in a Written
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    Answer to me yesterday, he said that over the past five years nearly £3½ million has been spent on and in this building? Would it not be better if we debated and settled the question of a new Parliamentary building before continuing to tinker with this one?
    Mr. Mellish: That is anticipating what is to come. I shall be making a great statement at the end of Questions. Let us hope that the hon. Gentleman will support me in what I say.
    Mr. William Hamilton: Will my right hon. Friend accept the assurance that he will get all possible support from this side of the House in whatever he does to improve the working conditions of hon. Members?
    Mr. Mellish: I am obliged for that. It looks as if I shall need some support.

    Employment Exchange, Rugby
    Mr. William Priceasked the Minister of Public Building and Works whether he will give an estimate of the cost of the proposed extensions to the employment exchange in Rugby.
    Mr. Mellish: About £35,000 including the site.
    Mr. Price: Is my right hon. Friend aware that that Answer will give a lot of satisfaction to my constituents? Will he say whether it includes the new Social Security offices which it is planned to put into that building?
    Mr. Mellish: Yes, Sir.

    Building Licensing
    Mr. R. W. Elliottasked the Minister of Public Building and Works what further studies he has made of the overall effect of the building licensing procedure contained the Building Control Act, 1966, and the Regulations made thereunder; and whether he will make a statement.
    Mr. Tom Boardmanasked the Minister of Public Building and Works when he proposes to introduce legislation to repeal the Building Control Act, 1966.
    Mr. Mellish: After considering the prospective demand on the industry, I suspended building licensing from 20th November, 1968, for an indefinite period. I do not propose to introduce legislation

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    to repeal the Building Control Act, 1966, because it may have to be used again.
    Mr. Elliott: As in the last three years there has been just a tiny amount of building work which has been refused a licence out of an enormous potential amount, would not the right hon. Gentleman agree that the whole licensing procedure is a bureaucratic nuisance and that it wastes industry's time as well as a lot of public money?
    Mr. Mellish: I would not agree with that. The reasons for the Act coming into being were fully debated in 1966. I do not go back on what was said then. As Minister of the day, however, I saw that they were not needed at that moment, and I withdrew them. I should have thought that there would be excitement and delight among right hon. and hon. Gentlemen opposite.
    Mr. Boardman: If licensing played any significant part in economic demand management, why is the right hon. Gentleman now suspending it? It it played a part, why suspend it now? If it did not play a part, why not repeal the whole Act?
    Mr. Mellish: The hon. Gentleman is getting confused with his own Question. The reasons why the Act came into being were debated in 1966. As newly in charge of the Department, I decided, in the light of events as I saw them at that moment, that they were not necessary, arid I suspended them.
    Mr. Chichester-Clark: As the right hon. Gentleman has had time to think about this since I last raised it with him, will he now evaluate what, in the Prime Minister's words, was the direct impact on the balance of payments which we were promised that this Measure would have?
    Mr. Mellish: Perhaps the hon. Gentleman would care to ask the Prime Minister. I can assure him that my right hon. Friend is capable of answering any Questions that the hon. Gentleman puts to him.

    Building and Civil Engineering Industry (Pay and Conditions)
    Mr. R. W. Elliottasked the Minister of Public Building and Works whether he is aware of the concern in the con-
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    struction industry at the delay by the National Board for Prices and Incomes in producing their reports on the wage structures of the building and civil engineering industries; and what action he has taken to expedite the report.
    Mr. Boyd-Carpenterasked the Minister of Public Building and Works what further representations he has received from both sides of the construction industry regarding the reference of the wage structures of the building and civil engineering industries to the National Board for Prices and Incomes; and what reply he has sent.
    Mr. Mellish: The Reports have now been published, and as to the next steps I have nothing to add to the statements by myself on 6th November [Vol. 772, c. 895]; by my right hon. Friend the First Secretary on 15th November [Vol. 773, c. 761]; by the Under-Secretary of State for Employment and Productivity on 28th November [Vol. 774, c. 185.]
    Mr. Elliott: Is the Minister not aware of the annoyance caused in that the Government wasted six months before making the reference?
    Mr. Mellish: Oh, yes. I know of the concern in the industry, and I am aware that it is disturbed about the delay. The Report is now to hand. I am sure that it has been read, and there are discussions going on between both sides of the industry and the Government on this very important matter.
    Mr. Boyd-Carpenter: Is the Minister aware that the Government have created this situation by the delay of a year? Will he now give an assurance that they will not make the situation worse by any further intervention?
    Mr. Mellish: I can assure the right hon. Gentleman that there will be no delay in making certain decisions known. My right hon. Friend, the First Secretary, will no doubt make a statement to the House at the appropriate time.
    Mr. Chichester-Clark: Apart from the Government's utterly represensible delays in the matter which have caused much of the trouble, may I ask whether it is true that the Prices and Incomes Board's computer broke down in the white heat of the technological revolution?
    Mr. Mellish: I have no idea what happened to the P.I.B. machinery. All I know is that the ultimate result is before both sides of industry and there are important discussions going on and we shall hear the results of these as soon as possible.

    Mann Committee (Reports)
    Mr. Rossiasked the Minister of Public Building and Works whether he will now publish the second and third Reports of the Mann Committee; and whether he will make a statement.
    Mr. Peter Millsasked the Minister of Public Building and Works whether he will now make a statement on his policy regarding his Department's direct labour force, in the light of the Reports of the Mann Committee.
    Mr. Mellish: A joint examination of the work of selected depôts has just been completed, and I am discussing with the trade unions the results of this examination and the further steps which should now be taken. It would be premature for me to make any further statement, or to publish the Reports at this stage.
    Mr. Rossi: When will the House be told what the third Report of the Mann Committee contains? Will the Minister confirm or deny that he is considering making up to half of his Department's direct labour force redundant?
    Mr. Mellish: The last part is not true. The Mann Committee reported to me as Minister and I regarded that information as confidential. I have acted upon sample surveys taken by the Mann Committee by establishing an inquiry into one of my important depôts. Based upon the result of that inquiry, in which I am taking the trade unions with me step by step, I shall come to certain decisions. When that is done, I will inform the House. But it must be for me to decide.
    Mr. Mills: This is not very satisfactory. Surely the Minister will confirm that it seems likely that this Report will show that there is a 25 per cent. difference in productivity between direct labour and private enterprise, and therefore we need a full statement.
    Mr. Mellish: The Mann Committee took sample surveys only and came to certain conclusions. I was not prepared
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    to accept the Report of the Mann Committee at face value. This had to be tested and proved. Therefore, I set up my own investigation over a wide area of my Ministry's activities, in conjunction with the trade unions. Based on the results of that inquiry, I will be in a stronger position to say whether the Mann Committee was right. It does not follow that, because the Mann Committee has issued a report, it is right.
    Mr. Hunter: Will my right hon. Friend say whether he has had representations from M.P.B.W. workers in Rosyth dockyard on the question of redundancies, and can he give an assurance that everything possible will be done to preserve jobs in this sector, bearing in mind that it is a development area?
    Mr. Mellish: I understand this. This is why I am handling it in the way that I have described. We are dealing with men's livelihoods. Some men have been working for my Ministry for 30 to 40 years. We cannot glibly say that we shall sack 25 per cent. I am not that kind of Minister.
    Mr. Chichester-Clark: Is the Minister aware that in March he said that 50 per cent. of the maintenance was done by his direct labour department and in July that 40 per cent. was done by his direct labour department? Does that mean that there has alreday been a run-down, or is there some other reason?
    Mr. Mellish: My Department's record on maintenance is very good. The exact proportion, whether it is 60 per or 50 per cent., I cannot give off the cuff. All I can say is that it varies. A considerable proportion is already done by contractors, and some of those are very inefficient.

    Selective Employment Tax
    Mr. Peter Millsasked the Minister of Public Building and Works whether he will place in the Library a copy of his public correspondence with the President of the National Federation of Building Trades Employers regarding the increase in Selective Employment Tax and certain firm price building contracts.
    Mr. Cleggasked the Minister of Public Building and Works what representations he has received from the National Federation of Building Trades

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    Employers regarding the Government's decision not to reimburse the extra cost of the increased rate of Selective Employment Tax to those contractors whose firm price contracts were adversely affected by the increase; and what reply he has sent.
    Mr. Mellish: Copies of my correspondence with the President of the National Federation of Building Trades Employers on the Government's decision not to reimburse any of the increased rate of Selective Employment Tax which effected firm price building contracts have been placed in the Library.
    Mr. Mills: Does the Minister agree that this correspondence shows that S.E.T. is seriously affecting the industry? Will he now tell us what he has achieved for the industry rather than about representations and what he said on their behalf?
    Mr. Mellish: The industry's relationship with my Ministry is very good. Output is going up. S.E.T. does not seem to have made any difference.
    Mr. Clegg: Does the Minister agree that it would take a genius to keep up with the tax changes introduced by the Government, that it is difficult for those estimating to take into account what the Government will do, and that this puts the whole business of firm price contracts at risk?
    Mr. Mellish: It is obvious that the hon. Gentleman is not a genius, because he does not understand what is going on.
    Mr. Costainasked the Minister of Public Building and Works what evidence his Department has submitted regarding the effect of Selective Employment Tax on the construction industry to the Reddaway Inquiry; and whether he will publish it.
    Mr. Mellish: I have nothing to add to the answer I gave to the hon. Members for Chigwell (Mr. Biggs-Davison) and for Hornsey (Mr. Rossi) on 29th April, 1968.—[Vol. 763. c. 767.]
    Mr. Costain: As no progress has been made, can some indication be given to the House when the Report is likely to be produced and when the Report on the construction industry will be dealt with?
    Mr. Mellish: The industry is not making these representations to me and
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    it is not complaining at present. The Reddaway Committee is in being to receive the industry's point of view. I take it for granted that the industry has written to the Reddaway Committee. If I can find out when the Report will come forward I will let the hon. Gentleman and the House know.
    Mr. Speed: Does the Minister think it sensible that the construction industry should still be treated as a service industry rather than a manufacturing industry? He keeps talking about output from the industry.
    Mr. Mellish: I have great respect for the industry. A great part is manufacturing and another part should be in another category. This has been an anomaly which I have discussed with the Chancellor of the Exchequer. This is why the Reddaway Committee is considering the matter.

    Construction Industry (Capital Investment)
    Mr. Costainasked the Minister of Public Building and Works whether he will now make a further statement on his policy on capital investment in plant and machinery on construction sites in the construction industry.
    Mr. Mellish: I have nothing to add to the reply which I gave to the hon. Member on 17th June.—[Vol. 766, c. 687.]
    Mr. Costain: Is the Minister aware that the Board of Trade is still refusing to pay grants on winter building equipment such as wood scaffolding and shuttering? Will he use his influence to get these items through to make the industry more efficient?
    Mr. Mellish: I want to be helpful—[Interruption.]—yes, I do. Whether the Board of Trade is entitled by law to impose any lower limit for administrative or financial reasons has been the subject of litigation. I understand that the matter is now under appeal, so it is, therefore, sub judice.

    British Standard Time
    Mr. Joplingasked the Minister of Public Building and Works whether he will make a statement on the subject of the lighting of building sites after the

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    change to all year round British Standard Time.
    Mr. Mellish: However one sets the clock, at the height of winter it is impossible for a building craftsman—particularly in an indoor trade—to work a full day without artificial light for part of the time. One of the main features of my Ministry's winter building campaign has been to persuade contractors to invest in efficient site lighting equipment to improve their productivity. British Standard Time merely emphasises the need.
    Mr. Jopling: Is the Minister aware that British Standard Time is causing work to be lost in the most productive first hours of the day—a statement with which he agreed in his speech at Bristol? Is he also aware that lighting is impossible on many sites such as motorways and those operated by small firms, where it is impossible to have lighting in all circumstances?
    Mr. Mellish: The hon. Gentleman knows that before British Standard Time was introduced, the industry, in common with others, was asked for its point of view. Marginally, the construction industry came down in favour of the introduction of B.S.T.
    Mr. Jopling: It did not.
    Mr. Mellish: It is no use the hon. Gentleman saying that it did not, because it did. We have a list of all those who approved it. My right hon. Friend the Home Secretary has said that there will be a review at the end of this winter and I should expect the industry's views to be passed to him and to the House.
    Mr. Chichester-Clark: Does not the present situation mean that construction workers arrive at 8 a.m., and either stand around in the dark for an hour doing nothing or work in possibly dangerous or icy conditions, or they arrive later and thus help to swell the traffic jams?
    Mr. Mellish: What I find extraordinary is that these remarks should come from the hon. Gentleman and others behind him, yet the industry, which has a close relationship with the Ministry and knows where to make complaints, has not made representations on this subject.

    Caerphilly Castle
    Mr. Fred Evansasked the Minister of Public Building and Works what amount of public money has been spent on Caerphilly Castle since it was taken over by his Department.
    Mr. Mellish: Up to 31st October, 1968, £130,649.
    Mr. Evans: Will my right hon. Friend accept that the people of Caerphilly are profoundly grateful for the restoration of this magnificent castle, which is situated in the heart of the town and is a source of great civic pride? Will he, therefore, consider entering into arrangements with the local authority to enable the residents in that area to have free access to their castle?
    Mr. Mellish: I am obliged to my hon. Friend for his remarks about my ancient monuments division. I think that it has done and is doing a magnificent job. Caerphilly is another example of its work. Caerphilly Castle is rather different from any other castle that I have seen in that, as my hon. Friend says, it is situated in the heart of the town. I am willing to discuss with the local authority whether we can come to some arrangement about the townsfolk having special entry.
    Mr. Arnold Shaw: Is my right hon. Friend aware of the dedication of the men employed on this work and on other ancient monuments within the purview of his Ministry? Will my right hon. Friend note also that these men are all employed as direct labour? Will he, from time to time, at least hand out some sort of praise to these people who are doing a first-rate job of work?
    Mr. Mellish: I am grateful to both my hon. Friends for giving me an opportunity once again to say that this branch of my Ministry is respected and much admired by the vast majority of people in this country for the wonderful job it does.

    Building and Civil Engineering Industries National Consultative Council
    Mr. Cleggasked the Minister of Public Building and Works whether he will ensure that the functions of the National Consultative Council for the Building and Civil Engineering Industries,

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    sponsored by his department, do not overlap with those of the Economic Development Committee for the Building and Civil Engineering Industries; and whether he will make a statement.
    Mr. Mellish: Yes Sir, there is in fact a clear distinction between them. The N.C.C. considers problems which concern the Government and industry jointly. The E.D.C.s are independent bodies whose purpose is to promote efficiency and to forecast supply and demand.
    Mr. Clegg: I thank the right hon. Gentleman for the old world courtesy of his reply. Will he consider looking at this matter a little more deeply, because people are represented on both committees, and perhaps some costs could be saved if the functions could be combined.
    Mr. Mellish: When I became Minister I found that my consultative machinery was very bad. As far as I could judge, it did nothing except meet and have a cup of tea. I reorganised the machinery. We now try to do an effective job, which the industry is asking us to do, and the industry itself has welcomed the changes that I have made.

    Wimbledon Common
    Mr. Hugh Jenkinsasked the Minister of Public Building and Works whether the Conservator of Wimbledon Common, appointed by him under Section 12 of the Wimbledon and Putney Commons Act, 1871, was present at the meeting of the Conservators which approved the tipping of soil and other materials on part of Wimbledon Common near the top of Roehampton Lane; and whether his appointee agreed with this decision of the Conservators.
    Mr. Mellish: This tipping of soil on Wimbledon Common was accepted by the Conservators in accordance with their obligations under the Greater London Council (General Powers) Act, 1966. The site for the tipping was agreed by the Conservators at a meeting from which the Conservator appointed by me was unavoidably absent.
    Mr. Jenkins: Is my right hon. Friend aware that my hope is that if his representative had been present he would have opposed this proposal? Is my right hon. Friend further aware that the Conservators had failed in their duty to safe-
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    guard the common? Will my right hon. Friend ask them to see what can be done to repair the severe damage done by this irresponsible tipping on Wimbledon Common? Is my right hon. Friend further aware——
    Mr. Speaker: Order. That is enough to be aware of.
    Mr. Mellish: My appointee is not a delegate, and does not need to come back to me for instructions. Secondly, as I understand the General Powers Act, the Conservators' discretion is limited to agreeing to the position of the tipping. They could not absolve themselves of the responsibility of agreeing to tipping of some kind, and the position was the only question at issue.
    Mr. Boyd-Carpenter: Is the right hon. Gentleman aware that this tipping has done a great deal of damage to the Common, and also to the rare plants on it? Is the right hon. Gentleman further aware that many of us think it is his duty to ensure that the Conservators appointed by him protect the interests of the public?
    Mr. Mellish: If there is anything that I can do to help, I shall. There is one particular individual whom we appointed. I am afraid that he was not there, for other reasons, but I am told that if he had been he would have voted against it, but the proposal would still have been carried.
    Mr. Jenkins: In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible opportunity.

    Public Offices, Hartlepool
    Mr. Leadbitterasked the Minister of Public Building and Works if he will take steps to integrate and recite the various buildings used by the department of Social Services, the Department of Employment and Productivity and Her Majesty's Inspector of Taxes at Hartlepool, having regard to the comprehensive central area redevelopment in the town and the need to reduce the inconvenience to the public and to improve conditions for the staffs of the present offices.
    Mr. Mellish: My Ministry is planning to erect a new building on a site in Surtees Street, to provide an integrated local

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    office for the Department of Health and Social Security. The Department of Employment and Productivity and the Inland Revenue Tax Office are already accommodated in a satisfactory Crown Building near the proposed Civic Centre.
    Mr. Leadbitter: Does my right hon. Friend realise that I appreciate his cooperation, and that of his officers? In view of the amalgamation of the Hartlepools and redistribution of boundaries, will my right hon. Friend make available to me an opportunity for another discussion, so that the fullest amount of integration, which I am sure he desires, may be carried out in the end?
    Mr. Mellish: I shall be prepared to see my hon. Friend at any time on any subject.

    Building Contractors (Statistical Information)
    Mr. Gordon Campbellasked the Minister of Public Building and Works what proposals he has for reducing the amount of statistical information required by his Department to he submitted by building contractors; and whether he will make a statement.
    Mr. Mellish: None, Sir. The information collected by my Ministry is kept to the minimum and is barely adequate for the many purposes for which it is needed.
    Mr. Campbell: Why is it that so many figures are required from the building industry, in some cases the same figures by three different Government Departments, as is made clear in Appendix 7 of the Estimates Committee's Report?
    Mr. Mellish: I accept what the hon. Gentleman says, that there is duplication. The Government's statistical services are being more fully integrated so that such duplication is minimised, and the construction industry will share in this reorganisation.
    Mr. English: Would not my right hon. Friend agree that the statistics produced by industry in general, including the building industry, are far fewer than those produced in many other advanced industrial nations, such as the United States of America?
    Mr. Mellish: I would not know. I am not qualified to talk about the posi-
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    tion in other countries. We get a lot of information from industry. I understand that there are fears that too much is being asked of them. I say to hon. Gentlemen opposite in particular, who continually press me for more information, that the only way to get it is to ask other people for it.
    Mr. Costain: Does the right hon. Gentleman realise that industry will appreciate anything he does to cut down the amount of statistics required, particularly by co-ordinating them from other Government Departments? The more he asks for, the more inaccurate it gets.

    Public Building Programme (Estimates Committee's Report)
    Mr. Gordon Campbellasked the Minister of Public Building and Works whether he will now make a statement on his policy regarding the recommendations of the Fourth Report of the Estimates Committee of the House of Commons entitled, The Public Building Programme in the United Kingdom.
    Mr. Mellish: I would ask the hon. Member to await the publication of the Departmental Observations on the Report.
    Mr. Campbell: Is the right hon. Gentleman carrying out a complete reappraisal of the annual accounting procedures for building programmes, as recommended by the Committee in its paragraph 71?
    Mr. Mellish: I cannot answer that off the cuff, but I am prepared to write to the hon. Gentleman and give him full details of what my Department is doing in that sphere. The observations to which I referred will be published early in the New Year, because they concern other Government Departments as well, and have far-reaching implications.
    Mrs. Ewing: Has the right hon. Gentleman made a start on implementing Recommendation No. 4 of the Report. to the effect that
    "A regular check on the amount of space occupied by the staff of Government departments should be carried out in as many as possible of the larger centres of Government activity outside London"?
    Mr. Mellish: Our record of staff dispersal is better than that of any previous Government.

    Building Work (R.I.B.A. Survey)
    Mr. Tom Boardmanasked the Minister of Public Building and Works what consideration he has given to the representations of the Royal Institute of British Architects regarding the value of building work entering the production thawing stage; and what action he has taken in that regard.
    Mr. Waddingtonasked the Minister of Public Building and Works whether he will now make a statement on the level of design work for building entering the production drawing stage, details of which he has received.
    Mr. Mellish: The latest R.I.B.A. survey showed that work in the drawing offices of private architects fell by about 12 per cent. between the first and second quarters of 1968. Work in local authority drawing offices fell by 2 per cent. in the four months to the end of May, 1968, compared with the four months to the end of January. There are no equivalent indicators for other public authorities, civil engineers and contractors. These figures are not conclusive evidence of trends in the industry, and the consensus of other indicators suggests reasonable prospects for 1969.
    Mr. Boardman: Is it not most disturbing that the R.I.B.A. survey shows that the figures have dropped substantially be low anything since 1954?
    Mr. Mellish: The trouble is that these surveys are not really conclusive, in the sense that they are concerned only with private architects, and the work given to them by public bodies by the use of outside consultants. The same survey shows a small increase during the second quarter in new commissions with a marked rise in private work other than housing, of 11 per cent., and this continued a trend evident for the last nine months.
    Mr. Waddington: Why does the Ministry confuse the issue by giving local authority figures in four-monthly periods, and private industry figures for each quarter? As I understand it, that is what the Minister said. Surely in this context the estimates of building work in 1969 are irrelevant? The fall in the level of design work this year is disturbing, and is likely to be reflected in the
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    amount of building, not in 1969, but in 1970.
    Mr. Mellish: I have answered the Questions put down by both hon. Members, in the form which I think is proper. The fact that the Answer does not suit the hon. Gentleman is not of too much concern to me. This industry constantly complains about future trends. The Confederation of British Industry has said that there will be a fairly strong rise in investment in building over the next 12 months, and the Board of Trade's investment intention survey also points to a strong recovery in private investment in 1969.

    Building Operatives (Output)
    Mr. Silvesterasked the Minister of Public Building and Works what estimate he has made of the increase in output of building operatives employed by contractors in Great Britain in 1968.
    Mr. Mellish: I have not yet estimated the increase in output per operative in 1968, but I think it likely that it will be higher than the long-term trend of 4 per cent. for the second year running.
    Mr. Silvester: Would the Minister say, therefore, why he felt that it was necessary for his right hon. Friends to obstruct an interim increase of 3·7 per cent. which is less than his estimate for the building trade operatives' increase in October?
    Mr. Mellish: I suggest that the hon. Member reads the P.I.B. Report. If he does he will get some information there. Some of the increase each year is the result of better management, more mechanisation, bigger contracts, better tendering procedures, and so on. It is not necessarily a measure of an increase in the productivity of labour.
    Mr. Heffer: Does not my right hon. Friend agree that the estimate of his Department seems to be different from the estimate of the P.I.B.? Will he indicate why there is a difference between the two estimates of output and productivity in the building industry?
    Mr. Mellish: The figures that I have given up to last year have been published year by year since 1945. The output of the building and construction industries has risen every year. This year it will

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    rise by another 4 per cent., I think, and I expect it to rise next year by between 4 per cent. and 5 per cent. This happens to be the view that the Department holds, and we have said so to the P.I.B.

    Maintenance Work (Committee's Report)
    Mr. Silvesterasked the Minister of Public Building and Works whether he will now make a statement on the Report of the Winterbottom Committee on training for, and the carrying out of, maintenance work.
    Mr. Mellish: This Report is now being printed and will be published in January.
    Mr. Silvester: As a result of the publication of this Report, is it intended to publish later a simple booklet for the guidance of smaller firms, as was at one time suggested as a result of the activities of the Committee?
    Mr. Mellish: When I publish the Report I am willing and prepared not only to give it wide circulation but also to break down that part which concerns special aspects of the industry, and to do all that I can to bring home to those interested the important conclusions of the Report.

    House of Commons (Annunciators)
    Dr. Bennettasked the Minister of Public Building and Works how many closed-circuit television sets have been installed in the Commons part of the Palace of Westminster as annunciators of business in the debating Chamber; and at what cost to public funds.
    Mr. Mellish: 387 sets have been installed at a cost of about £20,000.
    Dr. Bennett: I am sure that the whole House is most impressed by that figure, but how many machines did the 387 sets replace? Secondly, as the figure is approaching a ratio of one per Member, how many sets are for the use of Ministers, and perhaps in even smaller rooms?
    Mr. Mellish: The hon. Member was not here at the beginning of Question Time when I said—and I repeat it, because it is worth repeating—that I did
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    not put these sets in because I liked doing it but because I was instructed to do so by the Services Committee of this House, of which several hon. Members opposite are very prominent members.
    Mr. C. Pannell: Is my right hon. Friend aware that this matter is not something within the discretion of his Department; neither is it in the discretion of the Government? This is a conscious act of a Committee of the Legislature—a Select Committee of this House—and he should not be held accountable in this place for such expenditure.
    Mr. Mellish: I could not have said that better myself.
    Mr. Chichester-Clark: Is it not nevertheless within the Minister's competence to see that some of these television sets work—because an awful lot do not?
    Mr. Mellish: Incidentally, they are provided by a private enterprise firm. I think that I shall get my directly employed labour to have a look at them.
    Mr. Hugh Jenkins: Is my right hon. Friend aware that these sets are so wired that they could be used for a closed circuit transmission of the proceedings of this House? Will he see that they are used for this purpose?
    Mr. Mellish: That possibility frightens the life out of me. The old machine annunciators were virtually worn out. I understand that when the Services Committee considered the matter it was told that it would be cheaper to replace them by a television system than by a modern type of machine system. The present television system also provides much more flexibility in operation.
    Mr. Boyd-Carpenter: Will the right hon. Gentleman make it clear, notwithstanding his earlier Answer, that responsibility for recommending expenditure lies solely with Ministers and that he is not entitled to shelter behind the recommendations of a Select Committee?
    Mr. Mellish: With respect to the right hon. Gentleman, he was part of this new democratic procedure of the Services Committee. The first that I knew about the television sets was when I received instructions from Mr. Speaker to put them in.

    Metrication Board
    Mr. Speedasked the Minister of Public Building and Works if he will announce the name of his Department's representative on the Metrication Board.
    Mr. Chichester-Clarkasked the Minister of Public Building and Works whether his Department will be represented on the Metrication Board.
    Mr. Mellish: My right hon. Friend the Minister of Technology is considering the membership of the Metrication Board. the interests of the construction industry will be well represented.
    Mr. Speed: Does not the Minister agree that the construction industry is already in great difficulty due to the delay in setting up this Board, which has a four-year programme in which to work? Will he bring pressure to bear upon his right hon. Friend to get this Board set up as soon as possible?
    Mr. Mellish: The construction industry will be one of the first to go metric. It has a fine record. I agree that it is important that the Board should be set up, and we want the best people on it. I can give an assurance that the construction industry will be well and truly represented on it.
    Mr. Chichester-Clark: Can the Minister give an assurance that the decision to go metric was not taken without a feasibility study, and that if so his Department took part in it?
    Mr. Mellish: In what we have done we have carried the industry with us. It has taken the initiative. My Ministry will be going metric in its design work next year. I pay tribute to the industry for playing an important and progressive part in this matter.

    Construction Industry (Output)
    Mr. Chichester-Clarkasked the Minister of Public Building and Works what estimate he has made of the effects upon the construction industry of the economic measures announced by Her Majesty's Government on Friday, 22nd November.
    Mr. Blakerasked the Minister of Public Building and Works whether he
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    will now make a further statement about the output of the construction industry in 1969.
    Mr. Mellish: It is too early to estimate the effect of the measures on output in 1969 but it may be to put the increase nearer 4 per cent. than 5 per cent. The effect on construction costs will I think be very small.
    Mr. Chichester-Clark: Cannot the Minister give us any idea of the effect of bridging finance and loans to builders? Will he take this opportunity publicly to deny the suggestion that the price of houses might be raised by as much as £80, and give his own estimate?
    Mr. Mellish: I would not give an estimate about the price of houses off the cuff. It would have to be carefully considered before any such estimate was made. The view of my Ministry is that there may be a small increase in the cost of construction of about per cent. overall, due to the increases in Purchase Tax and the new deposits on imports.
    Mr. Heffer: Will my right hon. Friend draw the attention of his right hon. Friend the President of the Board of Trade to the fact that import deposits on plywood and other timbers may have a very bad effect on the building industry? Is he aware that, while many of us on this side of the House are in favour of import controls, we think that they should be selective and intelligent controls, and that the imposition of import deposits on plywood in particular is not likely to be very helpful to the construction industry?
    Mr. Mellish: There is to be a debate on this matter and I assume that in Committee there will be a chance for Amendments to be put down to the Bill to exempt various commodities from its provisions. As I understand it, raw and sawn timber will be exempt from import deposits but planed plywood and particle board will be subject to the deposits. What the overall effect will be I cannot say, except that I have had no representations from the timber people, although the Board of Trade probably has had.
    Mr. Gordon Campbell: What estimate has the Minister made of the effect of

    1235
    these economic measures upon the construction industry in Scotland?
    Mr. Mellish: Without notice I cannot make an estimate. I have said that there will be a small increase in the cost of construction of about ¼ per cent. overall. How much applies to Scotland I have not a clue.

    Direct Labour
    Mr. Rossiasked the Minister of Public Building and Works what is his policy regarding the employment of building workers by public bodies by direct labour on London building sites; and if he will make a statement.
    Mr. Grantasked the Minister of Public Building and Works what is his policy regarding the employment of building workers by public bodies by direct labour; and whether he will make a statement.
    Mr. Mellish: It is a management responsibility to make the most advantageous arrangements. So far as my own Department is concerned, I consider that there is a place for both directly employed labour and contractors.
    Mr. Rossi: Can the Minister state what place he considers the Southwark direct labour department has in view of the fact that it has overspent nearly £1 million on the North Peckham development site, for which the Minister himself is partly responsible?
    Mr. Mellish: The hon. Member is asking the wrong Minister the wrong question at the wrong time. Otherwise he is in order. He should address his question to my right hon. Friend the Minister of Housing and Local Government.
    Mr. Manuel: Is my right hon. Friend aware that quite a campaign is being waged on this question by Aims of Industry, which is reflected in the questions being put by hon. Members opposite?
    Mr. Mellish: I know about Aims of Industry, of course. It is always opposed to direct labour. The tragedy in this argument is that, by imputation, nothing is good about directly employed labour and everything is good about contractors
    1236
    —when the truth is that there is a bit of bad about both.
    Mr. Ashton: Is my right hon. Friend aware that the public works department in Sheffield has made a profit of £14 million in the last 12 years and that the Department asked Aims of Industry and Mr. Malcolm Hoppé to investigate their hooks, and that when they did, they found nothing wrong and had to accept that this was genuine profit obtained by tendering in competition with private enterprise?
    Mr. Mellish: I accept that and I think that it confirms what I said, that there is a great deal of good about directly employed labour, where—this is the key—management is efficient.
    Mr. Chichester-Clark: I agree with the right hon. Gentleman that he is the wrong Minister in the wrong place at the wrong time. Why, if he cannot be questioned on this matter, did he make a public statement in The Times on this subject in October?
    Mr. Mellish: I did not make a public statement on that matter. The question which his hon. Friend asked related to the period when I was a Parliamentary Secretary to the Ministry of Housing and I referred the whole matter to the National Building Agency. That is the only part that I played in that. I am now the Minister of Public Building and Works—and a darned sight better Minister than some of them on that side would be.

    Lambeth Bridge House (Office Cleaning)
    Mr. Straussasked the Minister of Public Building and Works if he is satisfied that the firms he employs to do the office cleaning at Lambeth Bridge House act in conformity with the Fair Wages Resolution; and if he will make a statement.
    Mr. Mellish: Compliance with the Fair Wages Resolution passed by this House on the 14th October, 1946, is a condition of our contract for the cleaning of Lambeth Bridge House. I have not received any complaints or representations.
    Mr. Strauss: Is my right hon. Friend aware that, according to what appears

    1237
    to be sound information, at least one of the firms is not operating the Fair Wages Resolution? If I give him particulars, will he look into that?
    Mr. Mellish: I certainly will and I will have the matter thoroughly investigated: I give my right hon. Friend that assurance.

    Builders (Registration)
    Mr. Moreasked the Minister of Public Building and Works whether he will request the sub-committee of the National Consultative Council, currently studying the registration of builders, to take into account the Phelps Brown Committee's Report.
    Mr. Mellish: I have no doubt that the independent inquiry when set up will consider all relevant matter in the Report of the Phelps Brown Committee.
    Mr. More: Why, apart from a statement by the Minister's colleague the Secretary of State for Employment and Productivity, have we not had a statement of Government policy in this matter? Could not the "darned better Minister" himself, in view of the fact that he commissioned this Report jointly, make a public statement for the benefit of this sub-committee?
    Mr. Mellish: For the very simple reason that, when Phelps Brown issued the Report, we did the proper thing and supplied it to the industry—both employers and unions. Up to a week or so ago, we had not received any official replies. In a matter like this, it would be wrong for the Government to state a policy without having carried the industry with them.

    Whitehall Redevelopment Plan
    Mr. C. Pannellasked the Minister of Public Building and Works whether he will make an early statement on the progress of the Whitehall Redevelopment Plan, that is to say the Martin and Buchanan proposal; and whether the statement made in the House on 1st November, 1965, still remains the policy of Her Majesty's Government.
    Mr. Sandysasked the Minister of Public Building and Works whether he will make a statement on the progress of the Whitehall Redevelopment Plan.
    Mr. John Smithasked the Minister of Public Building and Works whether he will make a statement about the Whitehall Plan.
    Mr. Mellish: With permission I will answer these Questions at the end of Question Time, because the Answer is long.

  COAL

    Stocks
    Mr. Eadieasked the Minister of Power what estimate he has made of the reduction in coal stocks during the coming winter, giving the figures for distributed and undistributed stocks, respectively.
    The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): Depending on weather conditions, coal stocks might fall by about 6 million tons this winter, made up of a fall of perhaps 2½ million tons in undistributed stocks, and a fall of 3½ million tons in distributed stocks.
    Mr. Eadie: Is my hon. Friend aware that many miners would be happy if the coal stocks were reduced? Does he agree that, if the policy of the T.U.C. to hold an independent inquiry into the fuel and power industry were carried out, many more miners would be satisfied?
    Mr. Freeson: I would agree, of course, that, if we could get the coal stocks reduced, the miners and the economy itself would benefit. This is a question of expanding and holding the market, in which, of course, we are interested and the N.C.B. is very active.

    Mining Industry (Manpower)
    Mr. Eadieasked the Minister of Power what estimate he has made of wastage of manpower in the mining industry in 1969.
    Mr. Freeson: While it is not possible to make a precise estimate, I expect that in 1969, wastage from all causes other than redundancy will be rather lower than the figure of about 45,000 estimated by the N.C.B. for 1968.
    Mr. Eadie: I thank my hon. Friend for that reply. Is he aware—he probably is—that the figures which he has given

    1239
    make nonsense of the estimate in the fuel and power White Paper? Is this not a further example of how the White Paper should be entirely scrapped and replaced with fresh estimates?
    Mr. Freeson: It is fair to say that the figure of 35,000 men, to which my hon. Friend refers, was spread over a number of years. We expect that, in the later years of the period covered by the White Paper estimates, we will come closer to the original 35,000 men than we have done this year.

  NIGERIA
  Mr. Barnesasked the Prime Minister if he will make a statement on his recent discussion with Chief Enahoro about the supply of arms to Nigeria.
  The Prime Minister (Mr. Harold Wilson): My discussion with Chief Enahoro on 8th November provided an opportunity for a review of all aspects of the Nigerian war but the details must of course remain confidential.
  Mr. Barnes: What would be the Government's attitude if, for example, Canada were to seek an internationally-agreed arms embargo through the United Nations or, indeed, if Canada were to take the lead in trying to interpose a peace-keeping force? Would the British Government fully support such moves?
  The Prime Minister: This is a hypothetical question, but we have made clear our attitude. Indeed, it was I who raised with the former Prime Minister of Canada the idea of a Commonwealth peace-keeping force for this purpose, including Canadian and British units, but the discussions with Chief Enahoro were principally on the possibility of urgent moves towards a cease-fire, and also on the relief question.
  Mr. Hugh Fraser: Would the right hon. Gentleman, in view of the disaster which continues in Nigeria, not consider approaching, when he talks to Chief Enahoro or others, the idea of something like the Aburi agreement, which was signed and agreed but which everyone has reneged upon, and which would make possible an early settlement of this question?
  The Prime Minister: I agree with the right hon. Gentleman's description of this tragedy, and also about the need for an agreement which will be honoured, but he will know the very great patience with which not only the Emperor of Ethiopia but the O.A.U. has pursued an agreement. Yet still the agreement is eluding both parties, and still there is no agreement to get relief supplies, either by the land route or by daylight flights, into Biafra.
  Mr. Philip Noel-Baker: Has my right hon. Friend seen the report by Mr. Andrew Brewin, of the Canadian House of Commons, who has just returned from the Biafran front, and who makes a powerful case for a Commonwealth initiative in the United Nations to end the war and stop the supply of arms to all parties?
  The Prime Minister: I have seen a report by a Member of the Canadian Parliament, although I am not certain whether it was the same member to whom my right hon. Friend refers. However, on a Commonwealth initiative, there have been many initiatives taken by Britain, by other Commonwealth countries, by the O.A.U., and by the Emperor of Ethiopia. All of them have been designed to get a cease-fire, to get guarantees against genocide or recriminations after the cease-fire and to get the relief supplies flying. So far, we have been prevented, because of the intransigence of those on the spot, from getting this done.
  Mr. Heath: We recognise the many demands which have been made to secure these objectives, but will the Prime Minister consider whether the time has come to take a further initiative—and perhaps for the Government to take it themselves—first of all to try, with other countries, to get a limitation on arms going to the two countries, at least to Nigeria and Biafra, and particularly private arms; and, secondly, whether the British Government could not be responsible themselves for flying in food supplies without their being inspected by the Federal Government? Would the right hon. Gentleman consider these two initiatives?
  The Prime Minister: These are important questions, but the right hon. Gentleman has the suggestion in the wrong

  1241
  form. On the first, it is, of course, the almost total inability to control private arms shipments which has caused the difficulty all along. The problem is to get both sides to agree to a cease-fire. A limitation of arms would not, of itself, achieve that, and recent shipments to Biafra have of course prolonged the misery and the agony. On the relief side, we made it clear from the beginning that we are prepared to make Royal Air Force Transport Command planes available for both sides. I believe that it may be done under the Red Cross. Unfortunately, we can get no agreement for the daylight flights which are necessary to supplement the very limited facilities provided by night flights.
  Mr. Grimond: As one of the reasons advanced by Her Majesty's Government for the continuing supply of arms to Nigeria was that we would thereby have greater influence with the Nigerian Government, and as it appears from the Prime Minister's answers to questions that we have so far unfortunately had none, will he now agree to stop the supply of arms?
  The Prime Minister: The right hon. Gentleman must be responsible for his own deductions. We have certainly had greater influence than any other country in getting, for example, the Hunt Mission, which made powerful proposals for getting relief supplies to a starving population. That was not unimportant. Because of the concern of this House and all of us to prevent genocide, massacres and undisciplined action, we have a military observer at the battlefront reporting all the time, together with other observers, on what is happening. As for our influence, we have got the Nigerian Government to agree to a reasonable cease-fire and to relief flights, but these have been vetoed by Colonel Ojukwu on his side.
  Mr. Winnick: Despite what has been said so far, is my right hon. Friend aware that many people in Britain would like to see more done by way of supplies for the millions of people in Biafra who will die unless these supplies reach them? What is to prevent us from trying to get some sort of agreement for arms embargoes with countries which are supplying arms to either side now? Is my right hon. Friend aware that some people are
  1242
  saying that Russia, France, Portugal and ourselves have got blood on our hands because we have been sending arms?
  The Prime Minister: What my hon. Friend said was, I thought, perfectly fair when he began by concentrating on relief supplies. It was we who, through the Hunt Mission, arranged to have opened a land supply route. That is still not open, because Colonel Ojukwu has refused to let relief go through by that route. As for air supplies, I very much doubt that, even if we could get the daylight flights which the Biafrans are refusing to have, we would get enough supplies through to avoid starvation. This is a very serious matter, but, here again, while the Federal authorities have agreed to the daylight flights, they have been rejected by Colonel Ojukwu.
  Sir Alec Douglas-Home: Is it not a fact that there is really only one airfield which is essential to getting food supplies into Biafran territory? Is the right hon. Gentleman saying that access to this is now being refused by Colonel Ojukwu? If so, will he make another effort to see whether these food supplies can be flown in under British Government supervision?
  The Prime Minister: The right hon. Gentleman will be aware of the repeated initiatives which we have taken, including the recent one, in this matter. The International Committee of the Red Cross—and I shall be discussing this matter with a representative of the Red Cross this evening—is convinced that night flights alone cannot now meet the need in the rebel-held area for food and medical supplies. The Federal Government have agreed to daylight flights, but Colonel Ojukwu has still to be persuaded to agree. I have expressed the view that, even if he does, it may be inadequate, in the period in the New Year, when there will be need to fly in massive amounts of carbohydrates as well as proteins which are so much needed at the present time?
  Mr. James Johnson: In view of the difficulty of securing a collective embargo on arms supplies to Nigeria—in view, for example, of the behaviour of the French—is it not also fiction to talk about getting in such large quantities of food and medical supplies in daylight when an offer to supply these goods has been made but has been refused by Colonel Ojukwu? Is it not a question of having to accept that these are the facts of life?
  The Prime Minister: Arms supplies to Eastern Nigeria have undoubtedly prolonged the agony and the danger of starvation. That is so, from wherever the arms may come. To answer my hon. Friend's remarks about food and medical supplies, very many organisations in this country, including Her Majesty's Government, have made supplies available. The tragedy has been all along the inability to fly these supplies in in large enough quantities. I have stated clearly what the inhibitions are. It is a question of the daylight flights having so far been refused. We recognise, of course, that if we could open the land corridor—it could be opened and the Federal authorities are prepared to open it; international organisations and the Hunt Mission confirmed that it could be used—we could certainly transform the situation from the point of view of the question of starvation.

  COMMONWEALTH PRIME MINISTERS' MEETING
  Mr. Tilneyasked the Prime Minister whether he will propose the formation of a small Commonwealth peace-keeping force at the forthcoming meeting of Commonwealth Prime Ministers.
  The Prime Minister: I would refer the hon. Gentleman to the reply which I gave to a similar Question by my hon. Friend the Member for Rowley Regis and Tipton (Mr. Archer) on 22nd October.—[Vol. 770, c. 1085–6.]
  Mr. Tilney: Is not a peace-keeping force urgently needed to stop the carnage in Nigeria? Would the right hon. Gentleman bear in mind that more than half the United Nations force in Cyprus, who have done such a wonderful job, is British and that if in the future we concentrate on Episkopi the other Sovereign Base Area at Dhekelia would make a first-class Commonwealth force base?
  The Prime Minister: I agree with the tribute which the hon. Gentleman paid to what has been achieved in Cyprus, not least by the British Services out there. His question, however, refers to a standing Commonwealth peace-keeping force. We have made clear our willingness to participate in a peace-keeping force in Nigeria. The arguments against a permanent peace-keeping force would be much more difficult to overcome, because one could
  1244
  never envisage the peculiar circumstances in which it might have to be used.
  Mr. Tilneyasked the Prime Minister whether at the forthcoming meeting of Commonwealth Prime Ministers he will propose the adoption of a Commonwealth flag.
  The Prime Minister: I would prefer to wait until there is evidence of some general interest in such an emblem in the Commonwealth.
  Mr. Tilney: Since it is not easy to find either the money or the site on which to erect 28 flagpoles in other cities—that is, except in Parliament Square—would the right hon. Gentleman bear in mind that a simple flag could represent all the colours of the spectrum?
  The Prime Minister: It would not exactly be a simple flag if it had to represent all the colours. In addition to the usual practice of displaying flags in Parliament Square, I would be happy to invite the hon. Gentleman in a month's time to Marlborough House, where there is no difficulty in accommodating even the flags of all the 28 Sovereign Commonwealth countries.
  Mr. Hugh Jenkins: Would not my right hon. Friend consider the possibility of such a flag, based on the tie of the Commonwealth Parliamentary Association?
  The Prime Minister: I would require notice of that question.

  PRIME MINISTER (SPEECH)
  Mr. Blakerasked the Prime Minister if he will place in the Library a copy of his public speech at the Guildhall on 11th November about the country's economic situation.
  The Prime Minister: I did so, Sir, on 12th November. The hon. Gentleman will know I so informed the House in reply to a Question by my hon. Friend the Member for Bothwell (Mr. James Hamilton) the following day.—[Vol. 773, c. 110.]
  Mr. Blaker: Does the right hon. Gentleman recall that he paid a well-deserved tribute to the way in which shipping, insurance and banking had regularly contributed positively to our balance

  1245
  of payments. In recognition of that contribution, would he agree that the time has come to relieve them of Selective Employment Tax?
  The Prime Minister: I certainly paid that tribute. Indeed, their contribution to our invisible earnings has increased considerably, particularly in the last year, for reasons which hon. Members will understand, and particularly as a consequence of devaluation. However, I would not have felt that S.E.T. was inhibiting them from making what is now a record contribution——
  Mr. C. Pannell: On a point of order. I wish to point out, Mr. Speaker, that the hon. Member for Maidstone (Mr. John Wells) has been standing at the Bar of the House for the last ten minutes munching apples. Now he has entered the Chamber and is making an exhibition of himself. I do not know whether you have noticed this, Mr. Speaker. I would be obliged if you would do something about it.
  Mr. Speaker: I will deal with that point of order it the end of Questions.
  The Prime Minister: Before that point of order. I was saying that I was not aware that S.E.T. was preventing this record achievement of invisible earnings. It is worth pointing out that, as a proportion of our trade earnings, as a proportion of visible exports, invisibles are now less than they were some years ago.
  Mr. Alfred Morris: Further to the point of order raised by my right hon. Friend the Member for Leeds, West (Mr. C. Pannell), may 1 remind you, Mr. Speaker, if you intend to deal with his point of order at the end of Question Time, that the hon. Member for Maidstone (Mr. John Wells) will have finished his apple?
  Mr. Speaker: Order. We must get on.
  Later——
  Mr. Speaker: If I did not deal with the point of order when it was raised by the right hon. Gentleman the Member for Leeds, West (Mr. C. Pannell) it was because Mr. Speaker is probably more aware than any hon. Member how keen hon. Members are to get Questions on the Order Paper, and how anxious they are to get them answered. This is why the
  1246
  Chair is always putting on pressure at Question Time to enable as many hon. Gentlemen as possible, who have taken great pains to work out Questions, to have the opportunity to put them.
  On the issue itself, I understand that two centuries ago Parliament was a place where hon. Members brought in oranges, to eat. That custom has disappeared during the years. I do not think that its disappearance has in any way taken from the dignity of the House and, indeed, may have added to it. I have no power to interfere with an hon. Gentleman's masticatory habits, but I would impress on the House that the dignity of the House of Commons, which every hon. Member prizes, is in the hands of every hon. Member. Mr. John Hynd—on a point of order.
  Mr. John Hynd——
  Mr. Wyatt: On a point of order——
  Mr. Hynd: Mr. Speaker——
  Mr. Wyatt: On a point of order——
  Mr. Speaker: Order. The mere repeating of "On a point of order" does not entitle the hon. Member for Bosworth (Mr. Wyatt) to take precedence over the hon. Gentleman whom I had called. Mr. John Hynd.
  Mr. John Hynd: Referring to your Ruling, Mr. Speaker, can you enlighten the House whether it is equally in order for an hon. Member to indulge in liquid refreshment in the Chambers.
  Mr. Speaker: This shows the danger of any departure from the decorum of the House, which most hon. Members are anxious to preserve.
  Mr. Wyatt: On a point of order, Mr. Speaker. May I remind you that in 1945 or 1946 an hon. Member on this side was eating an orange and was ordered by your predecessor to desist from the practice? Is that not a useful precedent which, with respect, you might consider following today?
  Mr. Speaker: It is one that I must certainly look at.
  Sir A. V. Harvey: Further to the point of order, Mr. Speaker. You may not remember, but on that occasion it was the present Lord Boothby, then Mr. Boothby,

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  who sat here, and objected to pips going down his neck.
  Mr. Speaker: After the interlude, back to the business of the day.

  PRESIDENT-ELECT OF THE UNITED STATES (MEETING)
  Mr. Gresham Cookeasked the Prime Minister when he now plans to have a meeting with the President-elect of the United States of America.
  The Prime Minister: I have at present nothing to add to the Answer I gave on 7th November to a Question by my hon. Friend the Member for Ealing, North (Mr. Molloy).—[Vol. 772, c. 1076–8.]
  Mr. Gresham Cooke: Will the right hon. Gentleman consent to be photographed with Mr. Nixon, as he refused some years ago in so being? Will he press on the President-elect the fact that probably the best service he could do for Europe would be to give a lead on the question of international liquidity by either recommending a European integrated currency or possibly by revaluing gold?
  The Prime Minister: I certainly have no recollection of refusing to be photographed with Mr. Nixon. At a time when he was not of the eminence of today, I remember, as Leader of the Opposition, calling on him at his hotel. There was no difficulty, as far as I recall, about photographs being taken. If the hon. Gentleman has information which is better than mine, I hope that he will send me the details.
  To answer the second part of his supplementary question, the whole House will agree about the importance of further moves towards international liquidity. We look forward to discussing these questions with the new President after his inauguration on the same intimate basis as we discussed matters in the past with his predecessors.
  Mr. John Fraser: When the Prime Minister meets the President, will he discuss with him matters of common concern inside N.A.T.O., and particularly the affront to democracy now taking place in Greece? Will he discuss concerted ways of getting early restoration of
  1248
  democracy in that country, and throw it out of the alliance if democracy is not restored there?
  The Prime Minister: I think that it would be inconceivable if I were to meet the President of the United States without discussing all matters of relevance in the N.A.T.O. field, both military and political, which are disturbing the effectiveness of the alliance.
  Mr. Thorpe: Since the economic crisis of a few days ago could recur in a matter of months owing to the present unsatisfactory international monetary system, is there any reason why we should have to wait for the inauguration of the new President before top-level talks between representatives of our Treasury and the American Government begin? Should not these start straight away?
  The Prime Minister: This is a matter for American constitutional conventions rather than for anything affecting this House, but the right hon. Gentleman will be aware of the initiatives taken over the past four years by two Chancellors of the Exchequer on this side, and the fact that great progress has been made, although that progress has been blocked on a number of occasions by those who did not see the need for international monetary co-operation. We have also been able to build on the work of the right hon. Gentleman the Member for Barnet (Mr. Maudling), and taken it further. We would like to take it further still, and we hope that the new situation will provide the opportunity.

WHITEHALL REDEVELOPMENT PLAN
The Minister of Public Building and Works (Mr. R. J. Mellish): With permission, I will now answer Questions Nos. 37, 38 and 42.
Since the statement about the Whitehall Redevelopment Plan by my right hon. Friend the Member for Leeds, West (Mr. C. Pannell) on 3rd November, 1965, there have been a number of developments:
Studies have been made of the requirements to be met in a new Parliamentary building on part of the Bridge Street/Richmond Terrace site, and the Select

1249
Committee on House of Commons Services has made proposals in its Fourth Report for the 1967–68 Session. It is necessary that this House should consider these proposals, and I hope that an opportunity for this will be found soon. The preparation of detailed requirements and the completion of the architectural arrangements can then be undertaken.
Studies have been carried out into requirements for Government offices on the remainder of the Bridge Street/Richmond Terrace site, and a brief prepared providing also for shops, restaurants and other public facilities. The Ministry is investigating further the advantages of open-plan offices, and, meanwhile, preparing plans which will be submitted in due course to the Royal Fine Art Commission and the planning authorities, and then displayed in this House.
The programme envisages demolition work starting early in 1970 between Richmond Terrace and Derby Gate, and proceeding in stages with a view to completing the Government offices and associated development by 1975.
As stated in the House on 16th July, 1968, all three of the former Metropolitan Police Headquarters buildings will be demolished in the course of this redevelopment.
No plans or programme have yet been made for the future of the Foreign Office site.
Following the public inquiry in May, 1966, into the future of the site between Broad Sanctuary and Great George Street, my Ministry is preparing in collaboration with other site owners and interested authorities a joint brief for a comprehensive redevelopment.
A joint study is now in hand between my Ministry, the Ministry of Transport, the Greater London Council and the Westminster City Council, with the assistance of consultants, to investigate in more detail proposals for dealing with north-south traffic, including a riverside road tunnel, and the problem of east-west traffic, as the proposal for widening the Horseferry Road route, would be too costly. I expect to have a report on these further studies next spring.
The House will see, from what I have said, that the working out of detailed proposals is proceeding within the broad
1250
framework agreed following the Martin-Buchanan Reports.
Mr. C. Pannell: Is the Minister aware that it is now more than three years since the last statement was made from the Treasury Bench on the Martin-Buchanan proposals? We are grateful to him for the statement he has just made, but is he aware, and, if so, will he bring it to the notice of his right hon. Friend the Leader of the House, that the time for questions has now long passed and that the time is now, or in the immediate future, for action on this very important project, which includes not only the whole development of the centre of the capital of the Commonwealth but particularly the extension of this House and provision of the facilities which are so much needed by all hon. Members?
Mr. Mellish: I agree with my right hon. Friend that there has been an enormous delay. I hope very much that time will be found for a debate. When we have it, I hope that we shall get a decision by the House, so that we may get on with the work.
Mr. Sandys: Will the right hon. Gentleman ensure that when a debate takes place it will be wide enough for us to discuss all the aspects of the plan—this House, the Bridge Street plan, Parliament Square, and also the Foreign Office site?
Mr. Mellish: I give the right hon. Gentleman the assurance that when the debate takes place—and my right hon. Friend the Leader of the House assures me that he is alerted to the importance of this and we hope that it will be very early after the Christmas Recess—we shall have the terms of reference in such a fashion that the right hon. Member for Streatham (Mr. Sandys) can talk about anything.
Mr. John Smith: Is not this taking rather too narrow a view of the matter? Is the Minister aware that the Whitehall Plan proposes to dump 10,000 civil servants into the centre of Westminster? Is it realistic to get on with building plans before debating the questions of national and regional government, which may make those civil servants more necessary elsewhere?

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Secondly, in view of the large number of very important and much-loved public buildings which may be demolished, will the right hon. Gentleman have a proper public inquiry into the plan as a whole?
Mr. Mellish: I should have thought there had been enough inquiries into this plan to satisfy everyone. The hon. Member will be able to express his point of view when we have the debate. As to the number of civil servants who will find themselves in this precinct, at the moment civil servants are spread all around London. It is about time that we tried to get them together. That is one of the objects of the new buildings.
Mr. Batsford: Is the right hon. Gentle man aware that we on this side of the House welcome his assurance that before any final decision is made this House will have an opportunity to debate the question?
May I ask the right hon. Gentleman two further questions? First, does he agree that the present architectural form of New Palace Yard should remain entirely undisturbed? Secondly, in consultations with other bodies on the north-south traffic route, is his aim to establish a pedestrian precinct in Parliament Square?
Mr. Mellish: I am glad to have the hon. Member's support that the matter should be debated soon. If there is a Division we shall know exactly what hon. Members want us to do.
On the present architecture of this House, the hon. Member will know there have already been proposals to have other buildings put inside this Palace and that they have been rejected by the Services Committee. We shall see whether the House endorses that. Personally, I hope that it will.
In reply to the hon. Member's second question, a traffic feasibility study is going on, linked with the possibility of a tunnel by the river bank outside the Palace. Studies on whether this is a practicability are going on.
Mr. Thorpe: Is the right hon. Gentleman aware that the speed with which he delivered his answer and the lack of decibels which accompanied it made it difficult to follow what he was saying,
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particularly for older and deafer hon. Members such as myself? Is he aware that before there is any question of the commercial letting of offices or shops to which he alluded, or of satisfying the growing hunger of Ministers, no scheme will be satisfactory to hon. Members until every hon. and right hon. Member has proper office equipment and premises in which to do his job'?
Mr. Mellish: I know that the Liberal Party has many difficulties and problems, but I did not know that deafness was one. I read the statement rather quickly because there is another statement to be made for which the majority of hon. Members are waiting. I thought that it was in the interests of the House that I should read it in the way I did. We are looking forward to anything the right hon. Member may say when we have the debate.
Dr. David Kerr: Can my right hon. Friend assure the House that there is no overlap and perhaps no conflict between the work of his Ministry and the work of the Services Committee, and also whether there will be an opportunity to look at schemes other than the Martin-Buchanan scheme, in particular, the interesting work of Mr. Christopher Libby? Will he see that these proposals are available in the Library?
Mr. Mellish: When the debate is held, if I am fortunate to catch Mr. Speaker's eye, I shall refer to Mr. Libby's contributions. I hope that hon. Members will express their personal views on the facilities they want in the future.
Mr. Heffer: Will my right hon. Friend give an assurance that as it will be six years before the buildings across the road are demolished this will not be used as an excuse for holding up provision of better conditions for those who work in these obsolete buildings at present?
Mr. Mellish: I am glad that my hon. Friend has referred to conditions because the conditions, not only of hon. Members but for the staff of the House, are very bad indeed. It is about time that we made up our minds what we intended to do. Let us get on and do it.
Mr. Robert Cooke: Will the right hon. Gentleman make available to the House all full details of what he has announced

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today in the way of offices, shops and so forth in advance of the debate, so that we may have a full discussion? May I ask two detailed questions? Does he envisage demolition of the Norman Shaw part of the Scotland Yard complex and is it a fact that the Brydon Treasury building is not affected?
Mr. Mellish: It is our intention to demolish the Norman Shaw building. If the hon. Member has doubts about the wisdom of that, I ask him to look inside it, never mind the outside.
So far as demolition of offices is concerned, consideration of hon. Members' facilities will be taken care of by transferring them elsewhere if demolition takes place.
Mr. Howie: In regard to the architectural form of New Palace Yard, if a car park can have one, is it not time to refer to Barry's original scheme for building over New Palace Yard?
Mr. Mellish: That is a matter of opinion, but I hope that we shall not build inside the Palace. It will be a matter for hon. Members. Decent conditions for the staff will be the first consideration of building across the road in Bridge Street. The way to do that is by an archway under Bridge Street. We think this a good solution, but I hope that all hon. Members will read the Services Committee's Report before they make their comments.
Mrs. Anne Kerr: Has my right hon. Friend considered the idea of asking the House of Lords simply to move out of this building so that we can have modern office equipment and the staff of this House may have proper quarters in which to work and this place may become a real House of Commons, not a place for a lot of hangers-on?
Mr. Mellish: I have enough trouble at the moment without saying what we ought to do with the House of Lords. Let us have this debate first and clear away some of the arguments.
Mr. EnglishIs it not clear that the services required by hon. Members cannot be provided at reasonable cost unless the new House of Commons is built on the site from Bridge Street to the Ministry of Defence? Is this not to be done merely because the Foreign Office wants to use the site?
Mr. Mellish: That is a personal view, and we are all entitled to a personal view. Any suggestion that there should be a brand-new House of Commons, and that this one should be discarded, I, for one—I love this place and have been here for 22 years—would very much regret.

FALKLAND ISLANDS
The Minister of State, Foreign and Commonwealth Office (Mr. Fred Mulley): With your permission, Mr. Speaker, and that of the House, I wish to make a statement on the Falkland Islands.
My right hon. and noble Friend Lord Chalfont visited the Falkland Islands from 23rd to 28th of November to establish direct Ministerial contact with the people of the islands and to explain to them Her Majesty's Government's policy in their talks with the Argentine Government.
During his stay in the Colony, my right hon. and noble Friend was able to meet a large part of the island's population both in Stanley, the capital, and in the settlements, and he repeated to them the assurances that Ministers have given the House on many occasions this year, namely, that it is not the policy of Her Majesty's Government to transfer sovereignty over these islands against the wishes of the islanders.
My right hon. and noble Friend also had a number of meetings with the Islands' Executive Council, which was enlarged for the duration of his visit to include the unofficial members of the Islands' Legislative Council. On 25th November, the Executive Council told Lord Chalfont that in his meetings with the general public it would wish him to state, first, that he had discussed in detail with the Executive Council the present position reached in the talks with Argentina and the position which we hoped to reach soon; and, secondly, that the members of the Executive Council accepted that the British Government had been acting in good faith in the talks with Argentina and that the agreed position, if it is reached, would be fully in keeping with the promise that Her Majesty's Government would not transfer sovereignty against the wishes of the Falkland Islanders; and, accordingly.

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Lord Chalfont was able to give this additional assurance.
As my right hon. Friend the Foreign and Commonwealth Secretary explained to the House on 26th March last, following the United Nations General Assembly Resolution 2065 of December, 1965, we have had talks with Argentina with the object of securing
"a lasting and satisfactory mondus vivendi between these islands and Argentina".
In particular, we are concerned to restore and improve communications between the islands and the nearest mainland since this would be of great benefit to the islanders.
We have made clear throughout these discussions, as the House has been informed on many occasions, that no transfer of sovereignty can be made against the wishes of the Falkland Islanders.
I hope that it may shortly be possible to conclude the present stage of the discussions and their outcome will then be reported to the House.
Mr. Braine: Is it not the case that the real object of Lord Chalfont's mission was to tell the Falkland Islanders that if they retain their present status their future is bleak? Why has no account been taken of recent proposals which may well transform the economy of the islands?
Secondly, would the right hon. Gentleman explain the extraordinary statement attributed to Lord Chalfont, in Buenos Aires, that Britain and Argentina may make a joint effort to convince the islanders that a change of status would be convenient?
Lastly, in view of the unchanging wishes of the Falkland Islanders to remain British, and the support which those wishes have on both sides of the House and in this country, will the Government take the issue of sovereignty off the agenda of any further talks with the Argentine?
Mr. Mulley: My right hon. Friend's visit was made in response to suggestions in this House, on the one hand, and in the Falkland Islands from the Governor and the Executive Council, on the other, that a Minister should visit the islands. He is the first Minister who
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has made such a visit in the history of this Dependency. The purpose was to explain the position in the light of a good deal of confusion which has arisen and not to persuade the islanders or in any way to direct their views. Secondly, I have no information about the so-called attributed quotation in Buenos Aires.
On the third point, about taking sovereignty off the agenda, the purpose of the talks is to restore communications between the islands and Argentina. The absence of such arrangements at present is a very great hardship. We have the absurd situation of imports from Argentina going all the way up to Montivideo and 1,000 miles across the sea to the islands. The purpose is to improve communications and in that context we are prepared to talk about sovereignty—[HON. MEMBERS: "Why?"]—but only in the context—[HON. MEMBERS: "No."] With respect, the Government stand on this position. It is for the islanders to say and not for us.
Mr. Hamling: While welcoming my right hon. Friend's thrice-repeated assurance that the Government's policy is that independence will be maintained so long as the islanders want it, may I ask him to say whether the statement of Lord Chalfont, to which the hon. Member for Essex, South-East (Mr. Braine) referred, was a genuine statement or newspaper talk?
Further, is my right hon. Friend aware that there are great economic interests involved here and that some of us on this side of the House are not prepared to see the islands handed over to a Government who treat Left-wing parties like some hon. Members opposite would like to treat them?
Mr. Mulley: I give the assurance that the Government have no intention to transfer these islands to Argentina unless that is the express wish of the islanders.
On the question of the news leak, we say many times in the House that we are not responsible for what appears in newspapers. I have no knowledge of that. I cannot believe that it was said, because it would be totally at variance with many excellent statements which Lord Chalfont has made in Press conferences in Argentina and the Falkland Islands.
Mr. Clark Hutchison: Does the right hon. Gentleman realise that, although there may be no transfer of sovereignty, the spirit of the talks which Lord Chalfont had with the islanders has caused confusion and depression in the islands? What steps will the Government take to rectify the damage which they have done? Secondly, will a statement be made about the new seaweed project? Thirdly, may we be given an exact record of the discussions between Lord Chalfont and the Argentine Minister of Foreign Affairs and his officials?
Mr. Mulley: If I am to do justice to these questions, my answers must be a little long, and I hope that the House will forgive me for that.
On the first point, apart from creating confusion, I understand—and again I rely only on Press reports—that the hon. Gentleman sent a telegram to a trade union leader in the islands asking him to organise a petition and had a reply back from that gentleman, who is also a member of the Executive Council, saying that the Executive Council was satisfied with the assurances which it had received.
Lord Chalfont did not have any formal talks or negotiations in Argentina. As a matter of courtesy, he met the Foreign Minister. It would be inappropriate to circulate any record of talks following a dinner party.
We have known about the possibility—and I use that word advisedly—of seaweed developments for some months, but it was put to the Governor and others in the Falkland Islands that this was a fairly remote possibility. Only in July the Governor expressed his disappointment to Mr. Merton that even the prospect of a pilot scheme was remote. The dramatic developments of the last few days have been made known to us only through the courtesy of the B.B.C. and the newspapers.
Mr. Winnick: Is my right hon. Friend aware that his statement will be warmly welcomed by all those who have the interests of the people of the Falkland Islands genuinely at heart? Would he agree that this matter is like that concerning Rhodesia and Gibraltar and that what must be taken into account are the views of the majority of the people in any given Colony? If they wish
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to remain British it is only right and proper that they should do so.
Mr. Mulley: I am grateful to my hon. Friend. The situation is very similar to that in Gibraltar. While the people desire to retain their link with us, we are happy. But if the situation should change, as we have told the Gibraltarians, we accept that, too.
Sir Alec Douglas-Home: Would the right hon. Gentleman give the assurance that the sovereignty of the Falkland Islands is in no sense being used as a bargaining factor in the talks with the Argentine, and that it will not be so used in the talks which are to take place over the rest of this week? If he would give that assurance, the House might be satisfied. There is a feeling that sovereignty is being used in some sense as a bargaining factor, which would be totally wrong.
Mr. Mulley: I am willing to give the assurance in the form requested. Anyone with the remotest experience of diplomacy knows that it would be unwise to try to use it in a bargaining context when we attach the firm condition to it that it can be done only with the wishes of the islanders. We know, and I am sure that Argentina knows, the state of opinion in the Falkland Islands. The only purpose of the discussions and negotiations with Argentina is to try to improve the situation in terms of communications and facilities for the people in the islands.
Mr. Shinwell: In view of statements attributed to Lord Chalfont which have appeared in the Press over the past few days, apart from being mentioned in the House today, is it possible for my right hon. Friend to ask Lord Chalfont whether there is any truth in them? Why does my right hon. Friend dismiss this allegation as if it is of no consequence? Surely it is of considerable significance and has a bearing on the principle involved.
Mr. Mulley: Lord Chalfont, on his visit, was accompanied in every meeting, except for the confidential meetings with the Executive Council, by five journalists. A great deal has appeared in the newspapers about this matter. In the short time that Lord Chalfont has been back, I have not thought fit to ask him about

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every line in every newspaper. I cannot conceive that Lord Chalfont would make a statement of the kind—[HON. MEMBERS: "Ask him".] I will ask him, but I could not do so in between the question being asked and my answering it.
Mr. James Davidson: What, if any, concessions or undertakings have so far been given by the Argentine during the course of the talks? Will the Minister give an undertaking that before there is any question of a change in the sovereignty of the Falkland Islands the people there will be allowed to give an indication of their views through a referendum, as they were in Gibraltar?
Mr. Mulley: Any talk of a referendum is very premature, because we are all aware of opinion in the islands at present. As to the question of what concessions or other matters have been discussed, I cannot reveal the details of the negotiation until it is concluded, when I have undertaken that the result will be reported to the House.
Mr. Wyatt: Is my right hon. Friend aware that Lord Chalfont said some very odd things once in Zurich? What is worrying everybody is that Her Majesty's Government appear to be trying to persuade the islanders to hand their sovereignty over to Argentina, and nobody can understand why the Government are trying to do that.
Mr. Mulley: I take issue with my hon. Friend on what I thought were very unfair remarks about my right hon. and noble Friend. Anyone who thinks that the islanders have been pressured by Lord Chalfont completely misjudges the character of the islanders and Lord Chalfont. The islanders will not be pressured into taking a decision if they think that it is against their interests, and Lord Chalfont would not so seek to persuade them.
Sir A. V. Harvey: Why did the Government create doubts about the matter in the first place? Does the right hon. Gentleman recall that less than a year ago the Government admitted that negotiations were taking place with the Argentine for the supply of warships? Why at this late stage are we now being told that the talks are about communications? Why not tell us at the begin-
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ning what is taking place? Will the right hon. Gentleman consider publishing a White Paper, giving all the facts and all the things that Lord Chalfont has said?
Mr. Mulley: What I have said this afternoon follows almost word for word what my right hon. Friend the Secretary of State told the House in the middle of the night of 26th–27th March. I think that it would be appropriate to consider a White Paper when—I hope shortly—the present stage of discussions has been concluded.
Mr. Alfred Morris: Since the Falklanders have made it repeatedly and emphatically clear that they wish to remain British, could the matter be left in abeyance until the improbable date when they say that they have changed their minds?
Mr. Mulley: The matter cannot be left in abeyance—[HON. MEMBERS: "Why not?"] Because we want, if possible, to improve the islanders' position with regard to communications. It is not satisfactory for them to remain in an isolated position. The only port they can use is 1,000 miles away and the nearest mainland is less than 300 miles away. All communications have to go that very long way round, and travelling to school, and so on, is very difficult. We want to improve their position.
Mr. Sandys: Does the right hon. Gentleman realise that to leave in the air the alleged statement by Lord Chalfont about a joint duty of the Argentine and British Governments to convince the Falklanders that it is to their advantage to make a change would cause very serious anxiety and difficulty? Will the right hon. Gentleman ask his right hon. and noble Friend whether that statement was, in fact, made, so that the matter can be cleared up; and will he undertake to make a statement to the House tomorrow?
Mr. Mulley: I will put the point to my right hon. and noble Friend, and report accordingly to the House.
Miss Herbison: My right hon. Friend will be aware that, in spite of all the assurances given by Ministers from the Dispatch Box, there are still very grave fears among the people of the Falkland

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Islands that they will be handed over to Argentina. What further evidence do the Government want about the will of the people of the Falkland Islands? If they need any further evidence, why cannot they state forthwith that they will meet the will of the people of the islands to remain as they are, no matter what other discussions there are with Argentina to help them with communications, and so on?
Mr. Mulley: If I have not been able to make the Government's position clear in this respect, I do not know what the words in the English language mean. I should have thought that the words "there will be no transfer against the wishes of the islanders", are clear enough for everyone to comprehend.
That statement has been made not only today but many times, and was made in a remarkably clear and well-argued speech by my right hon. Friend the Secretary of State in March, the significance of which was that we had no more questions and trouble about the matter for a very long time after. I suggest to the House that the doubts and troubles do not come from the Government side of the House.
Mr. Birch: The right hon. Gentleman said that he had known for some months about the seawed project. Is not that a very important project, and would it not have altered the views expressed by Lord Chalfont about the weakness of the prospects of the Falkland economy if he had chosen to mention it?
Mr. Mulley: The position is not that I personally have known, but that the Government of the Falkland Islands have known about the possibility of the seaweed project for some months. There was correspondence between Mr. Merton and the Governor, but it was couched in terms of "maybe in five years, maybe in a much longer period" it would become an interesting project.
As I have told the House once already, the Governor told Mr. Merton by letter, I think it was in July, that he was very disappointed that even the possibility of a scheme was so remote. The right hon. Gentleman has been in business. Would he stake he whole of his future on an extremely vague undertaking of that
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kind? If it can become a real possibility, we naturally welcome anything that would increase the diversification of the economy of the islands.
Mr. Brooks: Will my right hon. Friend clarify why it is apparently so urgent to improve communications with the nearest mainland, which is the desert of Patagonia, where only a few Welshmen live? In view of the need to put the matter beyond doubt once and for all, does my right hon. Friend agree that the Constitutional Conference to be set up in the near future might have its terms of reference widened to include the problems of small dependent territories such as the Falkland Islands, and possibly consider their becoming constituencies of the United Kingdom and sending representatives to this House?
Mr. Mulley: The question of the terms of reference of the Constitutional Conference is not for me. My hon. Friend's suggestion is interesting, and no doubt he will convey it to my right hon. Friend the Prime Minister. I do not think that it would deal with the Falkland Islands situation in the coming weeks, when I hope to be able to report further to the House.
Mr. Peyton: Why cannot the right hon. Gentleman accept without qualification or reservation the remarks of his right hon. Friend the Member for Lanarkshire, North (Miss Herbison)? This would entirely satisfy most of us. Is the right hon. Gentleman aware that there is a deep suspicion, possibly born from the Government's record, that Lord Chalfont was sent on a very slippery mission, and that if he was not he made remarks which, perhaps unintentionally, gave very grave grounds for suspicion?
Mr. Mulley: I have undertaken to look at the question of the remarks about which complaint has been made. I cannot answer the question now, but I am certain that Lord Chalfont did not express that view. As to his mission, when we send a Minister—and Lord Chalfont is the Minister in the Foreign and Commonwealth Office with particular responsibility for that part of the world—in response to demands in the House and in the Colony, the House should be satisfied instead of making the kind of complaints we have heard.
Earl of Dalkeith: On a point of order. Is not this possibly a case where it might be for the convenience of the House if the Minister concerned, Lord Chalfont, could be invited to come to the Bar of the House and answer questions directly?
Mr. Speaker: Order. We should be going back a long way in history if we attempted that procedure.
Mr. Jay: Will the Minister at least say clearly now whether it is the fact that the great majority of these islanders wish to remain British?
Mr. Mulley: In present circumstances, I think that there is no question but that the wish of the islanders is to remain British.
Mr. Boyd-Carpenter: Is not the impression suggested by the hon. Member for Bosworth (Mr. Wyatt), that the Government are trying to push the islanders into Argentina really fortified by the fact that during five days Lord Chalfont did not think it necessary to refer to the seaweed scheme, with all its possibilities, but found time to tell the islanders that if they wanted aid from this country they must greatly increase their taxation?
Mr. Mulley: I should make this quite clear. There was no seaweed scheme when Lord Chalfont was in the Falkland Islands. The proposals which have recently been disclosed—I think that the gentleman who sponsors them says that they have a political motivation—were first made public not to the Government, but through the B.B.C. and the Press on Friday after Lord Chalfont had left the islands. The only discussion otherwise had been between Mr. Merton and the Governor, so that they were already seized of the situation, and they expressed their disappointment at the fact that the possibility of this coming to fruition seemed so remote. There was no scheme of the kind about which we now read in our newspapers in existence or within the knowledge of the Government at the time of Lord Chalfont's visit.
Mr. Paget: Can there be any doubt that the seaweed proposal, and, indeed, any other proposal for the development of these islands, would stand a very much better chance if there were communications and co-operation with Argentina than if there were not? Is that what Her
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Majesty's Government are attempting to provide?
Mr. Mulley: I think that improved communications, co-operation, and, for a small community of this kind, good relations with its neighbour, are matters of very great importance.
Mr. Turton: Does the Minister appreciate that to publish a White Paper after the negotiations have been concluded will be too late for the House? Will the Minister tell us, in particular, whether these talks are covering the Falkland Islands dependencies in Antarctica, where there are very rich mineral deposits?
Mr. Mulley: I can assure the right hon. Gentleman that no step will be taken before the House has been fully apprised of any conclusions that come from the current talks. In any case, as the House well knows, although it is clearly a remote possibility, any transfer of sovereignty could take place only with the consent of the House.
Mr. Heath: The Minister has declared that the Falkland Islanders have no wish whatever to give up British sovereignty. Is it therefore not plain, and does not the right hon. Gentleman recognise, that the great majority of the House are absolutely determined to support the Falkland Islanders in this view? Therefore, sovereignty cannot pass.
Does not the right hon. Gentleman recognise that there can be no point whatever in discussing sovereignty with Argentina and that it should be immediately taken off the agenda? Until this happens, there is bound to be the gravest suspicion about Her Majesty's Government's motives in discussing this matter at all.
Mr. Mulley: It is not as simple as that, as I should have thought the right hon. Gentleman would know. It is not a question of an agenda. It is a case of discussing the position in the light, on the one hand, of the United Nations resolution—[HON. MEMBERS: "Ah."] It was only through the United Nations resolution that we were able to get these talks going.
The very unsatisfactory situation as regards communications and relations with Argentina pertained throughout the administration of the Conservative Party,

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and nothing was done about it. We want to utilise this situation to reach the best understanding we can between the islanders and the Argentine Government. We have made it quite clear to the Argentine Government that, unless the Falkland Islanders so desire, we shall not transfer sovereignty. I have made it quite clear that we do not rule out the possibility that in the future the islanders may change their minds.
Hon. Members: Resign.
Mr. Speaker: Order. The islanders do not need any help from noise in the House.
Mr. Mulley: The simple proposition that I put to the House is that, while we stand fully behind the islanders if they desire to remain British, in a different set of circumstances in the future I would hope that whichever party was then in power would be prepared not to stand in their way if the islanders change their minds. At present, there is no question but that the islanders wish to stay British. This has been the clear position we have adopted in our talks with Argentina. The words that we could not consider any transfer of sovereignty against the wishes of the islanders are as clear and plain as words can be.
Mr. Mayhew: Have the islanders given any evidence to the Government that in some future circumstances they might wish not to be British any more? If they have given no suggestion along these lines, are they not entitled to resent the statement which came from the Minister?
Mr. Mulley: I do not think that there is any resentment. I think that there has been concern over a long period in the islands, because their economy is based largely on wool, the price of which has been falling in world markets, because they are so isolated, and because the possibilities for the islands' younger generation are so limited. It is this concern, rather than the question whether they remain British or otherwise, that has been exercising the islanders' minds.
Mr. Thorpe: Since the right hon. Gentleman's penultimate reply was somewhat equivocal, may we know whether the fact that a Colony many thousands of miles away from the United Kingdom wishes to remain associated with and part
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of the United Kingdom and Colonies is a matter which the Government treat with pride and gratification or with dismay?
Mr. Mulley: I think that it has been made clear from both sides of the House today that it is received with great satisfaction. I certainly pay my tribute to the islanders; I stand second to none in my admiration for the hard work of these people and for their loyalty to this country and to the Crown.
Mr. Blackburn: Is my right hon. Friend surprised that after all the words he has used there is still suspicion in the House? Why cannot he just say simply that the Falkland Islanders have stated that they want to remain loyal to this country and, therefore, there is no question of any transfer of sovereignty ever?
Mr. Mulley: I thought that is what I have said.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order—
Sir C. Osborne: On a point of order. Since you, Mr. Speaker chose the hon. Member for Chorley (Mr. Kenyon) and myself to go to the Falkland Islands less than two years ago, and as they raised two important points with us which have not been raised today, would you allow me now to put those matters to the Minister?
Mr. Speaker: I am grateful to the hon. Member for Louth (Sir C. Osborne) for refreshing my memory of that important delegation. We are delighted that he got back from the Falkland Islands. He may put his question.
Sir C. Osborne: The Falkland Islanders raised two questions with the hon. Member for Chorley and myself. Their economy is shrinking because the price of wool is falling and they are having great difficulty in keeping the young men in the islands. They want to know, first, whether Her Majesty's Government will give them some economic aid if they run into more difficulties, as we have given economic aid to the newly-independent countries in Africa and Asia.
We were pressurised in Buenos Aires by the British colony there, who said that they represent much greater industrial

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and financial interests than the Falkland Islanders. The islanders were frightened—this was the second matter they raised with us—that it was the British colony in Buenos Aires which was pressurising the Government into taking action. Will the Minister make a statement on these two issues?
Mr. Mulley: We give no aid to the islands at present because the need has not arisen. The average income per head in the islands is about £500, almost the same as that which obtains in the United Kingdom. The rates of tax are very low. I think that it is about 2s. in the £1 on £1,000 and the highest rate of tax is 5s. 9d. starting at £6,000. I should have thought that before the question of budgetary aid arose the islanders have some possibilities themselves.
On the question of capital aid, we have made it clear to the Executive Council that, if it puts forward specific and realistic schemes, we shall consider what can be done. But no such proposals have been made since the early 1950s, when there was an attempt which, unfortunately, failed to get an export of frozen mutton.
On the point about Her Majesty's Government being pressurised by Anglo-Argentinians in Buenos Aires, that is certainly not the case.
Mr. Sandys: On a point of order, Mr. Speaker, I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the inability of the Government to give an unequivocal assurance that, in their present discussions with the Argentine Government, they will make it absolutely clear that there is no qustion of renouncing sovereignty over the Falkland Islands."
Mr. Speaker: The right hon. Member for Streatham (Mr. Sandys) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter which he thinks should have urgent consideration, namely,
"the inability of the Government to give an unequivocal assurance that, in their present discussions with the Argentine Government, they will make it absolutely clear that there
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is no question of renouncing sovereignty over the Falkland Islands."
As the House knows, under the revised Standing Order No. 9, Mr. Speaker is directed to take into account the several factors set out in the Order but to give no reasons for his decision.
I have listened very carefully to what has just taken place, and I have given careful consideration to the representation that the right hon. Gentleman has made. But I have to rule that the right hon. Gentleman's submission does not fall within the provisions of the revised Standing Order and that, therefore, I cannot submit his application to the House.
Mr. Biggs-Davison: On a point of order, Mr. Speaker—
Mr. Speaker: Order. We have established quite a good precedent that, when Mr. Speaker makes the very difficult decision of ruling on Standing Order No. 9, that is the end of the discussion. I hope that the hon. Member for Chigwell (Mr. Biggs-Davison) will keep to that. Is it the same point of order?
Mr. Biggs-Davison: No, Mr. Speaker. It is a different one, having nothing to do with the application under Standing Order No. 9.
Since it appears that Lord Chalfont cannot be brought to the Bar of this House, and since it also appears from my researches that he cannot now be impeached, may I ask you whether the Leader of the House is not anxious to catch your eye for the purpose of informing the House when we may have the further statement which has been indicated by the Minister of State—[An HON. MEMBER: "Promised."]—promised by him, to clarify his disastrous diplomacy?
Mr. Speaker: That is a point for the Leader of the House and not for the Chair.
The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): Mr. Speaker, I think that my right hon. Friend the Minister of State said that he would have talks with his right hon. and noble Friend, Lord Chalfont, and that he would inform the House accordingly. I will see that that is done tomorrow.

ORDERS OF THE DAY

  CUSTOMS (IMPORT DEPOSITS) BILL
  Considered in Committee.
  [Mr. SYDNEY IRVING in the Chair]

Clause 1

  CHARGE OF IMPORT DEPOSITS
  4.25 p.m.
  Sir Peter Rawlinson: I beg to move Amendment No. 85, in page 1, line 14, after 'Kingdom', insert:
  'save for goods originating in and consigned from any member state of the European Free Trade Association or from the Republic of Ireland'.
  The Chairman (Mr. Sydney Irving): With this Amendment, I think that we might discuss Amendment No. 98, in page 1, line 14, after 'imported', insert:
  'excepting those from nations of the European Free Trade Area'.
  Amendment No. 35, in Clause 3, page 3, line 39, at end insert 'either (i)' and Amendment No. 42, in page 3, line 42, at end add:
  'or
  (ii) at the expiration of a period of three months unless the duty has prior thereto been approved by a resolution of the Council of the European Free Trade Association'.
  Sir P. Rawlinson: The purpose of the Amendment is to clarify the position which arises from the effects of Clause 1 and our treaty and convention obligations. I seek to exclude from these provisions the European Free Trade Area and the Irish Republic until it is clear that the inclusion of goods from those countries is not at the expense of a breach of our international agreements. It is right that the Committee should be given categorically the most authoritative advice that it can have, which is from the Law Officers of the Crown.
  This point was first raised in the economic debate on 25th November, in an intervention by my right hon. Friend the Member for Streatham (Mr. Sandys) to the Chancellor of the Exchequer. At
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  the time, the Chancellor did not appear able to give a full answer to the point. It is not surprising that Ministers cannot give sudden answers to legal points, but this must be a matter which was the subject of careful consideration before introducing the proposal. It must have been basic to the scheme to establish that it could be done within the framework of the Convention, otherwise it would suggest that this legislation has been very hastily conceived and ill-prepared.
  As I say, the Chancellor was not able on that occasion to give a full answer to the House. In winding up the debate, the Chief Secretary said that the Government had taken the best advice available to them and that there is no specific prohibition in the Convention. He added that the Government are entitled to take this action and that no question of illegality arises.
  When one examines the Convention and the Bill which ultimately has been produced, it is stating it a little high to say that there is no question of illegality. It may be that the advice that we shall receive from the Law Officers will be that, in their opinion, this is legal. But to say that no question of illegality arose surely was stating the case very high.
  When we came to Second Reading, on 28th November, the Financial Secretary said that it was not appropriate to discuss whether this was legal, because it was for the E.F.T.A. Ministers themselves to decide. In winding up that debate, the Minister of State said that the matter would be taken up within the E.F.T.A. Council. The indication was that Ministers were saying, "It is not for us, it is inappropriate somehow for the House of Commons, to examine this question". The proposition that the House should merely accept, on the ipse dixit of Treasury or economic affairs Ministers, that everything is perfectly all right is one which the House ought not to accept.
  My right hon. and hon. Friends and I have, therefore, requested the advice of the Law Officers so that we may have a categorical answer. The Attorney-General, as right hon. and hon. Members know, comes here in these circumstances not as a political Minister and not in his quasi-judicial rôle, but in his rôle as adviser to Parliament. I emphasise that it will be in this latter rôle that he will

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  answer the debate today. On 27th May, 1963, it was said in the House that
  "The Attorney-General, whoever he may be, is not only the legal adviser to the Crown and to the Government. He is also a servant of the House. It is from time to time his duty to advise the House on legal matters—a duty going beyond his responsibility to the Government and the Crown—and the hon. and learned Gentleman, like his predecessors, has frequently accepted this duty …"—[OFFICIAL REPORT, 27th May, 1963; Vol. 678, c. 993.]
  Those were the words of the present Prime Minister, when he was Leader of the Opposition, in speaking of what is generally accepted as the rôle of the Attorney-General.
  The question which we put to the adviser to the House, in his rôle as counsel to this Committee, is this: does Clause 1 unamended breach the E.F.T.A. Convention of 20th November, 1959, and the Agreement for a free trade area established between Great Britain and Ireland? The answer to that question will amount to an opinion in law on the construction of the Bill's provisions and the Articles of the Convention. However, before coming to those matters, I have another question to put.
  If it is the advice of the Law Officers that there is no breach, may we be told what argument will be advanced before the E.F.T.A. Council to establish that there is, prima facie, no breach? Further, turning, as it were, to the political Ministers, if that argument is presented to the Council and the Council rejects it, will the Government repeal the Bill? May we have their undertaking to that effect?
  The Long Title of the Bill tells us that its purpose is
  "To grant a new duty of customs repayable after a specified period."
  Next, subsection (1) provides that
  "there shall be charged on all goods imported into the United Kingdom a duty of customs, to be known as an import deposit. …"
  Again, I emphasise the words, "a duty of customs". Next, in subsection (3):
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs.…"
  In the light of all those words, it is clear that there is here a duty of Customs about to be levied. It is said to be a duty of Customs, and the opening words
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  of subsection (3) specifically speak of it as
  "in addition to any other duty of customs".
  The Attorney-General will be well aware that the definition of such is
  "A duty charged upon commodities on their importation into a country".
  Thus, Parliament is asked to give power to levy an extra duty, and this is explicable only if it be extra to what is now levied or, alternatively, if it be a levy, burden or duty which did not exist hitherto. The question is: can that duty be levied without breaching the Convention?
  I turn now to the Convention. Article 1 establishes the association of nations
  "to be known as the European Free Trade Association, hereinafter referred to 'the Association'".
  Article 2 sets out the objectives, and Article 3 deals with the matters relevant to the advice which we wish to receive, namely, import duties. Article 3(1) provides that
  "Member States shall reduce and ultimately eliminate, in accordance with this Article, customs duties and any other charges with equivalent effect, except duties notified in accordance with Article 6. …"
  Paragraph 2(a) provides that
  "On and after each of the following dates, Member States shall not apply an import duty on any product at a level exceeding"—
  certain percentages, the levels of which have been altered since that date. There is specific provision there that Member States shall not apply an import duty. If the duty now proposed is an import duty, we want to know how it can be levied without breach of Article 3 of the Convention.
  Next, one must consider whether what is proposed is, because of its character and despite what is said in the Bill, not an import duty. Accordingly, it is necessary to turn to Article 6:
  "Member States shall not
  (a) apply directly or indirectly"—
  I emphasise the word "indirectly"—
  "to imported goods any fiscal charges in excess of those applied directly or indirectly to like domestic goods…"
  Paragraph 6 of the same Article, the definition paragraph, tells us that
  "fiscal charges' means revenue duties, internal taxes and other internal charges on goods".

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  The next question, therefore, is: if what is proposed is not an import duty, does it come within the terms of Article 6 and is it contrary thereto?
  I hope that the Committee will forgive me for putting the matter in this way. I do so so that we may have an authoritative reply from the Attorney-General. I turn next to Article 10:
  "Member States shall not introduce or intensify quantitative restrictions on imports of goods from the territory of other Member States".
  There is a plain prohibition there. On the question whether this is a quantitative restriction, one turns to Article 17(2):
  "Any products which have been exported from the territory of one Member State to the territory of another Member State and have not undergone any manufacturing process since exportation shall, when reimported into the territory of the first Member State, be admitted free of quantitative restrictions and measures with equivalent effect. They shall also be admitted free of customs duties and charges with equivalent effect…"
  Therefore, combining Articles 3, 6, 10 and 17, will the Attorney-General advise us under what provision it can be said that the Bill is not caught? If it is not an import duty, is it not caught under Articles 6, 10 and 17, or, alternatively, is it not caught under Article 3? I appreciate that, under the Convention, there is a complaints procedure, under Article 31, providing that any aggrieved member, because some objective of his has been frustrated, can refer the matter to the Council of E.F.T.A., which, by a majority, can arrange to examine the matter. The Council can then recommend certain sanctions and interim measures. That is the complaints procedure. That broadly is the form of the convention. I do not need to refer in detail to the Irish Agreement, save to say that Article 1 says:
  "After 1st July, 1966, the Government of the United Kingdom shall not apply any import duty to goods which, in accordance with Article 2, are regarded as originating in and consigned from the Republic of Ireland."
  In fact, the same doubt and query arises with that agreement as under the E.F.T.A. Convention.
  These, then, are my questions to the Attorney-General. Is he satisfied that, prima facie, on the wording of this Convention and having regard to the wording of the Bill and this Clause, there is no breach of the Convention? If so,
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  would he give his reasons, relating them to the particular Articles? If not, I am sure that he will say so. There is a difference between saying, "In our view there is no breach of the Convention," and saying, "We accept that there is or may be a breach, but we are confident that our E.F.T.A. partners will understand and excuse our position." This is the distinction, and this is what we wish to discover. We look to the Attorney-General's advice to interpret this to us.
  This, of course, is the legal issue. On the political issue, if there were and if there are sound legal doubts, it might be thought a cynical approach to an agreement and to one's partners to present them with a fait accompli by a Bill and then merely to rely on their mercy. I would therefore like the Attorney-General to tell us, as our adviser, whether or not the position of these duties is within or without the provisions of those Articles.
  The Attorney-General (Sir Elwyn Jones): In view of the most courteous way in which the right hon. and learned Member for Epsom (Sir T. Rawlinson) has invited me to address myself to the questions which he has raised, I am, of course, most happy to do so, as I hope the Committee has generally found me willing to do when it has been good enough to seek my advice. I have carefully considered the Articles in question in the Stockholm Convention which give rise to consideration in dealing with the question whether the Bill's proposal is legal within the terms of the Convention. As the right hon. and learned Gentleman said, Article 3 requires the abolition of Customs duties on goods qualifying for E.F.T.A. treatment by 31st December, 1966. The Article prohibits Customs duty and any other charges with equivalent effect. It prohibits such Customs duties on imports of goods eligible for area tariff treatment from other E.F.T.A. countries.
  The critical question, therefore, is whether import deposits of the type proposed in the Bill are Customs duties for the purposes of Article 3. I will deal first with the right hon. and learned Gentleman's first point, that they are so described in the Bill. This is a technicality which makes it possible to apply the machinery provisions of the Customs

  1275
  and Excise Act of 1952 to the collection and general control of the deposits, and it thus avoids the need for lengthy new legislation. The Committee will see that, by the terms of Clause 3(2), the Bill shall be construed as one with the Customs and Excise Act. This technicality avoids a massive Bill which would otherwise be necessary.
  4.45 p.m.
  However, I submit that this matter must be looked at in the E.F.T.A. context, which means that we must consider the substance of the matter as it affects imports of goods from E.F.T.A. countries. Import duties of the type which the Committee is discussing involve the temporary retention of funds which are reimbursable automatically after 180 days. I suggest that that is quite different from a Customs duty or charge with equivalent effect. To levy a duty or a charge is to take something without returning it, which is not what the Bill proposes. The fact that the importer—this point may be raised—may incur a loss of interest on his money does not alter the situation in that respect. This may be the consequences of the scheme in certain circumstances, but it would be stretching the meaning of words to say that any loss of interest would make the deposit a charge with equivalent effect to a Customs duty.
  Mr. Charles Doughty: The last line of Article 3(1) referring to Customs duty, or other charges, says:
  "Any such duty or other charges is hereinafter referred to as an 'import duty'."
  It is the import duties in the Bill and the Convention with which we are concerned.
  The Attorney-General: I thought that I had referred to duty and charge in seeking to distinguish between what the Bill does, which is to involve a temporary retention of funds, and a duty or charge which, in my understanding of the words in terms of Customs and Excise, means levying a duty or charge without returning it. That is a quite fundamental matter in approaching the meaning of the words in Article 3.
  As the right hon. Gentleman has said, Article 6 prohibits member States from applying, as is said in paragraph 1(a):
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  "… directly or indirectly to imported goods any fiscal charges in excess of those applied directly or indirectly to like domestic goods …".
  The question arises what the phrase "fiscal charges" means under the terms of the Convention. Fiscal charges are defined in paragraph 6(a) of Article 6 as meaning revenue duties, internal taxes and other internal charges on goods. In my view, import deposits are not revenue duties, nor are they taxes. They are not imposed for the purpose of raising revenue, and the money is to be automatically returnable. In my view, therefore, the import charge is neither a revenue duty nor an internal tax, nor any other form of internal charge on goods.
  Mr. John Hall: Does the right hon. and learned Gentleman not agree that the raising of money by the Government which they receive interest-free and which in turn has to be paid for by interest imposed on the deposit is equivalent to raising a tax?
  The Attorney-General: I do not accept that as a correct interpretation. The purpose of the import deposit is not directed to the raising of Revenue, even though to a small degree in certain circumstances that may be an incidental effect of what is proposed.
  Mr. Patrick Jenkin: Are we to treat as of no effect the preamble to the Bill, which includes the words:
  "… towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue …"
  The Attorney-General: I would like to consider that, but I suspect that there are various matters related to the administration of the scheme which require that provision which, in any event, is the normal form of words for this kind of Measure. I do not think, in the context of the E.F.T.A. Convention or the meaning of a fiscal charge, that it is relevant or helpful. The Committee should again consider Article 10 of the Convention—
  Mr. Ian Percival Mr. Ian Percival (Southport) rose—
  The Attorney-General: May I just continue. No doubt the hon. and learned Gentleman will catch your eye in due

  1277
  course, Mr. Irving, and he will then seek to deal further with the matter.
  I was drawing the Committee's attention to Article 10 of the Convention. That prohibits member States from introducing quantitative restrictions on imports of goods from the territory of other member States. The right hon. and learned Gentleman takes the view that that is not applicable because what is proposed is not the introduction of quantitative restrictions on imports of goods from the territory or other member States. I respectfully agree with him. Quantitative restrictions are defined in paragraph 11(a) of that Article as meaning:
  "… prohibitions or restrictions on imports from the territory of other Member States whether made effective through quotas, import licences or other measures with equivalent effect, including administrative measures and requirements restricting import;"
  Quotas and licensing systems impose definite quantitative limits to imports of particular goods or to imports of particular importers. Import deposits of the type proposed in the Bill have no such effect and they are, as I understand it, essentially a device for restricting credit in a selective way, with a generally discouraging effect upon imports as a whole over the short term. That is their purpose, and that is the reason why his device is being introduced. Import deposits, therefore, are not prohibited under Article 10 of the Convention. In my view, the Articles which need examination in order to consider whether we are in breach of the Convention establish that we are not.
  It may be said that, even though that may be so, what is proposed in the Bill is incompatible with the spirit of the Convention. I have looked carefully at that matter, and I would remind the House that the Convention itself, by Article 19, gives the right to Member States to take far more drastic measures in order to protect their balance of pay-merits than we have done by the terms of the Bill. Under Article 19 the stringent step of introducing quotas and licensing systems is permitted, and what my right hon. Friends have done by their proposal is—
  Mr. F. A. Burden: Will the right hon. and learned Gentleman tell the Committee under what conditions?
  The Attorney-General: Under what conditions what?
  Mr. Burden: Under what conditions quotas and other restrictions may be imposed.
  The Attorney-General: If the hon. Gentleman has the Convention before him he will see in paragraph 1 of Article 19:
  "Notwithstanding the provisions of Article 10, any Member State may, consistently with its other international obligations, introduce quantitative restrictions on imports for the purpose of safeguarding its balance of payments.
  2. Any Member State taking measures in accordance with paragraph 1 of this Article shall notify them to the Council …"
  There is then a procedure of notification and examination of the matter by the Council. The paragraph continues:
  "If the balance of payments difficulties persist for more than 18 months and the measures applied seriously disturb the operation of the Association, the Council shall examine the situation and may, taking into account the interests of all Member States by majority decision, devise special procedures to attenuate or compensate for the effect of such measures."
  So that where a member State introduces the stringent protective device of quotas and licensing schemes, that is permissible under the Convention, and action in regard to it is taken only in the event of the event of the continuance of what is done for a term of more than 18 months.
  Bearing in mind that provision in the Convention, therefore, I think that we are being unduly harsh upon ourselves if it is said against us that we are acting contrary to the spirit of the Convention.
  Happily, as my right hon. Friend the President of the Board of Trade has told the House, and as has been said to the Committee, the measures that are proposed are about to be discussed in the E.F.T.A. Official Council, and my right hon. Friends are confident, and from my knowledge of the matter so am I, that we will in due course be able to reach a full understanding with our partners in E.F.T.A. on this whole matter.
  As to the position under the Anglo-Irish Free Trade Area Agreement of 14th December, 1965, to which the right hon. and learned Gentleman referred, the language of the relevant provisions on Customs duties was taken directly, as I

  1279
  think he knows, from the E.F.T.A. Convention, and everything that I have said with regard to the position under the Convention applies equally to the Anglo-Irish Free Trade Area Agreement.
  I understand that we are also discussing Amendments Nos. 35 and 42 on Clause 3, and, if I may be permitted, I will say a brief word about those.
  5.0 p.m.
  Mr. Percival: It appears that the burden of the right hon. and learned Gentleman's argument is that this does not come within Articles 3 or 6 because this is not a charge; it is not a charge because it is repayable. On the face of it, it does not seem that anything can be repayable unless it has first been charged. I wonder whether there is any previous decision or interpretation which has escaped us on this side of the House. I am obliged to the Attorney-General for giving way, because I wish to know whether I have overlooked something so that I do not make a false point.
  The Attorney-General: I have never known a levy or charge in the fiscal history of any nation to be repayable. In the ordinary meaning of the language—
  Sir Gerald Nabarro: The Attorney-General has said that he has never known of a levy or charge which was repayable. That is manifest nonsense. We are doing this every day of our lives under the Customs Statutes. Goods are imported on drawback. When, subsequently, they are incorporated in manufactured goods for export, the amount of import duty is repaid.
  The Attorney-General: In this case the machinery of the import deposit requires the payment of an import deposit which is reimbursable automatically after the specified period of 180 days. In my submission, within the meaning of the language of the E.F.T.A. Convention, the levy of a duty or a charge contemplates the taking of money without returning it as a positive step of creating the most active difficulties for importers. This falls far short of the imposition of a duty or charge and, accordingly, is not caught by the language of the Convention.
  Mr. John Hall Mr. John Hall rose—
  The Attorney-General: May I finish what I was about to say?
  I had turned to Amendments Nos. 35 and 42. There is a suggestion that the scheme should be brought to an end after the period of three months unless it has previously been approved by a resolution of the E.F.T.A. Council. Article 31 of the Convention provides a procedure in the event of any member State wishing to complain of the action taken by another with adverse effect on its trade. As I have said, I am confident that the discussions which are about to take place will produce a satisfactory conclusion and that any Amendment of the kind which is proposed will prove, therefore, to be unnecessary and should be rejected.
  Mr. John Hall: The Attorney-General, presumably, does not agree that the terms of the Convention require that any partner to it who wishes to introduce a measure of this kind should consult the Council beforehand. Secondly, can he say whether our partners in E.F.T.A. have the same view of the legality of the Government's Measures as he has himself?
  The Attorney-General: In reply to the first point, the requirement of consultation certainly applies to Article 19 in relation to the introduction of quantitative restrictions in regard to quotas, but it does not apply to the measure that is proposed in the Bill, namely, the imposition of import deposits. There is, of course, no specific reference to import deposits in the Bill. In the Convention, there is certainly no specific prohibition of the use of import deposits and, as I have submitted, they are not contrary to either the letter or the spirit of the Convention.
  As to the hon. Member's second question, my right hon. Friend the President of the Board of Trade has indicated that the Ministers from the member States have shown a good deal of sympathy with the difficulties which the Government have had to face in dealing with this problem, and I have reason to feel that the legal anxieties which seem to be troubling right hon. and hon. Members opposite—I am quite sure, entirely in the public interest, to protect the interest of the country—will not be reflected so eagerly in the Ministers of the member States.
  Mr. Peter Emery: It seems to me that there are two specific arguments on the Amendment. One is the

  1281
  legal argument and the other the political argument, relating specifically to my Amendment No. 98. I will deal fairly briefly with the legal argument
  I am certain that the Attorney-General has tried to do everything in his power to clear our minds, but I am nearly as befuddled now as I was before he spoke. From his answer to the question of when a duty is not a duty, it would appear that it is not a duty when it is to the convenience of the Wilson Government to call it something else. The right hon. and learned Gentleman's argument that because the charge was repayable it could not be considered as a duty or tax, is obviously demolished in the matter of duty drawback, Selective Employment Tax and a number of other industrial arid tax factors about which we all know a great deal.
  I wonder, however, whether I can help the Attorney-General, as I should like to do. I would have been happier with his arguments had he based them on the balance of payments difficulty, on which ground it is possible and permissible to introduce quantitative restrictions. If the right hon. and learned Gentleman refers to paragraph 11(a) of Article 10 dealing with quantitative restrictions, he will see a definition. According to that article, "quantitative restrictions" means
  "prohibitions or restrictions on imports from the territory of other Member States whether made effective through quotas, import licences or other measures with equivalent effect, including administrative measures and requirements restricting import".
  In the debate on 28th November, the Financial Secretary said that
  "The Bill is intended to bring a selective pressure on liquidity affecting importers and to produce an immediate if marginal effect upon the total of our imports".—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 750–1.]
  The Attorney-General's case would be much stronger if he based it on that argument. I do not know whether this might be of assistance to him with his legal background.
  Mr. John Hall: Would my hon. Friend agree that what he has said strengthens the point which I made earlier that we should have consulted the E.F.T.A. Council beforehand?
  Mr. Emery: I am coming to that point. Perhaps my hon. Friend will allow me to make my speech. I sat through the
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  debates on Monday and Thursday of last week and heard every speech and was not able to catch the eye of the Chair. I do not intend to make on this Amendment the speech which I wished to make then.
  I tabled my Amendment excluding E.F.T.A. from the Bill for a basic reason. On the whole, our financial position and the position of sterling are based more than anything else on confidence in the Government and in the economic management of this country. Twice within four years the Government have broken the spirit, if not the letter of the E.F.T.A. Agreement. Article 14 of the E.F.T.A. Convention on public undertakings states:
  "Member States shall ensure the progressive elimination, during the period from 1st July, 1960, to 31st December, 1969, in the practices of public undertakings, of (a) measures the effect of which is to afford protection to domestic production …"
  Paragraph (b) deals with
  "trade discrimination on grounds of nationality in so far as it frustrates the benefits expected from the removal or absence of duties and quantative restrictions on trade …"
  Whether there is a let-out, there is no doubt that the Government have broken the spirit of the E.F.T.A. Agreement. If we want to build up confidence in sterling and our economic administration, breaching the spirit of agreements will have a very severe effect on our exports and the confidence in our economy of people with whom we do business.
  In the last week, I have had communications from Norway, Sweden and Portugal condemning this unilateral action, as it is described by them. I pointed out that at a meeting on Friday the President of the Board of Trade put forward his point of view. I realise that that was not a consultation but a statement of what was to be done. This is the interpretation put on our action by people in these three countries, not perhaps by the politicians, but by business people and bankers.
  5.15 p.m.
  Secondly, the Government are entirely wrong in believing that their measures will have the effect which they have in mind. Four years ago, when the import surcharge of 15 per cent. was imposed, members of the Treasury Bench were not occupying the positions which they are

  1283
  occupying now, but I can recall Minister after Minister saying that the import surcharge would have a considerable effect in reducing imports. It was suggested that it would probably save up to £300 million. The right hon. Member for Battersea, North (Mr. Jay), who was then President of the Board of Trade, will know of the detailed study made by Johnson and Margaret Henderson and their paper assessing the effect of the import surcharge. They state that the overall effect could never have been more than £150 million and probably would be only just above £100 million. The impact of the Government's present measures will be very much less.
  I objected most strongly to the speech made by the hon. Member for Ebbw Vale (Mr. Michael Foot). I warned him that I would mention this matter. He suggested that only he and some of his colleagues were patriotic in standing up to the demand that the Government took action. Apparently, anybody who criticised what was proposed was attempting to undermine Britain's position. That was a lot of crocodile tears. My desire to see us abide by the spirit of the E.F.T.A. agreement stems from the belief that by so doing we shall be standing up for our country a great deal more than by trying to find ways round it. It was apparent from the speech of the hon. Member for Ebbw Vale that he had not considered the long-term effects of the Government's proposals.
  I am convinced that the best way to ensure that British industry is truly competitive is to allow buyers to buy from whatever market they believe is most beneficial. Buyers buy abroad not for fun or pleasure but for good reasons.
  I refer to a study recently made by the Institute of Purchasing and Supply into the buying of machine tools. I accept that it was a limited investigation, but, because of its smallness, I think that it is all the more effective. Four pieces of evidence emerged from this inquiry: first, and most important, that people bought machine tools abroad and in Europe because they were not available in this country; secondly, that the performance of imported goods was more than marginally superior to the performance of anything which could be obtained in the United Kingdom; thirdly, that the ser-
  1284
  vice and delivery of the imported machine tools was considerably better than anything which British manufacturers could provide; and, fourthly, that the price was more favourable. If the hon. Gentleman believes—
  The Chairman: Order. The hon. Gentleman was good enough to say that he would not make a Second Reading speech. He is now beginning to do so.
  Mr. Emery: Thank you, Mr. Irving, for bringing me gently back to the paths of the Amendment. A 10 per cent. deposit, which is likely to mean in real terms 2 to 2¼ per cent. extra on the price—
  Mr. Burden: A 50 per cent. deposit.
  Mr. Emery: A 50 per cent. deposit. A 2¼ to 2½ per cent. increase in price will not affect the buyer who needs to go abroad to get the equipment necessary for his firm's operations. It would assist the Government to sustain the confidence of our trading partners and ensure that the E.F.T.A. nations do not take offence—because considerable offence is being taken by them in terms of the application to them of the provisions of the Bill.
  The last argument to which I want to refer was brought forward by the Financial Secretary to the Treasury. He made it clear that importers would not go to the wall and that the basis of the exercise was not merely a question of import saving but a degree of liquidity control.
  It is wrong for the Government to take these measures to impose a liquidity control on the economy. Many other ways are open to the Government to impose controls which do not affect E.F.T.A. and which do not put the E.F.T.A. Agreement in doubt. This Bill runs against the spirit of the E.F.T.A. Agreement, even if the Government can put forward a legal argument. That is why I strongly support the Amendment.
  Mr. David Weitzman: I listened with interest to the legal argument put forward by the right hon. and learned Member for Epsom (Sir R. Rawlinson). I also listened to my right hon. and learned Friend the Attorney-General. A simple answer was given by my right hon. and learned Friend to the argument of the

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  right hon. and learned Member for Epsom. Customs duty, which he suggested was forbidden under the E.F.T.A. Convention, remains a duty when it is repayable in certain circumstances. This import deposit is not a duty.
  The Bill sets out clearly in Clauses 1 and 2 that it is from the outset a sum which is a deposit and which is repayable. It remains so throughout. That is the distinction between the two. Whereas Customs duty may be forbidden under the provisions of the Convention, import deposits are not. That is the simple answer to the legal argument put forward by the right hon. and learned Member for Epsom.
  I do not pretend to be an expert on economics, and I do not remember ever having taken part in a debate on economic affairs, but I listened with interest to the remarks of the hon. Member for Honiton (Mr. Emery). I remember speeches made by leading members of the Opposition Front Bench in favour of this sort of deposit. Approving as they did of this kind of import deposit, it hardly lies in their mouths to condemn it now. The fact that they have put forward legal and other arguments today shows a Degree of hypocrisy on their part. At a time like this, when such a Measure as this is urgently needed, they would have done better to support it if they genuinely cared for the economic stability of the country.
  Mr. Peter Blaker: The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) must have failed to notice that the remarks made by my right hon. Friends in the past concerning some sort of import credit restriction scheme have almost always related to the Italian scheme. The hon. and learned Member said that he was not well versed in economic affairs. If he had examined the details of that scheme he would have realised that it is totally different from the scheme that the Government are seeking to introduce. He would have realised that by no stretch of the imagination could it be regarded as having the inconsistency with international agreements which some hon. Members on this side of the Committee suspect to be the case with these import deposits.
  The Minister of State, Treasury (Mr. Dick Taverne): Is not the hon. Member aware of the remarks made by his right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) during the main economic debate, when he said that of all the various schemes proposed he thought that this was the best?
  Mr. Blaker: Yes. I am grateful to be able to clear up this point, because in his very next sentence my right hon. Friend asked whether this scheme was consistent with our E.F.T.A. and other international obligations. It is clear from that passage that he was not suggesting that we should adopt it whether or not it was legal.
  The hon. and learned Member for Stoke Newington and Hackney, North said that it was not a duty, but a few sentences later on he referred to it as a duty. That illustrates the intellectural acrobatics which hon. Members opposite are having to go through. The Attorney-General seemed to be arguing firstly that this is not a charge, and secondly that it does not have an effect equivalent to Customs duty. Some of my hon. Friends have pointed out that it is very difficult to distinguish it from other sorts of charges. Let us consider the other leg of that propostion. Does it not have an effect equivalent to Customs duty in the sense that it deters, and is intended to deter, imports?
  To take the line that the Attorney-General is to strain the argument. Like his right hon. Friends, he takes comfort in the fact that this scheme will be referred to the E.F.T.A. Council and he is confident that the consultations at the Council will have a satisfactory result. He seemed to think that the E.F.T.A. countries are content with this proposal. He must know that the Danish Finance Minister said last week that this was a case of Britain, for the second time, violating the E.F.T.A. Convention. He will also know that the Prime Minister of the Republic of Ireland had consultations with the British Prime Minister last week.
  If the Government are satisfied that both the E.F.T.A. countries and the Republic of Ireland are content with these proposals perhaps they will tell us. I hope that we shall have some comment from one of the political Ministers during the debate. Perhaps he will tell

  1287
  us whether any representations have been received from E.F.T.A. countries since the announcement of this proposal. Perhaps he will tell us something about the view expressed by the Prime Minister of the Republic of Ireland when he talked with our Prime Minister.
  I do not want to go further into the question of the legality of this proposal. What my hon. Friends and I fear is that when the matter is discussed with the Republic of Ireland and the E.F.T.A. Council those countries—all of them smaller than ourselves—will be browbeaten into accepting the situation with which they have been faced as a fait accompli, regardless of the question of legality. The Government should not get the reputation for sailing close to the wind. The difficulty with which the Committee followed the argument of the Attorney-General was very worrying. It suggested that he was putting forward a most ingenious but very complicated argument. The Government should not put themselves into a situation in which, when dealing with some of our closest allies, they have to go through incredible antics to persuade those countries that they are within the law.
  5.30 p.m.
  It is important to preserve our reputation for sticking to our agreements, whether they are comfortable or not. The Government may perhaps find these two agreements uncomfortable, but other countries find agreements uncomfortable. too, and we hope they stick to them. If so, why should not we.
  E.F.T.A. and the Republic of Ireland are important to us also in practical ways. The E.F.T.A. countries take almost as much by way of imports from us as the the whole of the Common Market countries. We shall need the help of the E.F.T.A. countries in future. When it again comes to negotiations to get into the Common Market, solidarity amongst the E.F.T.A. countries will be important. There is no doubt about the bitterness with which they received the 15 per cent. surcharge which the Government imposed in 1964. I fear that this measure will be taken by them as yet another reason for being cautious in their future dealings with this country.
  The way we treat the E.F.T.A. countries and the Republic of Ireland concern-
  1288
  ing these agreements goes wider than those countries alone. We had a good example at Question Time, when we had the statement about the Falkland Islands, of the trouble we get into when we acquire a reputation for playing fast and loose with obligations. I believe, even if it is strictly in accordance with the letter of our obligations, that this proposal will give us further trouble and will further spoil our reputation. Moreover, it will add fuel to the opponents of freer trade in all countries.
  To sum up, our behaviour now is giving us the reputation of being the exploiters of the fine print in our agreements. And to what purpose? The Government are doing this for what, on the repeated statements of the Financial Secretary on Second Reading, is a Measure which will have only marginal effect.
  [Sir MYER GALPERN in the Chair]
  Mr. John Page: The Committee listened with absolute fascination to the Attorney-General this afternoon—a kind of Parliamentary Blondin walking along a blazing tightrope, hopping first on one foot and then on the other. I congratulate the right hon. and learned Gentleman on his mental dexterity and the wizardry with which he has used a magnifying glass to find the small print which helped him to produce his case.
  Mr. Weitzman: Did the hon. Gentleman understand him?
  Mr. Page: I have always found it a matter of real congratulation to the Attorney-General that I understand him, because he speaks with remarkable clarity. He speaks slowly and in a pleasant voice, and I was able to follow the snakes and ladders of his argument. But I leave it to my hon. and learned Friends to refute it in any way. I was merely saying that it seemed a bit complicated.
  I should like to follow what was said by my hon. Friend the Member for Blackpool, South (Mr. Blaker). Is it really worth the money for us to bilk on our E.F.T.A. partners in this way? Having got away from the very poor reputation that we got after the 15 per cent. surcharge debate, I think that it

  1289
  would have been a wonderful opportunity for the Chancellor of the Exchequer if on Friday, 22nd November, he had been able to say, "This will apply to imports, but not to imports from the E.F.T.A.. countries."
  I now want to make a rather guarded apology to the President of the Board of Trade. I rang his office at 3 o'clock this afternoon. Owing to the short time available I spoke to the E.F.T.A. Information Department, and not, as I normally would, to his private office to ask to be put through. I asked, "Can you give me the figures of the value of goods from E.F.T.A. countries covered by the exempted list and those which are not?". After a moment's silence I was told, "No, we have not been asked about this". I said, "I do not mind hanging on. Will you find out for me, because I feel sure that the figures must have been worked out?". I hung an for a few minutes and was then told that the figures had not been worked out. I hope that we will hear from the Government, before they wind up, what is the approximate value of the goods which would be exempted out of the total imported from E.F.T.A. countries, because it is vitally important to the discussion.
  Having failed with the Board of Trade, at five minutes past three I got on to the House of Commons Library, and at quarter past I was given a rough breakdown which may be of interest to the House before the President, if he is to reply, gives us the full details. It will be interesting to see whether the Library guess, plus my own mathematics, work out at anything like the answer which I am sure the right hon. Gentleman will be able to give us. The total imports in 1967 from the E.F.T.A. countries amounted to £941 million. Of these food was 22·5 per cent., taking a monthly average. Putting that out on to the yearly figure I have made it £207 million. Manufactured goods represented 53·1 per cent., which I have made approximately £498 million. Then what are called crude materials, inedible—timber, pulp, wood, lumber and ore—21 per cent., which makes £198 million in a full year. It looks although about £400 million worth of imports from the E.F.T.A. countries would probably be exempted and about £500 million would have the
  1290
  duty deposit paid upon them. I should hardly think—[Interruption.] Some hon. Gentleman said that it is not duty. All I can say is that the short title of the Bill says:
  "A Bill to grant a new duty …"
  I do not know when a duty is not a duty if it is in the short title.
  Does the President feel that it is worth while alienating our E.F.T.A. friends for him to go along again in the very worn sackcloth and rather dusty ashes which his colleagues have had to use so often with our E.F.T.A. partners and ask them to make allowances for us? I should hardly think that in this instance the prize was worth while. I hope that the Government might, even at this stage, accept the Amendment standing in the name of my hon. Friend the Member for Honiton (Mr. Emery) and myself so that the right hon. Gentleman can hold himself up straight again when he meets our E.F.T.A. friends in future.
  Mr. Burden: International trade is not a matter of nice legal points. I see the Attorney-General nodding his head. I think that he made some nice legal points this afternoon. The right hon. and learned Gentleman described this as a device. He said that there was no reference in the Convention to import deposits. It is clear that this is a device, a very nice legal point, because the Government have asked, "How can we get round the restrictions laid upon us by the E.F.T.A. Convention, and get away with it?" The Attorney-General says that this is not a Customs duty, but, as my hon. Friend the Member for Harrow, West (Mr. John Page) said, the purpose of the Bill is to
  "Grant a new duty of customs repayable after a specified period."
  That does not make it any less a duty. Indeed, the Bill says at line 25:
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs for the time being …"
  The right hon. and learned Gentleman has been treading a blazing tightrope, and not nearly as successfully as he had hoped. If we abide by the E.F.T.A. Treaty, we shall not take any steps which will artificially increase the price of goods from those imported into this country, but the whole purpose of the Bill is to do just that. The Bill is designed to increase the price of imported goods, and

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  to make it so difficult for importers to get their merchandise that imports are cut. This is contrary to the E.F.T.A. Convention.
  Article 6 of the Convention, which refers to fiscal charges imposed with the object of raising money, does not apply, says the Attorney-General, because the deposit is returnable in 180 days. It is an interest-free loan to the Government.
  I come back to the main point, which is that the Bill will restrict imports from our E.F.T.A. partners. The Attorney-General has done his best to prove that this is legal. Why is it that the right hon. and learned Gentleman did not convince the Financial Secretary to the Treasury and the Minister of State at the Board of Trade of that? On 28th November the Financial Secretary said:
  "It has been asked: is this scheme legal under E.F.T.A.? I think that there is some confusion of thought on this."—
  Not least on the Government's side—
  "Whether or not this scheme is legal under E.F.T.A. is a matter for the E.F.T.A. Ministers to decide. That has not yet been fully considered by them. I should not have thought it appropriate to have discussion in this House on this matter when the tribunal appropriate to decide it has not yet pronounced upon it."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 754.]
  That being so what confidence can we have in the Attorney-General's statement this afternoon that the Bill is legal?
  The Financial Secretary said that the Government had no authority to decide whether or not this was legal, that the matter had to be pronounced upon by the E.F.T.A. Council. It is extraordinary that this measure was never disclosed to the E.F.T.A. countries at any time. The Financial Secretary admitted that he was not in a position to decide whether it was legal, and if we are to take the hon. Gentleman's statement as being accurate, we can assume that no Member of the Government, either, is able to decide whether it is legal.
  In winding up the debate the Minister of State at the Treasury said:
  "I was asked about the legal effect under the E.F.T.A. Treaty. The decision as to whether or not the measure is contrary to the E.F.T.A. Treaty is not a matter for an international court. It is taken un within the E.F.T.A. Council, where it is decided in the normal way, and we have every confidence that we shall reach an understanding
  1292
  with our partners."—[OFFICIAL REPORT, 28th November, 1968; Vol. 744, c. 866.]
  There was no suggestion by the Minister of State that this had been discussed, and that the Government were convinced the measure was legal. The fact is that it is not within their compass to decide whether it is legal, and yet we have the Attorney-General telling us that it is.
  This is a most extraordinary situation, and I suggest that our E.F.T.A. partners have not yet had an opportunity to pronounce upon it. They will not be in a position to do so until the Council has met. I therefore ask the Government to withdraw the Bill until such time as it has been pronounced upon by the members of the E.F.T.A. Council.
  5.45 p.m.
  Mr. Doughty: I have the greatest sympathy for the Attorney-General in this matter. I know he will not mind if I take a totally different view from that which he announced. It is not uncommon for lawyers to disagree. They can always do so in a pleasant way, and I shall explain my disagreement with the right hon. and learned Gentleman.
  I said that I have some sympathy for the Attorney-General. The reason is that I believe the Government drafted the Bill rather hurriedly and conceived this idea without considering whether they were breaking the E.F.T.A. Agreement, or any other agreement. When the Chancellor of the Exchequer came down to the House and was asked about that, he did not have the answer ready. I am sure that if somebody in his office had asked, "Before we introduce this Measure, is there any international agreement which we might be accused of breaking?", somebody would have said, "Be careful at least about the E.F.T.A. Convention", but that did not happen. The Chancellor came down to the House and made the announcement, which no doubt was necessary in view of the balance of payments position, but that is another matter.
  After the matter was raised in the House and brought to the Chancellor's attention, the issue was, for the first time, referred to the Attorney-General, who was put on the spot.
  Mr. Burden: And a very hot one, too.
  Mr. Doughty: The Attorney-General had to try to get the Government out of

  1293
  a great legal difficulty in which they found themselves.
  The Chief Secretary to the Treasury (Mr. John Diamond): Shocking.
  Sir G. Nabarro: What is shocking about that?
  Mr. Diamond: I used the word "shocking" because of the suggestion that my right hon. and learned Friend adjusts his advice for the convenience of the Government when he is advising the House.
  Mr. Doughty: I am not suggesting anything of the sort. I began by saying that I took a different view from that taken by the Attorney-General. I take a different view of the law. If I had thought the Attorney-General had done anything of that sort, I should have used different language at the beginning of my speech.
  Mr. Diamond: On that assurance, perhaps I might withdraw the word "shocking".
  Mr. Doughty: I am happy to accept that and shall make no further reference to it.
  I propose to refute a number of matters referred to by the Attorney-General. It is true that when we have a balance of payments problem, we can, under Article 19, take certain actions, and those actions might be a great deal more serious than those proposed in the Bill. But to say that we could have done something else does not excuse what we are doing here. That is, therefore, a matter which is referred to in the Bill. The action which we are entitled to take—and, by implication, we cannot take any other—is referred to in Article 19.
  If we had gone to the E.F.T.A. countries and told them that, because of our balance of payments position, we proposed to take action under Article 19, it may be that they would willingly have agreed to that less severe action. Whether they would agree to this action is a different and hypothetical question.
  When I say that there is no justification under the E.F.T.A. Convention for taking this action, I refer, first, to Article 2 which sets out the objectives of the Convention:
  "The objectives of the Association shall be:
  (a) to promote in the Area of the Association and in each Member State a sustained expansion of economic activity, full employ-
  1294
  ment, increased productivity and the rational use of resources, financial stability and continuous improvement in living standards."
  In order to carry that out, the question of import duties is a vital one.
  Article 3 has been read by my right hon. and learned Friend the Member for Epsom (Sir P. Rawlinson), so I will not weary the House with it again, but it says clearly:
  "Any such duty or other charge is hereinafter referred to as an 'import duty'",
  and import duties are expressly forbidden under the Convention, except under the provisions of Article 19 to which I have referred already.
  To say that this is not an import duty within the meaning of that Article is contrary to the words used by the right hon. and hon. Gentlemen who have put their names to the Bill. Presumably, they chose the wording, because it is their Bill. It is a Government Bill, and they are Government Ministers. The Bill is entitled:
  "A Bill to grant a new duty of customs repayable after a specified period."
  What is a "duty of customs" but an import duty? It is that and nothing else.
  Further on in the Preamble to the Bill, one sees the phrase,
  "… and grant unto Your Majesty the duties hereinafter mentioned",
  and in Clause 1(3), one sees a reference to,
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs for the time being chargeable."
  Then, in paragraph 9 of Schedule 2, one sees a reference to the Customs and Excise Act. It is nothing else but an import charge—
  Mr. Weitzman: The hon. and learned Gentleman knows perfectly well that, in construing the effect of legislation, one has to have regard to the words used Is he not neglecting the words in Clause 1(2),
  "An import deposit shall become repayable …"
  Mr. Doughty: I am not neglecting them, because an import deposit is defined as an import duty repayable after a specific period. I have put the horse before the cart. The hon. and learned

  1295
  Gentleman is putting the cart before the horse. The horse pulling this into existence is an import duty. What happens to an import duty to make it an import deposit is a quite different matter which can be referred to afterwards. The hon. and learned Gentleman's suggestion does not hold water.
  Therefore, we are committing an act which we are not allowed to do, apparently, under the E.F.T.A. Convention. We have proposed this import duty without any right to do it. If I am right, we have broken an agreement. If we have not, we have sailed so close to the wind that we may be accused of it. Whether it is necessary for our balance of payments is another matter. When we enter into international agreements which put obligations and limitations on our power in this House to pass Bills in breach of those agreements, we shall be held in the future to have broken them. We shall be accused all over the world of making agreements and breaking them when it suits us. The mere fact of necessity is no excuse. If we have to break an agreement because our balance of payments requires it, that is no excuse. This country must keep its word throughout the world. I hope that the House will accept the Amendment.
  Mr. Percival: I am sure that the Committee appreciates the Attorney-General's courtesy and good will in responding so readily to the invitation to give the Committee the benefit of his advice, even though he introduced a sour note at the end of his speech. Hon. Members on all sides of the House regard it as important that, when we make agreements with other countries, we keep them. It is a necessary corollary to that that, if we propose some new measure, we should see whether it can be done as a matter of law and we ought to do it beforehand, because it dictates our whole approach to the matter.
  There may be occasions when we want to pass an unlawful measure having regard to the terms of an agreement, but, having discovered that fact, I hope that we shall then go to our partners and say "We have to introduce a Measure which is in breach of our agreement. Will you agree to our doing it?".
  1296
  That is one approach. The other is that which the Government are proposing, which is trying to slide out of it by saying that it is not a breach. Whether or not it is a breach is a matter which must be clarified. For that reason, I hope that the Attorney-General will reconsider what he has said. If we could hear a more convincing argument, I am sure that we on this side of the Committee would consider changing our attitude.
  I agree with him and disagree with my hon. Friend the Member for Honiton (Mr. Emery) about Article 10. I think that this is not a quantitative restriction, and there is no question of a breach of that which might have been justified under Article 19. That is a complete red herring.
  I agree with him and disagree with my Gentleman, too, when he says that this is a breach of Article 3, or Article 6, or nothing. I accept that. As I understand it, in his opinion, the reason why it is not a breach of Article 6 or Article 3 is that it is not a charge. One does not even have to get it within the definition of "duties". "Duties" are defined in Article 3 as
  "… customs duties and any other charges with equivalent effect".
  I think that the Attorney-General would advise us that, if what we are doing here is imposing a charge, we are in breach of Article 3, Article 6 or both. That is how I understand his argument, and I hope that he is with me at the moment.
  The Attorney-General The Attorney-General indicated assent.
  Mr. Percival: I am glad to see that the right hon. and learned Gentleman agrees. It comes down, therefore, to whether what we are doing here is levying a charge.
  Reference has been made to the Bill several times, and it will bear repetition. The Attorney-General said that this was not in the nature of a revenue-raising exercise. I hope that I do not do him an injustice if I say that, when he was referred to the Preamble, he appeared to be a little surprised at what he said. It says that we,
  "… towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and grant unto Your Majesty the duties hereinafter mentioned".

  1297
  It says that we are raising revenue for Her Majesty. It goes on in Clause 1:
  "… there shall be charged on all goods … a duty of customs"
  The word to which 1 draw attention is not that drawn attention to by my hon. and learned Friend the Member for Surrey, East (Mr. Doughty), but the word "charged".
  This word appears all the way through. In line 25, we read
  "The import deposit chargeable on any goods shall be payable in addition …"
  Over the page are the words
  "… the charge of import deposits …"
  I ask the Attorney-General and the Committee to consider very carefully this point. If he is right that this import deposit is not a charge, what sort of mockery is the Bill? It is not right for the Committee to try to get out of it by saying that this is a technical device. We cannot have a Bill in these terms and then seek to say that it is not a charge, despite what we have called it all the way through.
  Even if that were a tenable argument, and one could say, "Never mind all the references to charges," is there any meaning in the right hon. and learned Gentleman's submission that one can say that it is not a charge because it is returnable? How can something be returnable unless it is charged? This money, like any other duty—that is why it is called a duty—is being charged. A charge means that someone must pay; that is what they will have to do if the Bill becomes law. If that is not a charge in the ordinary meaning of words, I shall be extremely surprised.
  I therefore hope that, before the end of this debate, the Attorney-General will draw our attention to any support which there may be for his proposition, or give us the benefit of his further advice upon it after he has reconsidered it.
  Mr. John Biffen: I have listened fascinated to the legal eloquence with which my hon. and learned Friend the Member for Southport (Mr. Percival) has destroyed a good deal of the Attorney-General's argument and I crave the latter's indulgence if I offer the comments of a mere layman. The part of the right hon. and learned Gentleman's speech to which I took some mild exception was
  1298
  his suggestion that this Bill does not infringe the spirit of the Stockholm Convention. I do not for a moment pretend to be able to hold my own in any legalistic argument about whether it "can be deemed to be held to be consistent" with the finest print of that Convention, but it is, possibly, a little offensive to our E.F.T.A. partners to suggest that this action does not offend the spirit of E.F.T.A.
  I had the privilege to be in Stockholm a few weeks ago when the British Trade Week was being held. It was pointed out to me then what a terrific market Sweden is for the United Kingdom. On that point, it seemed that there was a good deal to be said for the proposition that the European Free Trade Area was one of the fastest growing exporting markets for this country. It is a characteristic of this kind of trade that it will be dominated to an extent by rising trade in manufactured goods, the very goods which attract deposits under the Bill.
  Article 2 of the Convention makes clear the desire for free trade. My hon. Friend the Member for Honiton (Mr. Emery) established by his quotation from the Financial Secretary's speech that the purpose of the Bill is to provide some harassment of free trade. When the Convention was signed in 1960, those were the halcyon days when the world seemed to be moving towards freer trade; we were on the threshold of discussions on the Kennedy Round and had seen the beginning of the E.E.C. negotiations. Little wonder that, in that part of the Convention dealing with balance of payments difficulties and the harassments to trade which would be permissible, it is provided that consultations shall take place before they come into force, and the harassments listed are quantitative restrictions on trade.
  We have had a good deal of unhappy experience since then to show that there are many other more refined ways of harassing trade than the old fashioned idea of quantitative restriction. I would like to elaborate on one or two. Article 6 wisely anticipated one, the manipulation of internal excise duties, but there are also health regulations which can be operated to bring about a restrictive consequence, and there is also the manipulation of Government purchasing to that

  1299
  end. These are all areas well-known to our trading partners.
  Therefore, when we plead that, somehow or other, we are not breaking the spirit of the Convention because we have found some new refinement—the prior deposits scheme—we are adding a great deal of insult to injury. As has been said, these are our trading allies. As a nation with a vested interest in free trade, we presumably hope to develop those areas of activity where we can trade carelessly and without restraint. Surely, the lesson to be learned from this is that if we engage in a certain amount of cleverness in trade harassment, we shall be engaging in a war of cleverness in which we shall be outwitted.
  Mr. Michael Alison: I want to support what my hon. Friend the Member for Oswestry (Mr. Biffen) has said. The Government are following the familiar pattern of the villain of Scripture, who digged a pit, and then fell into it. One of the more sinister reasons why our E.F.T.A. partners are not making the running in pointing out the iniquity of this Bill, but are leaving it to the Conservative Opposition, is precisely that they are learning from the expert cracksmen how to open the safe themselves.
  Under the E.F.T.A. Convention, we have an extremely good bargain. I do not know whether the President of the Board of Trade has seen the article in last week's British Industry Weekly, headed, "Britain's £100 Million E.F.T.A. Bonus." It related to the study, which I believe will be published in January next year, of how trade among the E.F.T.A. partners has surged up as a result of the agreement, and above all of how the principal beneficiary, of all the E.F.T.A. partners, of that surging trade created through the Free Trade Area has been the United Kingdom.
  The actual figures are that our own bonus, the actual increase in British exports up to 1965 alone as a result of our membership of E.F.T.A. has been £100 million, against an increase in imports of only £25 million. The list given in the article of various commodities traded among the E.F.T.A. partners gives repeated evidence that Britain has nearly always done the best. One example is plastics, in which Britain has made a 5 per cent. gain in exports, having benefited
  1300
  most with Norway. In electrical machinery, Britain and Sweden have benefited most, with Britain's exports up and imports static in relation to E.F.T.A.. In the textile trade, Britain has benefited most in absolute terms. In motor cars, British exports' share of the E.F.T.A. market have risen from 12 per cent. to 18 per cent. between 1959 and 1966. In clothing, again Britain is the major beneficiary, along with Sweden.
  Do the Government really believe that our E.F.T.A. partners, many of whom have unfavourable balances with us, will be anything but delighted at having handed to them a perfect protectionist instrument which Her Majesty's Government have fashioned for them? The Government have demonstrated to the whole world that the change is of the most pristine purity in terms of the Convention and of our moral obligation to E.F.T.A. Of course they keep quiet—they only want the Government to show them that what they do is perfectly reasonable, and then they can do the same. The more the Government establish that what they do is entirely fair, reasonable moral and legal, the more cause there is for fear.
  The slightest deliberalisation of trade must be a nightmare to the President of the Board of Trade, because he knows that Mr. Catherwood has argued most cogently that we have a greater interest than probably any other country in trade liberalisation. We now have a Republican Government in America; France is in difficulty; there may be difficulties for Germany from Japanese competition, we have the present international monetary situation. The whole trend is towards deliberalising world trade, yet here is Britain, which has most to lose, playing this particular card at this moment. Nothing could be more lunatic—and, above all, to do it to our E.F.T.A. partners, who have everything to gain by using this instrument against us—
  Mr. John Pardoe: The hon. Gentleman is attacking the de-liberalising of world trade, and I agree with him, but how does he square that attack with the remarks of his right hon. Friends who support the Italian scheme, which I think is a deliberate attempt to deliberalise trade?
  Mr. Alison: The hon. Gentleman will appreciate that the Italian scheme did not

  1301
  involve the payment of the six months deposit, which is what we are now arguing about. We are talking about this freezing of liquidity which is described as a selective squeeze on the liquidity of importers. That is where it differs from the Italian scheme.
  Mr. Catherwood was right in saying recently that Britain's balance of payments gap will only be closed, or the improvement will only come about, not through a restriction on imports, with all the consequential tendencies for world trade to contract and be de-liberalised, but through an upsurge and expansion of world trade. The nature of our position is such that, on the whole, our imports are relatively inelastic—a lot of them represent food and raw materials which we must always have in certain quantities.
  Given an increase in world trade on the whole, there is more likelihood of our exports going up and our imports remaining steady than the other way round. We benefit in logic and by our structural position by an increase in world trade. What the Government should not now be doing is introducing into the world trade situation a deliberalising measure arid, above all, giving to our E.F.T.A. partners the answer on a plate. If our E.F.T.A. partners adopt the Government's case and say that they can do the same, we shall be the losers.
  Sir John Foster: It has been pointed out that to impose any brake on world trade is contrary to the spirit of the E.F.T.A. Convention, and Article 19 provides the conditions justifying stringent measures when there is a balance of payments crisis. The legal argument can be fitted into the spirit of the E.F.T.A. Convention in this way, but the Attorney-General advanced a very interesting argument. He said, "It is called a duty in the Bill, but it is not really a duty. It has been called a duty for technical reasons." The technical reason is that the Act of 1968 requires it to be called a duty for the purposes of the Ways and Means Resolution.
  6.15 p.m.
  There are many occasions in ordinary life and in law where a certain rule lays down that such-and-such will happen in certain cases. The person, in
  1302
  this case, says to the Attorney-General, "Look—it is a duty." "No," the Attorney-General replies, "It is not really a duty." There are cases both ways. In some cases a person will say, "You cannot be heard to say that it is not a duty, because you have called it a duty," but there are other cases where a person can say, "It is quite true that I have called it a duty, but it is not really a duty—therefore it is not a duty."
  I submit that in this case it falls the other way because of the spirit of the E.F.T.A. Convention. The argument about whether it is a duty or not really a duty is nicely balanced, but here the balance falls right down against the Attorney-General, because he has called it a duty. In deciding whether he is bound by what he has called it, one has to look at the spirit of the E.F.T.A. Convention, and that says that we shall not put trammels on world trade; that we shall not impose duties or charges.
  Let us look at the word "charge". The Attorney-General says that it is called a charge and, as my hon. and learned Friend the Member for Southport (Mr. Percival) has so cogently pointed out, it is called a charge all the way through the Bill. Is it a charge? The Attorney-General says, "No, it is called a charge, but it is not really a charge because it is refundable." The argument is much more "dicey"—if I may use the word—for the Attorney-General, because it is very doubtful indeed whether a charge does not become a charge when it is refundable. Deposits on bottles of bitter lemon are usually called deposits on the bottle because they are refundable and I do not think that the grocer calls that a charge but, in most cases, where a charge is refundable it is still a charge.
  My hon. Friend the Member for Harrow, West (Mr. John Page) very kindly said of the Attorney-General that he was courteous and that he talked slowly and clearly, but I would remind the right hon. and learned Gentleman that it was said of one Attorney-General that he was courteous, that he was slow, that he was always wrong. Therefore, let the Attorney-General beware of my hon. Friend.
  The Attorney-General's case falls rather on the side of the Income Tax case in which a property company used to deduct the interest it had to pay on its developments. Up to a point, the tax

  1303
  inspectors said, "Yes, you have to pay interest, so it is deductible". After a year or two the inspector looked at the published accounts and saw that in order to present a more attractive picture to the shareholders the company had capitalised the interest and had said that the interest, for the purpose of the accounts of shareholders was not a revenue deduction but was capitalised. The courts, when I last left the Bar—they may have reversed their decision since, as it was some years ago—had said, "If you call it a capital expenditure, it is a capital expenditure. It does not matter that you say that it is not really a capital expenditure although you have called it so". I think that it was known as the Chancery Lane case.
  I do not care whether or not the decision has been reversed, because my view is that the test is, if it is contrary to the spirit of the E.F.T.A. Convention, can you be heard to say, "Although I call it a duty, it is not really a duty"? Then those concerned with the E.F.T.A. Convention see that this Measure is obviously meant to catch not only duties and charges but everything of the sort that puts a kind of brake or impediment on foreign trade.
  That is what destroys the Attorney-General's legal argument which, in vacuo might have held water. It might have been said, "I call a cat a dog, but it is not really a dog, it is still a cat". The Dogs Act of 1906 gave an example of that because, in Section 7, it is said:
  "the expression cattle' includes horses …"
  The Temporary Chairman (Sir Myer Galpern): Order. The hon. and learned Member is straying and must come back to the Amendment.
  Sir J. Foster: I was trying to give an example of the way in which the Attorney-General might, in certain circumstances, have said that poultry does not include cattle.
  The right hon. and learned Gentleman has not satisfied the Committee. To say, "It is not really that because call it that for technical reasons", it is so near that one is entitled to go outside the strict wording to see what the E.F.T.A. Convention provides. The E.F.T.A. Ministers may say, "It is a breach, but we shall forgive you", or they may say, in the case of an indulgent Government, that it
  1304
  is not a breach at all. I hope that they will say that, but that does not stop the wrongness of introducing a Bill not knowing exactly what the E.F.T.A. Ministers will say.
  Mr. John Peyton: My hon. and learned Friend the Member for Northwich (Sir J. Foster) has been exceedingly merciful to the Attorney-General. It appeared that the Attorney-General this afternoon was answering the quite simple question, when is an import duty not an import duty? He conveniently forgot, or glossed over, the words in the Bill which have already been mentioned. I refer to only one instance, which says:
  "The import deposit chargeable on any goods shall be payable in addition to any other duty of customs."
  The plain meaning of those words surely is that the import duty is to be regarded as just another form of customs duty. Those words cannot be read in any other way. Although I would not put myself forward against such an authority as my hon. and learned Friend, I nevertheless would have said that the Attorney-General, in his legal argument, stands stripped of any authority more profound than that of Humpty-Dumpty, who said that a word means exactly
  "just what I choose it to mean".
  The Attorney-General: What I endeavoured to say was that a payment which is repayable unconditionally and automatically after the efflux ion of a given period of time—and that is the arrangement—ab initio is not a charge within the meaning of the E.F.T.A. Agreement. That is the point on which I advised the Committee and, in my view, it is a valid point.
  Mr. Peyton: I listened to every word the Attorney-General said and, with great respect for his office and himself, I find myself unable to accept that argument. I go back to the speech—as one would expect, a very cogent and courteous speech—made by my right hon. and learned Friend the Member for Epsom (Sir P. Rawlinson). At one point he menacingly reminded the Attorney-General that, in making the speech he was to make, it was his duty to advise not only the Government but the House of Commons. I felt quite unable to echo the remark of my hon. and learned Friend the Member for Southport (Mr. Percival), who thanked the Attorney-General. I

  1305
  feel no gratitude to him for the advice we had this afternoon, although I felt some sympathy with him in the awkward predicament in which he was placed.
  I want to say a word or two about the second argument used by the Attorney-General on whether this was in breach of the spirit of the E.F.T.A. Agreement. It seems that the Government have been singularly inept, unprepared and clumsy in their approach to E.F.T.A. about whom they should have been warned because we have already trodden pretty firmly on E.F.T.A.'s toes. I entirely agree with my hon. Friends the Members for Barkston Ash (Mr. Alison) and Oswestry (Mr. Biffen). The Attorney-General this afternoon, in riding lightly off the argument, said that our friends—indeed, they are friends—will forgive us out of pity for our difficulties, for having cheated once more. This is a disgraceful position for any British Government to have got themselves into. It is impossible not to feel some sympathy with the right hon. and learned Gentleman in the acute embarrassment he was in this afternoon.
  I remind the Committee of some words which were spoken by the Financial Secretary to the Treasury on 28th November. The Committee will recall this quotation from the Second Reading debate when we discussed what the Government had done and our relations with E.F.T.A. The Financial Secretary used these words, which seem extraordinary:
  "On the other hand, I do not want to let any words fall which appear to prejudge the completely free discussion and decision of this matter by the E.F.T.A. Ministers themselves."—[OFFICIAL REPORT, 28th November. 1968; Vol. 774, c. 755.]
  In other words, discussions here would be very embarrassing because it could be that our partners in E.F.T.A., out of charity and kindness, would not wish to make this point. Therefore, we would be adding to the embarrassment of the Government if we unnecessarily called attention to the fact that they were cheating. I do not think the House of Commons should put up with that sort of thing. We should protest most strongly against it.
  I do not want to take up the time of the Committee further because I am conscious that some of my hon. Friends who have far greater authority than I have
  1306
  wish to speak. I appreciate particularly what my hon. and learned Friend the Member for Northwich said. The Government have put the House of Commons and the country into an embarrassing and shameful position which the Attorney-General has done nothing this afternoon to alleviate.
  Sir Douglas Glover: We have had a very interesting debate. I have a great deal of sympathy for the Attorney-General. I agree with my hon. Friend the Member for Harrow, West (Mr. John Page) that the Attorney-General speaks slowly and with great charm, but, I regret to say, very often I cannot agree with him. It seems that the Government are turning the E.F.T.A. Convention into a scrap of paper like the Treaty which Germany had with Belgium before 1914.
  This is the second or third occasion on which we have been in breach of the E.F.T.A. Convention, if not in law, certainly in the spirit of the Convention. E.F.T.A. people are our friends, but I think that a great many of them may be saying, "Lord protect us from our friends and put us in the hands of our enemies". The way in which Britain has behaved in this matter seems deplorable. What worries me is that all the things the Government have said have implied that the Opposition is wrong in raising this matter of legality and the spirit of E.F.T.A. and that we should allow all this to go through silently in the night. It implies that the Government are not criticising the Opposition but have guilty consciences. They knew perfectly well that they were sailing very close to the E.F.T.A. wind when they decided to do this.
  If the President of the Board of Trade considers that consultation with our E.F.T.A. friends took place on the Friday afternoon when, more or less at the same time, the Chancellor of the Exchequer was making a categorical announcement in the House about the Government proposals, I should not have thought that that was giving our partners any chance to put forward their views.
  6.30 p.m.
  The Government say further that we should not argue about this matter on the Floor of the House because it might affect what happens when the E.F.T.A. partners meet to consider whether we

  1307
  are in breach of the Convention. This is standing honesty and integrity on its head. If the Government have made a mistake and if they know that they will not be able to refute the arguments likely to be put to them by their E.F.T.A. friends, they should, if they are honest, withdraw the Bill until they have cleared it with E.F.T.A. To proceed contrary to that after all the arguments put forward by hon. and learned Members is asking for trouble. It spoils, not the Government's name—I could not care tuppence about the Government—but Britain's name in international conferences and affairs, makes their word less credible and makes people more worried about whether they can accept Britain's word when they sign their name to a convention or treaty.
  If, as appears, that is the position, the Government have been very ill advised in bringing this Measure before us in the form of a Bill until they have cleared it with E.F.T.A., and I still think that they should do that today.
  Mr. Tom Boardman: On the legal point, I am at a loss to follow the distinction between a tax or duty and what is proposed here, which is to take from someone something to which he would otherwise be entitled, namely, the income on a sum of money which he has been forced to leave in the Government's hands. I do not see the distinction between that and taking apples off a tree, which is the illustration used in many legal circles. The tree is left, but it cannot be said that the owner has not been deprived of something. Clearly, this is a charge and a duty, as the Bill provides. My hon. and learned Friend the Member for Northwich (Sir J. Foster) referred to the bottle deposit but I would make the point that in that case the person has the use of the bottle during the period concerned. But here the person paying the deposit receives nothing.
  The legal point has been widely argued. If this is not contrary to the spirit of the E.F.T.A. agreement, would it not be equally consistent with the spirit of that agreement if the Government decided to make interest-free loans to those who export measured against the value of the exports sent out? The Attorney-General might well say that this would be a subsidy, but for his argument to be consis-
  1308
  tent he could not say that. But it is beyond dispute that that would be against the spirit of the E.F.T.A. agreement.
  For those reasons, it is deplorable to put this measure forward as neither a duty nor a charge.
  The President of the Board of Trade (Mr. Anthony Crosland): Most hon. Members will be relieved to know that I am not a lawyer. I am quite incompetent to take part in the legal arguments exchanged across the Committee. But I am authorised by the Attorney-General to say that he, having listened to all the points which have been made, is not disposed to alter the legal advice which he tendered to the Committee earlier. A number of political points have been made and addressed more to me than to my right hon. and learned Friend. Perhaps I could deal with those.
  A number of hon. Members opposite raised the point about possible consultation. Perhaps I could correct the hon. Member for Ormskirk (Sir D. Glover) on one point. When I intervened in the speech of the Leader of the Opposition on Monday last week, I did not claim that there had been consultation in any proper sense of the term. I was merely rebutting the statement which he had made that the matter had not even been discussed. I would not claim that there had been genuine consultation in the sense which hon. Members opposite and myself would attach to the word. But I wonder whether it is seriously suggested that in a case like this there could have been real consultation as to whether we should have introduced this Measure.
  Perhaps I could put to the Committee the circumstances of the case. This decision was announced the week before last. That was a week of intense international monetary crisis when the Finance Ministers of the Group of Ten were meeting in Bonn. I cannot think that it is seriously suggested that during that week Her Majesty's Government, before taking a decision, should have gone to the other E.F.T.A. Governments which happened to be assembled at the Ministerial Council in Vienna, and said, "We should like to consult you, first, about whether we should do anything to restrain our imports and, secondly, if we are to do something, which of the possible measures you would prefer". Is it

  1309
  suggested that we should have had with them a consultation which, if it were to be real, would have taken, with their advisers, two or three days, the result of which would certainly have leaked?
  I suggest that true consultation, which I am not pretending occurred, on a matter like this is no more possible than true prior consultation on, say, tax changes or exchange rate changes. Not one of the E.F.T.A. Ministers has criticised us for not consulting in this way. Article 19 of the E.F.T.A. Convention, which refers to quantitative restrictions, which in some sense are legal, does not suggest that there should be consultation before they are imposed. It suggests only that they should be notified to the Ministerial Council. To have proper prior consultation in those circumstances would be a derogation of the sovereignty of any British Government, which was never envisaged when the E.F.T.A. Convention was drawn up and which would never be accepted by either side of the Committee.
  Mr. Biffen: I am interested in the right hon. Gentleman's comment about the difficulties arising from the international monetary crisis, but does he recollect that the Chancellor of the Exchequer argued that the package was not related to the international monetary crisis and that it was, to some extent, a coincidence that the two came together? Surely the question of import deposits was considered by the Government long before the international monetary crisis blew up. Was not that the time when consultations should have been considered?
  Mr. Crosland: Clearly the hon. Gentleman did not hear the speech of my right hon. Friend the Chancellor of the Exchequer, who made it clear that, on the one hand, these measures were not determined as a result of the Bonn meeting of the Group of Ten but that, on the other hand, they were linked to the international monetary crisis.
  The second point which was raised concerned the spirit of the E.F.T.A. agreement. I hope that I am as anxious as any of the critics to maintain and enhance the spirit of E.F.T.A. Some of the language used by, for example, the hon. Member for Yeovil (Mr. Peyton) is quite inappropriate to these discussions and wholly out of line with any language
  1310
  used by any of the other E.F.T.A. Ministers.
  We must all form our own judgment about the spirit of E.F.T.A.; I cannot claim unique accuracy for mine. I can only report my impression—and, after all, I was at the Ministerial Council—that the E.F.T.A. reaction was not as it has been painted today by hon Members opposite. There was a general recognition that we had to do something to restrain our imports and that of the possible measures open to us we had chosen the one least damaging to E.F.T.A. trade. As far as I remember, during the whole of that afternoon, the question of legality was not mentioned in the Ministerial Council. I can only give my impression as honestly as I can that what has been said about the threat to the spirit of E.F.T.A. today is not in accordance with the facts.
  The next question raised was: should E.F.T.A. have been excluded from the operation of the import deposit scheme? This is the object of Amendment No. 98, in the name of the hon. Member for Honiton (Mr. Emery). I put it to the Committee that whatever international repercussions there are from the scheme as a whole, with E.F.T.A. in, would be as nothing to the international repercussions if we were to make this a positively discriminatory scheme. Successive British Governments, like almost all Governments of advanced countries in the world, have long been committed to the principle that, if they had to do something about imports, they would do it in a non-discriminatory way. I assure the Committee that any attempt to exclude E.F.T.A. would make the international repercussions of the scheme ten times worse than they can possibly be as it now stands.
  I was asked what representations had been received. I assure the hon. Member for Worcestershire, South (Sir G. Nabarro) that I have read, as he heard reported on the radio, I think, the very critical speech by the Danish Finance Minister. We have, in addition, as the Committee knows, received representations from the Prime Minister of Ireland. Apart from those, no representations have been received since the Vienna Conference from any other E.F.T.A. country. All the other E.F.T.A. countries are satisfied that we should now follow the normal procedure in these matters, that is, that the question

  1311
  should go to the E.F.T.A. Official Council for its consideration in the weeks and months ahead.
  Sir Arthur Vere Harvey: The right hon. Gentleman explains away the E.F.T.A. countries, but will he say what representations have been received from the Government of Malta, a Government to which we are giving great support, which they most certainly require?
  Mr. Crosland: As this was a debate about E.F.T.A., I replied in terms of the E.F.T.A. countries. I understand that representations have been received from the Government of Malta, but I cannot say off-hand what they are. If their nature is not known, or if no announcement has been made, I shall discover what I can and write to the hon. Gentleman.
  For me, this debate has had an unreal quality. Its tone and atmosphere has been strikingly different from the tone and atmosphere of the debate which took place in the E.F.T.A. Ministerial Council. I am sure that the motive of those who have spoken has been a genuinely patriotic motive. I do not question that, despite some of the excessively violent language used. I end by expressing my personal judgment that the repercussions in E.F.T.A. will be not one-tenth as serious or damaging to this country, to E.F.T.A. or the spirit of E.F.T.A. as some of the more violent speeches from the benches opposite today have suggested.
  Sir P. Rawlinson: When the Minister, in winding up, refers to patriotism in those terms, I become suspicious. These Amendments were put down because it was the duty of the Opposition to press them. They were put down because it appeared to us that the Government had prepared this scheme ill-advisedly, without proper consultation and without recognition of the legal issues and the responsibilities and liabilities of this country under the Convention.
  None of my right hon. and hon. Friends would wish to do anything which might damage or cause difficulty for Britain, but it is the duty of the House of Commons to examine closely the legislation which is put before it.
  The right hon. Gentleman spoke of the urgency and agony of the crisis. I am sure that that was so and there was not time for consultation, but I remind him that,
  1312
  at the time of the European negotiations which were led by my right hon. Friend the Leader of the Opposition, there was conference and consultation with the E.F.T.A. countries in the 24 hours before an announcement was made in the House. However, perhaps because of the urgency and agony of the situation, the effect which the scheme would have under the E.F.T.A. Convention was not closely thought out, and, with the greatest respect to the right hon. Gentleman, the expression upon the Chancellor of the Exchequer's face when he had to meet that question revealed that in all the matters which he had to take into account his advisers had not gone into the point and had not considered the real legal position under the Convention.
  I listened with care to the Attorney-General, who was invited to come here and give his advice as adviser to the House. I regret that, at the end of it, he introduced, by tone if not by word, the suggestion of some reflection on the patriotism of those who have raised the question.
  The Attorney-General: If any such inference could have been drawn from what I said, I certainly did not intend it, and I withdraw it. I detected a slight element of party faction at one point in some of the speeches which I heard.
  6.45 p.m.
  Sir P. Rawlinson: With respect, I was the only one who had spoken at that stage, and I had not introduced the matter in terms of party faction. I made clear that what we wanted was advice. We wanted to hear the argument. I tell the right hon. and learned Gentleman categorically that, having listened to his argument—I am not alone in this—I cannot for the life of me see that it can be sustained. Knowing the Attorney-General's considerable powers of advocacy, I am certain that, if he had had to argue his case before the Revenue Court, with the judge able to interrupt, he would have had a far more difficult time than he had here in advising the House of Commons in Committee.
  My right hon. and hon. Friends have discussed the detail of the argument, subjecting it to close analysis. It comes down to this: call it what one will, this is a duty, as it is described in the Bill. The right hon. and learned Gentleman

  1313
  may recite that it is not. He may try to explain it away. Although I accept that in his own mind he has explained it away, on his view of the law, by saying that the provisions are so drafted for a purely technical reason, we remain unconvinced. On 26th November, the Financial Secretary to the Treasury—perhaps it was at an early hour in the morning; I am not sure—flatly referred to it as a customs charge. We find his words in column 264 of the OFFICIAL REPORT. In reality, that is what it is, and that is what economics Ministers know perfectly well it is.
  The Attorney-General was forced to examine the matter at a time when the Bill was coming before the House. I regret to say that I and, I think, some of
  my right hon. and hon. Friends totally disagree with the argument which he has put to us. I accept the Attorney-General's advice as advice which he gives to the House, but other circumstances and issues still remain. I strongly suspect that Ministers did not go to the Attorney-General for advice earlier on. I believe that this point took them by surprise. Because of this revelation, once again, of the incompetence of the present Administration, I advise my hon. and right hon. Friends to vote for the Amendment.
  Question put, That the Amendment be made:—
  The Committee divided: Ayes 181, Noes 256.

  Division No. 17.]

  AYES

  [6.48 p.m.

  Alison, Michael (Barkston Ash)

  Gilmour, Sir John (Fife, E.)

  Mawby, Ray

  Allason, James (Hemel Hempstead)

  Glover, Sir Douglas

  Maxwell-Hyslop, R. J.

  Atkins, Humphrey (M't'n & M'd'n)

  Godber, Rt. Hn. J. B.

  Mills, Peter (Torrington)

  Baker, Kenneth (Acton)

  Goodhew, Victor

  Mills, Stratton (Belfast, N.)

  Baker, W. H. K. (Banff)

  Gower, Raymond

  Miscampbell, Norman

  Beamish, Col. Sir Tufton

  Grant-Ferris, R.

  Mitchell, David (Basingstoke)

  Bell, Ronald

  Grieve, Percy

  Monro, Hector

  Bennett, Sir Frederic (Torquay)

  Grimond, Rt. Hn. J.

  Montgomery, Fergus

  Bennett, Dr. Reginald (Gos. & Fhm)

  Hall, John (Wycombe)

  More, Jasper

  Berry, Hn. Anthony

  Hall-Davis, A. G. F.

  Morgan, Geraint (Denbigh)

  Biffen, John

  Hamilton, Lord (Fermanagh)

  Morrison, Charles (Devizes)

  Biggs-Davison, John

  Hamilton, Michael (Salisbury)

  Munro-Lucas-Tooth, Sir Hugh

  Birch, Rt. Hn. Nigel

  Harris, Frederic (Croydon, N.W.)

  Murton, Oscar

  Black, Sir Cyril

  Harrison, Brian (Maldon)

  Naharro, Sir Gerald

  Blaker, Peter

  Harrison, Col, Sir Harwood (Eye)

  Neave, Airey

  Boardman, Tom (Leicester, S.W.)

  Harvey, Sir Arthur Vere

  Nott, John

  Boyd-Carpenter, Rt. Hn. John

  Harvie Anderson, Miss

  Onslow, Cranley

  Boyle, Rt. Hn. Sir Edward

  Hastings, Stephen

  Orr, Capt. L. P. S.

  Brewis, John

  Hawkins, Paul

  Orr-Ewing, Sir Ian

  Brinton, Sir Tatton

  Heald, Rt. Hn. Sir Lionel

  Osborne, Sir Cyril (Louth)

  Brown, Sir Edward (Bath)

  Heath, Rt. Hn. Edward

  Page, Graham (Crosby)

  Bruce-Gardyne, J.

  Heseltine, Michael

  Page, John (Harrow, W.)

  Buchanan-Smith, Alick (Angus, N & M)

  Higgins, Terence L.

  Pardoe, John

  Buck, Antony (Colchester)

  Hiley, Joseph

  Percival, Ian

  Bullus, Sir Eric

  Hill, J. E. B.

  Peyton, John

  Burden, F. A.

  Hirst, Geoffrey

  Powell, Rt. Hn. J. Enoch

  Campbell, B. (Oldham, W.)

  Holland, Philip

  Price, David (Eastleigh)

  Clark, Henry

  Hordern, Peter

  Prior, J. M. L.

  Clegg, Walter

  Hornby, Richard

  Pym, Francis

  Cooke, Robert

  Howell, David (Guildford)

  Quennell, Miss J. M.

  Cooper-Key, Sir Neill

  Hutchison, Michael Clark

  Rawlinson, Rt. Hn. Sir Peter

  Cordle, John

  Iremonger, T. L.

  Rees-Davies, W. R.

  Corfield, F. V.

  Irvine, Bryant Godman (Rye)

  Renton, Rt. Hn. Sir David

  Costain, A. P.

  Jenkin, Patrick (Woodford)

  Rhys Williams, Sir Brandon

  Cunningham, Sir Knox

  Jennings, J. C. (Burton)

  Ridley, Hn. Nicholas

  Currie, G. B. H.

  Johnson Smith, G. (E. Grinstead)

  Ridsdale, Julian

  Dalkeith, Earl of

  Joseph, Rt. Hn. Sir Keith

  Rossi, Hugh (Hornsey)

  Dance, James

  Kaberry, Sir Donald

  Russell, Sir Ronald

  Davidson, James (Aberdeenshire, W.)

  Kerby, Capt. Henry

  Sandys, Rt. Hn. D.

  d'Avigdor-Goldsmid, Sir Henry

  Lancaster, Col. C. G.

  Scott-Hopkins, James

  Dean, Paul

  Legge-Bourke, Sir Harry

  Shaw, Michael (Sc'b'gh & Whitby)

  Deedes, Rt. Hn. W. F. (Ashford)

  Lewis, Kenneth (Rutland)

  Smith, Dudley (W'wick & L'mington)

  Digby, Simon Wingfield

  Lubbock, Eric

  Smith, John (London & W'minster)

  Doughty, Charles

  MacArthur, Ian

  Speed, Keith

  Drayson, G. B.

  Mackenzie, Alasdair (Ross & Crom'ty)

  Staunton, Keith

  Eden, Sir John

  Maclean, Sir Fitzroy

  Steel, David (Roxburgh)

  Elliot, Capt. Walter (Carshalton)

  Macmillan, Maurice (Farnham)

  Stodart, Anthony

  Emery, Peter

  McNair-Wilson, Patrick

  Stoddart-Scott, Col. Sir M.

  Eyre, Reginald

  Maddan, Martin

  Summers, Sir Spencer

  Farr, John

  Maginnis, John E.

  Tapsell, Peter

  Fletcher-Cooke, Charles

  Marten, Neil

  Taylor, Sir Charles (Eastbourne)

  Fortescue, Tim

  Maude, Angus

  Taylor, Edward M. (G'gow, Cathcart)

  Foster, Sir John

  Maudling, Rt. Hn. Reginald

  Temple, John M.

  Fraser, Rt. Hn. Hugh (St'fford & Stone)

  Thatcher, Mrs. Margaret

  Thorpe, Rt. Hn. Jeremy

  Ward, Dame Irene

  Wolrige-Gordon, Patrick

  Turton, Rt. Hn. R. H.

  Webster, David

  Wood, Rt. Hn. Richard

  van Straubenzee, W. R.

  Wells, John (Maidstone)

  Woodnutt, Mark

  Vaughan-Morgan, Rt. Hn. Sir John

  Whitelaw, Rt. Hn. William

  Wright, Esmond

  Waddington, David

  Williams, Donald (Dudley)

  Wainwright, Richard (Colne Valley)

  Wills, Sir Gerald (Bridgwater)

  TELLERS FOR THE AYES:

  Walker-Smith, Rt. Hn. Sir Derek

  Wilson, Geoffrey (Truro)

  Mr. R. W. Elliott and

  Wall, Patrick

  Winstanley, Dr. M. P.

  Mr. Timothy Kitson.

  NOES

  Abse, Leo

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

  McKay, Mrs. Margaret

  Albu, Austen

  Fletcher, Ted (Darlington)

  Mackenzie, Gregor (Rutherglen)

  Allaun, Frank (Salford, E.)

  Foley, Maurice

  Mackie, John

  Alldritt, Walter

  Foot, Rt. Hn. Sir Dingle Ipswich)

  Mackintosh, John P.

  Allen, Scholefield

  Foot, Michael (Ebbw Vale)

  Maclennan, Robert

  Anderson, Donald

  Forrester, John

  McMillan, Tom (Glasgow, C.)

  Archer, Peter

  Fowler, Gerry

  McNamara, J. Kevin

  Ashton, Joe (Bassetlaw)

  Fraser, John (Norwood)

  MacPherson, Malcolm

  Atkins, Ronald (Preston, N.)

  Freeson, Reginald

  Mahon, Peter (Preston, S.)

  Atkinson, Norman (Tottenham)

  Gardner, Tony

  Mahon, Simon (Bootle)

  Bacon, Rt. Hn. Alice

  Garrett, W. E.

  Manuel, Archie

  Bagier, Gordon A. T.

  Ginsburg, David

  Mapp, Charles

  Barnes, Michael

  Gordon Walker, Rt. Hn. P. C.

  Marks, Kenneth

  Beaney, Alan

  Gray, Dr. Hugh (Yarmouth)

  Marsh, Rt. Hn. Richard

  Bence, Cyril

  Greenwood, Rt. Hn. Anthony

  Mason, Rt. Hn. Roy

  Bennett, James (G'gow, Bridgeton)

  Grey, Charles (Durham)

  Mellish, Rt. Hn. Robert

  Bidwell, Sydney

  Griffiths, David (Rother Valley)

  Mendelson, John

  Binns, John

  Griffiths, Eddie (Brightside)

  Mikardo, Ian

  Bishop, E. S.

  Hamilton, James (Bothwell)

  Millan, Bruce

  Blackburn, F.

  Hamilton, William (Fife, W.)

  Miller, Dr. M. S.

  Boardman, H. (Leigh)

  Hamling, William

  Milne, Edward (Blyth)

  Booth, Albert

  Hannan, William

  Mitchell, R. C. (S'th'pton, Test)

  Boston, Terence

  Harper, Joseph

  Morgan, Elystan (Cardiganshire)

  Boyden, James

  Harrison, Walter (Wakefield)

  Morris, Alfred (Wythenshawe)

  Braddock, Mrs. E. M.

  Hart, Rt. Hn. Judith

  Morris, Charles R. (Openshaw)

  Bray, Dr. Jeremy

  Haseldine, Norman

  Morris, John (Aberavon)

  Brooks, Edwin

  Hattersley, Roy

  Moyle, Roland

  Brown, Hugh D. (G'gow, Provan)

  Hazell, Bert

  Mulley, Rt. Hn. Frederick

  Brown, R. W. (Shoreditch & F'bury)

  Healey, Rt. Hn. Denis

  Murray, Albert

  Buchan, Norman

  Heffer, Eric S.

  Neal, Harold

  Buchanan, Richard (G'gow, Sp'burn)

  Newens, Stan

  Butler, Herbert (Hackney, C.)

  Henig, Stanley

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Callaghan, Rt. Hn. James

  Herbison, Rt. Hn. Margaret

  Norwood, Christopher

  Cant, R. B.

  Hobden, Dennis

  Oakes, Gordon

  Carmichael, Neil

  Horner, John

  O'Malley, Brian

  Carter-Jones, Lewis

  Howarth, Harry (Wellingborough)

  Oram, Albert E.

  Coe, Denis

  Howie, W.

  Orbach, Maurice

  Coleman, Donald

  Hoy, James

  Orme, Stanley

  Conlan, Bernard

  Hughes, Emrys (Ayrshire, S.)

  Oswald, Thomas

  Corbet, Mrs. Freda

  Hughes, Hector (Aberdeen, N.)

  Owen, Dr. David (Plymouth, S'tn)

  Cradclock, George (Bradford, S.)

  Hughes, Roy (Newport)

  Owen, Will (Morpeth)

  Crawshaw, Richard

  Hunter, Adam

  Padley, Walter

  Crosland, Rt. Hn. Anthony

  Hynd, John

  Paget, R. T.

  Cullen, Mrs. Alice

  Irvine, Sir Arthur (Edge Hill)

  Palmer, Arthur

  Dalyell, Tam

  Jackson, Colin (B'h'se & Spenb'gh)

  Pannell, Rt. Hn. Charles

  Darling, Rt. Hn. George

  Jackson, Peter M. (High Peak)

  Park, Trevor

  Davidson, Arthur (Accrington)

  Jay, Rt. Hn. Douglas

  Parker, John (Dagenham)

  Davies, Ednyfed Hudson (Conway)

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Parkyn, Brian (Bedford)

  Davies, G. Elfed (Rhondda, E.)

  Jenkins, Hugh (Putney)

  Pavitt, Laurence

  Davies, Dr. Ernest (Stretford)

  Jenkins, Rt. Hn. Roy (Stetchford)

  Pearson, Arthur (Pontypridd)

  Davies, Ifor (Gower)

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  Peart, Rt. Hn. Fred

  Davies, S. O. (Merthyr)

  Jones, J. Idwal (Wrexham)

  Pentland, Norman

  Delargy, Hugh

  Jones, T. Alec (Rhondda, West)

  Perry, Ernest G. (Battersea, S.)

  Dell, Edmund

  Kenyon, Clifford

  Perry, George H. (Nottingham, S.)

  Dempsey, James

  Kerr, Mrs. Anne (R'ter & Chatham)

  Prentice, Rt. Hn. R. E.

  Dewar, Donald

  Kerr, Dr. David (W'worth, Central)

  Price, Christopher (Perry Barr)

  Diamond, Rt. Hn. John

  Lawson, George

  Price, Thomas (Westhoughton)

  Dickens, James

  Leadhitter, Ted

  Price, William (Rugby)

  Dobson, Ray

  Ledger, Ron

  Probert, Arthur

  Doig, Peter

  Lee, Rt. Hn. Frederick (Newton)

  Randall, Harry

  Dunn, James A.

  Le, John (Reading)

  Rees, Merlyn

  Dunnett, Jack

  Lever, Harold (Cheetham)

  Roberts, Albert (Normanton)

  Dunwoody, Mrs. Gwyneth (Exeter)

  Lever, L. M. (Ardwick)

  Roberts, Gwilym (Bedfordshire, S.)

  Eadie, Alex

  Lewis, Arthur (W. Ham, N.)

  Robinson, Rt. Hn. Kenneth (St. P'c'as)

  Edwards, Robert (Bilston)

  Lewis, Ron (Carlisle)

  Rodgers, William (Stockton)

  Edwards, William (Merioneth)

  Lomas, Kenneth

  Roebuck, Roy

  Ellis, John

  Loughlin, Charles

  Rogers, George (Kensington, N.)

  English, Michael

  Lyons, Edward (Bradford, E.)

  Roes, Rt. Hn. William

  Ennals, David

  McBride, Neil

  Rowlands, E.

  Evans, Fred (Caerphilly)

  McCann, John

  Shaw, Arnold (Ilford, S.)

  Ewing, Mrs. Winifred

  MacColl, James

  Sheldon, Robert

  Fernyhough, E.

  Macdonald, A. H.

  Shinwell, Rt. Hn. E.

  Finch, Harold

  McGuire, Michael

  Short, Rt. Hn. Edward (N'c'tle-u-Tyne)

  1316

  1317

  Silkin, Rt. Hn. John (Deptford)

  Varley, Eric G.

  Williams, Alan Lee (Hornchurch)

  SKefffington, Arthur

  Wainwright, Edwin (Deame Valley)

  Williams, Clifford (Abertillery)

  Small, William

  Walker, Harold (Doncaster)

  Williams, Mrs. Shirley (Hitchin)

  Spriggs, Leslie

  Wallace, George

  Williams, W. T. (Warrington)

  Steele, Thomas (Dunbartonshire, W.)

  Watkins, David (Consett)

  Willis, Rt. Hn. George

  Stonehouse, Rt. Hn. John

  Watkins, Tudor (Brecon & Radnor)

  Wilson, William (Coventry, S.)

  Strauss, Rt. Hn. G. R.

  Weitzman, David

  Winnick, David

  Swain, Thomas

  Wellbeloved, James

  Woodburn, Rt. Hn. A.

  Swingler, Stephen

  Wells, William (Walsall, N.)

  Woof, Robert

  Symonds, J. B.

  Whitaker, Ben

  Wyatt, Woodrow

  Taverne, Dick

  Whitlock, William

  Tinn, James

  Wilkins, W. A.

  TELLERS FOR THE NOES:

  Tuck, Raphael

  Willey, Rt. Hn. Frederick

  Mr. loan L. Evans and

  Urwin, T. W.

  Williams, Alan (Swansea, W.)

  Mr. Ernest Armstrong.

  The Temporary Chairman (Sir Myer Galpern): The next Amendment is Amendment No. 1, with which it might he for the convenience of the Committee to take Amendment No. 2, in page 1, line 16, leave out 'fifty' and insert 'twenty-five'.
  [Mr. HARRY GOURLAY in the Chair]
  Mr. Peyton: I beg to move, Amendment No. 1, in page 1, line 16, leave out 'fifty' and insert 'thirty'.
  The charge that we on this side of the Committee make against the Measure is that it is vague, ill thought out and unpredictable in its effect. Because we believe it to be so full of those vices, we think that it would be a good thing if its immediate impact were lessened by the simple reduction from 50 to 30 per cent. This does not mean that we necessarily think that 30 per cent. would be a good thing.
  7.0 p.m.
  It is impossible not to admire the sagacity and dexterity of the Financial Secretary. On Second Reading he devoted no less than two-thirds of a column in HANSARD to the details of the Measure and thereafter skated on to talk of more joyous things such as the Opposition's Amendment, which gave him a good deal more joy than the Measure of which he was at least the foster-parent at that moment. I have never seen an example of anyone more ashamed of his own child than the Financial Secretary. One can always tell by the hon. Gentleman's attitude towards the subject he is discussing whether he is enthusiastic. When his enthusiasm is at a low ebb, he deals with the matter in hand very rapidly indeed. On that occasion the Bill received but scant attention from him.
  The Government are exceedingly vague about what is being done in the Bill. In
  1318
  moving the Second Reading of the Bill the Financial Secretary said this:
  "I shall leave the details of the Bill for more consideration as the debate develops".
  We greatly hope that the moment has now come when the hon. Gentleman will be able to open his mind and that his mind will have more in it as to the effects of the Bill than it evidently had on Second Reading. He said later:
  "I do not know exactly, or even within a wide range, what the effect will be … I am hoping that there will be a significant and marginal effect in terms of imports themselves."
  It is impossible to read the hon. Gentleman's speech without concluding that the Government, in putting forward this hotch-potch Measure, have no idea whether it will have a serious effect or none. This gives us ground for great concern. It would at least appear to us that the Government have given little thought to the effects of the Measure upon those wretched people who have to conduct businesses in Britain and who trade overseas.
  I have often wished that Ministers, particularly of this Administration, but I have wished it of others, could be obliged to take part in the business of trade so that they could feel at first hand the impact of the Measures they promulgate. It would not be such a bad thing if this practice were to be extended to the Treasury and other Government Departments, particularly the Customs and Excise.
  I am sorry to quote the words of the Financial Secretary so often, but we have not got very much Government literature on this subject. Later in his Second Reading speech he said this:
  "… there will be no one who cannot find the money."
  It could be, in these circumstances of squeeze, that many people conducting businesses, and not all of them small,

  1319
  find their resources stretched to the utmost and who, even if they can find the money, will not wish to undertake greater and more expensive commitments.
  Still later in his Second Reading speech the hon. Gentleman
  "repudiated the possibility of"
  the Bill's
  "bringing many businesses, small, medium or large, to bankruptcy."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 750–2.]
  I would like to know the measure of the hon. Gentleman's confidence in that repudiation. Does he consider that the Bill will have only a marginal effect? We should like to know how slight the margin is. We warn the Financial Secretary that some margins can be oppressive and that, added to some of the other burdens which have been put upon businesses, this will bear harshly indeed.
  How much though has gone into the organisation and the method of operation of this scheme? As to precedents and general design—
  The Deputy Chairman (Mr. Gourlay): Order. I must ask the hon. Gentleman to address his remarks to the Amendment which is to leave out "fifty" and insert "thirty".
  Mr. Peyton: I am sorry, Mr. Gourlay. I have failed to make my argument clear. The whole point of this, if I may repeat words I used at the very beginning of my speech, is that the Bill is a vague, ill-thought-out hotch-potch. Therefore, with great respect, I think that I am entitled to argue that it would be less vicious in its effect if it had an experimental period, at, say, 30 per cent. rather than the proposed 50 per cent. With respect, 1 do not believe that I have strayed very far from that point, but I will certainly do my best to comply with your requirement.
  The only people whose convenience has been consulted are the Commissioners of Customs and Excise. I do not know whether the Financial Secretary has seen the first letter in today's Financial Times. It is from a Mr. Arditti, an accountant, who writes:
  "Whether or no this is convenient for Customs and Excise is not relevant. It would suit the business man who is forced to lend huge sums of money free of interest."
  That is the alternative method which the correspondent suggests.
  The Financial Secretary to the Treasury (Mr. Harold Lever): I am listening attentively and am anxious to answer every point, but I am not clear what the point is that the hon. Gentleman is making. He has read part of a letter which I regret has not yet come to my attention. I do not know what the complaint is.
  Mr. Peyton: I will willingly give the Financial Secretary my copy. I read the letter only to indicate the indignation of business men and the feeling that their suggested methods have not been considered but only the suggestions and convenience of the Commissioners of Customs and Excise have been considered.
  I am also very concerned as to how the Government reached their conclusions about what should be in and what should be out of the Bill. The Financial Secretary made it clear that £3,000 million would be inside the Bill whereas about £6,000 million would be excluded. I wonder how some of these decisions have been arrived at. I cannot see why all food should be excluded. Britain is suffering at the moment from a considerable glut of imports of so-called Cheddar cheese.
  Sir G. Nabarro: And bacon.
  Mr. Peyton: I agree. Perhaps the Financial Secretary can explain the justification for excluding caviar.
  The Deputy Chairman (Mr. Gourlay): Order. We are not debating what should be in the Bill and what should not. We are discussing whether it should be "thirty" or "fifty".
  Mr. Peyton: I am sorry, Mr. Gourlay. I am endeavouring to suggest that the Bill has been ill-thought-out. I seek to illustrate that point. Because it has been ill-thought-out, I suggest that the percentage should be reduced from 50 to 30. I am sorry if I have appeared to transgress your Ruling, but, with respect, I do not think I have done so.
  I am not going into any of these points in detail. I am asking what thought has been given, for instance, to goods which are required to fulfil Government defence contracts. What thought has been given, for instance, to finished specialised steels

  1321
  which are not available in this country? As the Bill stands, these matters have evidently not received any or adequate thought. That is the point which I wish to ram home to the Financial Secretary and the Government.
  One might ask what about goods imported by one person for re-export by another. The Bill makes—
  The Deputy Chairman (Mr. Gourlay): Order. The hon. Member must come to the subject of the Amendment, which is whether the rate should be 30 per cent. or 50 per cent. So far, he has made very little reference to the Amendment.
  Mr. Peyton: I would not, of course, wish to argue at length with the Chair, Mr. Gourlay, but I think, with respect, that the alteration of that rate from 50 per cent. to 30 per cent. raises almost every issue which is relevant to the Bill.
  The Deputy Chairman: Order. I thought that the Amendment was perfectly clear. The hon. Member cannot make a Second Reading speech on it.
  Mr. Peyton: I have made most of the detailed points I wished to make and I am obliged to you for your Ruling, Mr. Gourlay. I nevertheless suggest that the points which I have dealt with are evidence of my charges that the Bill is vague and will be unpredictable in operation, that it has little consideration for the impact that it will have on business men and that inclusions and exclusions are haphazard and ill-thought-out.
  Believing those charges to be justified, I suggest to the Government that they should—quite exceptionally, of course—show a measure of modesty and that before honouring the nation with this Measure, which is untested, untried and unpredictable, they should reduce its impact for an experimental period. I would be content to withdraw my Amendment if they would substitute one of their own and say that they would make the rate 30 per cent. for the first six months while they see how it works. I suspect, however, that the Government are probably not of that reasonable frame of mind and do not feel sufficiently strong in morale at present to make concessions anywhere, otherwise they would have to run all along the line.
  1322
  I believe that despite the rebukes which you have administered to me during my speech, Mr. Gourlay, I have made in outline, and very briefly, a case for suggesting that the Bill is clumsy, ill-prepared and vague and that its impact could properly be reduced, at least for a trial period, from 50 per cent. to 30 per cent.
  7.15 p.m.
  Mr. Pardoe: I wish to associate my remarks, brief as they will be, with some—rather few—of the remarks of the hon. Member for Yeovil (Mr. Peyton) and to link with his Amendment my Amendment No. 2 to reduce the 50 per cent. deposit to 25 per cent. I do not quarrel very much with the hon. Gentleman about the odd 5 per cent. I thought that the intention of our two Amendments was the same but, having heard the hon. Member's speech, I am not so sure that they are.
  I have re-read my Second Reading speech. I was rather happy with it and I shall not make it again. The Government have been at pains, so far in these debates, to minimise the effects of the Bill, and I am not very surprised. I am rather reminded of the girl who had to tell the vicar that she had had an illegitimate child, and said, "Well, it was a very small one, Vicar". The Government's motto seems to have been that if we have to have a bastard, let it be a small one. I am trying to help them and to make it a little smaller.
  I wish to use my Amendment as a probing Amendment to elicit from the Financial Secretary exactly why the rate of 50 per cent. was fixed, what effect he thinks that rate will have and how its effect would be changed by my Amendment to reduce it to 25 per cent. I asked the hon. Gentleman when we debated the Ways and Means Resolution the exact value of the imports to which the deposits were being applied, but I got no very satisfactory answer. I have not seen any satisfactory answer to the question since.
  I would very much like to know from the Financial Secretary—I hope that he can give the figure in reply—what assessment the Government have made of the value that the 50 per cent. will be. What will it build up to in six months? What is the highest point at which it will be

  1323
  and what difference would it make, for instance, if my Amendment were enacted?
  I put down the Amendment to elicit further information. We in the House of Commons cannot support a Measure the effects of which we do not know. I am still incredibly vague, and I believe that the Government, too, are vague, about the full effects of the Bill. I hasten to say that it would not be a good Bill even with my Amendment or the Amendment of the hon. Member for Yeovil. I made it clear in my speech on the Ways and Means Resolution and on Second Reading that I am against protection and against this form of it. I would be about half as much against the Bill if my Amendment were carried, but only half as much.
  Sir G. Nabarro: What, I think, my hon. Friend the Member for Yeovil (Mr. Peyton) was saying—and I express it in different terms—was that rather than drop the fully-clothed importer into the deep end of the bath, he would drop him in three-fifths of the way along the bath from the shallow end to the deep end measured in that direction. The hon. Member for Cornwall, North (Mr. Pardoe), however, would drop him halfway along the bath from the shallow end to the deep end.
  I support my hon. Friend the Member for Yeovil, because we are now embarked on a path which, in my judgment, has an unpredictable ending. We do not know where this kind of dubious device of extracting large sums of money from legitimate importers will lead us. One thing which is perfectly certain is that we cannot constrain imports without, in the medium term and the long term, detrimentally affecting our exports, because all trade is a two-way affair and if we take this kind of discriminatory action against imports, it invites reciprocity.
  A number of hon. Members have said that they have not been able to gauge what the arithmetical or financial effects would be. I do not find that particularly difficult, and I want to dwell on what would be the financial implication of making the rate 30 per cent. instead of 50 per cent., because that is the nub of the matter.
  1324
  As I understand it, the 50 per cent. import deposit applies to £2,800 million worth of imports per annum. As the import deposit applies for a period of six months, it cuts that figure in half, to £1,400 million. As it is only for a period of six months, however, and at the rate of 50 per cent., the amount of money extracted from importers at any one time is £700 million. If imports continued at the same level it would remain fairly constant at £700 million, subject only to certain seasonal variation. If that £700 million is quantified for interest purposes at the rate of 10 per cent.—not 8 per cent., but 10 per cent. because of the difficulties of borrowing—it would mean an additional charge on primary importers of the order of £70 million per annum.
  Mr. Harold Lever: Did the hon. Member say 7 per cent.?
  Sir G. Nabarro: I said 10 per cent. I am taking it at 10 per cent. because, whereas preferential borrowers from banks getting a preferential rate of 7 per cent. may be able to borrow at 8 per cent., an importer would not be able to borrow at 8 per cent., in view of the Treasury instruction that facilities should not be granted to importers to meet this deposit. Therefore, I am afraid that importers, in order to get their goods, will have to resort to dubious methods of raising short-term loans and will probably have to pay 10 per cent., a usurious rate, for the purpose of bringing their goods into the country.
  I believe that the Financial Secretary in his reply will say that the figures which I am employing are approximately correct, and they are all dreadfully inflationary. No one on the Government Front Bench has yet contradicted this statement. The combined effect of £250 million of additional indirect taxation in the Chancellor's package and this 50 per cent. import deposit is all dreadfully inflationary. If the Amendment in the name of my hon. Friend the Member for Yeovil were carried, it would diminish the inflationary effect of the import deposit scheme by 40 per cent., from the 50 per cent. level to the 30 per cent. level, which is the purpose of the Amendment.

  1325
  There could be no better example of the inflationary effect of the import deposit proposals and the increase in indirect taxation, notably the petrol duty, than the announcement this morning from the Road Haulage Association that their charges are to be increased by Is. in the £. That means that goods brought into the country under the import deposit scheme, whether through the port of Liverpool, the port of Southampton, the port of Bristol or any one of 20 other ports, will all be carried to their inland destinations at a higher rate by 5 per cent. on account of the increased road haulage charge.
  Mr. Harold Lever: I am anxious to answer the questions raised by all hon. Members. Will the hon. Gentleman assist me by explaining how the increased charge for road haulage relates to the Amendment, so that I may be in order in replying to him?
  Sir G. Nabarro: I used the words "combined effect". I am skating on very thin ice, but that is characteristic. I cannot talk about this in isolation from the rest of the package, and I apologise. The fact is chat the combined effect of the £250 million additional taxation plus this inflationary proposal for deposits on imports together add a sum of money to the cost of living approximately equivalent to the rise we have suffered since the devaluation of sterling.
  I quantify the import deposit proposal of 50 per cent. as approximately 6d. in the £ on retail prices. I quantify the extra taxation charges at 6d. in the £. The two together are 1s. in the £. and the rise since devaluation before these charges was also Is. in the £. We are now consciously putting an extra 6d. in the £ on the cost of living by the import deposit proposal. If my hon. Friend's intentions were brought to fruition, God bless his noble ideals, the 6d. would become 3⅗d., thereby softening the inflationary effect of the proposals, dropping the clothed importer in the bath three-fifths of the way between the shallow end and the deep end.
  With that metaphorical allusion I conclude that this is a commendable proposition, which I hope will command the respect of the Committee. It is not obstructionist in character, and when the
  1326
  Financial Secretary replies I want him to be particularly careful to confirm all my figures.
  Mr. Harold Lever Mr. Harold Lever indicated assent.
  Sir G. Nabarro: I am glad that the hon. Gentleman is nodding assent. I do not like to see him wriggling; he is as good at mental arithmetic as I am. I want to be able to confirm the figures in order to reinforce the proposition which I put to the Committee, which is that the import deposit scheme is highly inflationary in character, and the inflationary influences ought to be slightly diminished in accord with the proposition of my hon. Friend the Member for Yeovil.
  Mr. J. T. Price: I have listened with my usual rapt attention to the rumbustious discourse of the hon. Member for Worcestershire, South (Sir G. Nabarro). His interesting curtain lecture on simple arithmetic has helped. so far as it goes. I have not yet checked up his calculations. I, too, am quite good at mental arithmetic; at one period in a previous existence I had to deal with Lloyd's underwriters, and it was necessary to be able to do mental arithmetic in order to deal with those gentlemen.
  What the hon. Gentleman has put to the Committee is interesting, but it is only part of the story. I am prepared to concede, as a matter of logic and fair reasoning, that if this measure results merely in borrowing at fancy rates on the black market it will have failed. We on this side of the Committee are intelligent people not without business knowledge. Hon. Gentlemen with City connections who speak with great authority must not assume that we on this side of the Committee have no business experience. Some of us have considerable business experience, but we do not boast about it as do hon. Gentlemen on occasions like this. They try to create the impression that we on this side who support the Government, and sometimes are critical of the Government, do so purely as theoreticians. I speak for myself, not as spokesman of a group, cabal or little clique. I have not necessarily always supported the Government. If I think that the Government are wrong I will stand up here and tell them so.
  Mr. Michael Shaw: Will the hon. Gentleman take it from us that it is the fact that he is so often alone in his remarks that has caused us regret.
  Mr. Price: I am grateful for the implied compliment, if it is a compliment. I am not looking for a compliment, I am trying to get at the truth of the matter.
  The hon. Member for Yeovil (Mr. Peyton), addressed us engagingly, and his hon. Friend the Member for Worcestershire, South dotted the i's and crossed the t's in what he had to say, much of it out of order—
  Sir G. Nabarro: On a point of order. Would you, Sir, cause the withdrawal of that stigmatising reference to the Chair.
  The Deputy Chairman (Mr. Gourlay): Certainly not. I think that the hon. Member for Westhoughton (Mr. J. T. Price) should finish his remarks on this aspect of his speech.
  7.30 p.m.
  Mr. Price: If I have said anything out of place, certainly I will withdraw it and do all that I can to restore peace and amity. I have always taken it for granted that, if an hon. Member was called to order on a number of occasions in the course of his speech, it was in order to refer to the fact that he was partly out of order. However, this is a matter of record. It will appear in the OFFICIAL REPORT tomorrow. As I say, if it will restore peace, I withdraw my remarks.
  In spite of the arithmetic presented to us so vigorously by the hon. Member for Worcestershire, South, the fact is that he misses the whole object of the exercise. It may be that he wishes to do it for the purposes of his argument. The object of the exercise is to put a brake on imports of goods which we do not need and cannot afford.
  I hope that the inflationary consequences which have been so dogmatically predicted by the hon. Gentleman do not prove to be right. The hon. Gentleman often vies with Gipsy Petulengro by making all sorts of diabolical forecasts. I have never been able to understand why the editors of Old Moore's Almanack do not engage him as a script writer. He is always the prophet of doom when a proposal comes before the House which
  1328
  he does not like. I hope that he will be proved quite wrong in the forecasts that he has made.
  These restrictions require a deposit of 50 per cent. of the value of goods to be imported, subject to the exemption list. I should regret it very much if it resulted in the requirement of large financing. On the contrary, I hope that the effect will be to put a very heavy brake on the flood of imports unrequited by a corresponding number of exports.
  In the past, right hon. and hon. Gentlemen opposite have pleaded with the Government to stop the import of all kinds of foodstuffs which they say that the British farmer could provide if he were given a little more encouragement. Our farmers have done pretty well out of the Annual Price Review, but right hon. and hon. Gentlemen opposite say that, if they had a bigger cut, they would produce better results. I cannot deal with that now, of course. If I do, I shall commit the error of judgment which the hon. Member for Yeovil committed a few moments ago—
  Mr. Peyton: I want to felicitate the hon. Gentleman on his very long and free run.
  Mr. Price: That is a matter for the Chair entirely, and I do not wish to take advantage of the Chair. I always try to keep in order.
  I am astonished that intelligent hon. Members, some of them of very long standing, can put forward seriously as a pure debating point the idea that they expect the same number of imports to flood through British ports as a consequence of this Measure as we have been complaining about in Lancashire for so long. We hope that this legislation will have a salutary effect on people whose chief interests lie in the import of all kinds of goods that we do not need and cannot afford. Many of the people have no commercial interest in them except from the point of view of the commission that they earn. I hope that the hon. Member for Worcestershire, South will be wrong in his forecast and that 10 per cent. finance will not be required to the extent that he believes.
  Mr. Gourlay, I ought to apologise to you for straying a little off the mark. I hope that my comments have put the

  1329
  arguments in a better perspective than that left by the hon. Member for Worcestershire, South.
  Mr. Patrick McNair-Wilson: We all appreciate the problems which the Government now face with the economic situation which they have created. They find a situation where they have an extremely unfavourable balance of payments which they feel that they have to try and correct. Earlier today, the President of the Board of Trade explained that, while the Measure that we are discussing now was only marginally related to the discussions which took place in Bonn, the fact is that this Bill obviously has been put together in great haste.
  The burden of the Amendment is to seek from the Financial Secretary an assurance that 50 per cent. is the figure which should be imposed rather than 60, 25 or 30 per cent.
  I want to make a plea for the small traders who are hurt severely by this Measure. I have a letter from a constituent who imports material from the United States for sail-making. Of course, he was not consulted by anyone when this Measure was considered, and he had goods in transit at the time that it was introduced. However, we have another Amendment to deal with that position.
  By taking what I believe to be an arbitrary figure of 50 per cent. without considering in detail what its effects would be, the Government have created a situation for British industry and commerce where we shall see a substantial rise in costs. My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) was careful to point out the very substantial increases of costs which would result from this Measure as well as from others. In a sense, it is not dissimilar from the Selective Employment Tax. It is one of those additional burdens which have to be carried.
  Many companies import machinery and use it to help them export—and, by so doing, help our balance of payments. Such a company is now at a substantial disadvantage. Why should it be expected to find 50 per cent.? Why has it been decided that that is the figure which will correct the situation?
  1330
  Taking the matter a stage further, I come to the developing countries of the Commonwealth which are selling goods to Britain. I have in mind Jamaica, which I happen to know very well. We hear a lot about the problem of people from Commonwealth countries coming to live in Britain. Surely the way to help solve that problem is for Britain to allow such countries to develop their industries. The Jamaican Government are anxious to export, and they are already selling Jamaican fashions to the shops of Britain. The 50 per cent. deposit imposes a severe brake on the development of the economy of such a country.
  This Amendment seeks to ensure that the Financial Secretary explains clearly what it was decided that 50 per cent. was the correct figure. If he cannot do that, I urge him to consider the Amendment. We know the balance of payments and other problems of the Government, but I believe that we should not hammer the small companies in trying to put them right.
  Mr. Emery: I support the Amendment standing in the name of my hon. Friend the Member for Yeovil (Mr. Peyton) because it is a matter of principle with me to support anything which decreases limitation on the freedom of trade.
  I want to follow up the important point made by my hon. Friend the Member for New Forest (Mr. McNair-Wilson) concerning the small importer. On Second Reading the Financial Secretary gave the impression that, on the whole, he did not think that any small firm would go to the wall because it found it impossible to meet the financial effect of the Bill. I would appreciate it if the hon. Gentleman could take this point further in reply. I should like to quote one example. I do not want to give the name of the firm, although I could do so in correspondence if the hon. Gentleman required it. I am not referring to the type of importation mentioned by the hon. Member for Westhoughton (Mr. J. T. Price), namely, goods that we do not need and cannot afford. I refer to goods being imported for industry for specific purposes.
  In this case the importer has a working capital of £30,000 and his turnover is just below £400,000 a year. In

  1331
  the first full year he will have had about £100,000 on free loan to the Government after six months. To be fair, it will have been working up in steps to that figure in the first six months. With his capital resources, if this man has to go out and borrow that money he will find, taking 10 per cent.—I am doing it in round figures—
  Mr. J. T. Price: Why 10 per cent.?
  Mr. Emery: I am asked: why 10 per cent.? The main reason is because of the Government's instruction that they wish the banks to decrease their ordinary lending. Therefore, the importer will not be able to get from his bank manager, in the way he would normally expect, the type of assistance he will require, which will be about £100,000. Also because of the size of his business, it may be considered in normal credit terms to be something of a risk. Therefore, he will have to go to markets charging 1 or 2 per cent. above the Bank Rate. The point is that this man is likely to find himself having to meet a position of £7,500 for interest payments. If it is less than 10 per cent. it will be scaled down. I do not wish to annoy the Committee. I should like my example to be relevant. Let us assume it is only 1 per cent. above Bank Rate and it is down to about £6,000. If the normal net back is at a rate of 5 per cent., he is therefore attempting to obtain from his turnover—and he has to pay all his expenses, staff and everything else—£20,000 a year. This is a successful business doing a service for industry.
  Many industrial undertakings—Leyland's is a good example—which purposely do not get into this specialist import sphere, use this type of person because of his specific contacts in the world in the areas in which Leyland's happen to be interested. This man will find himself having to meet an extra bill of between £6,000 and £7,500 on a figure of £20,000. I wonder whether I would lend him money on that. How will he be able to make it unless I extend the loan for a period of two to three years in the hope that he will pay it back from profits later. That being the case, it will cost him even more.
  7.45 p.m.
  It was said that the 15 per cent. surcharge was pretty rough justice. I sug-
  1332
  gest that this is so rough that the suggestions made by the Financial Secretary on Second Reading, concerning the small importer, are highly misleading. I suggest that a number of these people will find the situation very difficult to cope with. The Amendment put forward by my hon. Friend the Member for Yeovil makes considerable sense. I should like the figure to be nil, but if the Government insist on this proposal, let us decrease it. For that reason, I shall be delighted to support my hon. Friend in the Lobby.
  Mr. John Smith: I am not inflexibly opposed to this Measure. I just think that it is unworkable and that its effects are unpredictable. If we are to do something which is probably impossible and possibly undesirable, then the less we do of it the better.
  As it is the Government are asking importers to put up fresh working capital equivalent to a quarter of their turnover, since the deposit is for six months at the rate of 50 per cent. This is by far the easiest sum that we have been asked to do; it is fresh working capital equivalent to 25 per cent. of an importer's turnover. We hear that this is not to come from the banks. There has been a good deal of muddled thinking about this. Some of the time we are told that it will be a highly selective and powerful pressure on liquidity because the deposits are not to come from the banks. The rest of the time we are told that no importer is to worry much about it because it will be easy to borrow the money. So far as it is met by borrowing from the banks, it will be a general pressure on liquidity. Therefore the less successful it is in restraining imports, the less selective a squeeze it will be and the more it will squeeze the economy as a whole, including exports.
  I do not in fact think that those who are lucky enough to borrow money will have to pay high rates; but if we assume that they cannot borrow the money at all then we must recognise it is a very heavy burden. The sum involved over the country as a whole is £600 million or £700 million, but it comes from relatively few firms.
  I have a letter from a firm in my constituency of which I have never heard—[HON. MEMBERS: "Shame."] A great

  1333
  deal goes on in my constituency. Although I have never heard of this firm, it will have to provide a continuous interest-free loan to the Government of the sterling equivalent of one million dollars, because its business is entirely concerned with imports from the United States. What is it importing? Is it importing candy floss! The letter says:
  "If the banks are precluded from lending money for this purpose we shall he forced out of business."
  This firm—and we must move by examples—imports lifting equipment for heavy pressure vessels and the principal equipment for oil drilling and prospecting rigs in the North Sea. We do not wish to keep out any of those things. They are things which cannot be produced here, in some cases because they are subject to patents. They have to be imported through certain people because these people have exclusive agencies.
  These are things which I daresay have not been thought of. If we are to embark on a Measure whose effects are as unpredictable as this, would not it be better to start with something less violent than obliging firms to raise fresh working capital and lend it free to the Government, equivalent to 25 per cent. of their annual turnover?
  Mr. Michael Shaw: I support the Amendment, and I rise to speak principally because of something said by the hon. Member for Westhoughton (Mr. J. T. Price). He said that it was his hope that this Measure would stop the flood of imports of unnecessary goods. As far as I can see, that is not the belief of the Government. I certainly hope that it is not, and I trust that in due course the Financial Secretary will confirm that.
  If that were the result of this Measure, I believe that it could be very harmful. If there is a sudden stop of a flood of imports by means of a temporary Measure, it means, in effect, that the Government are applying a Measure which will completely cut across developing trades and stifle them, and put them out of business forever. I believe that that is the last thing we want, because in the long-term we want trade of all sorts to continue to expand.
  Mr. J. T. Price: I am familiar with the classical argument of free trade as distinct from protection. All I say is that
  1334
  if this Measure is harsh, it is pallid in comparison with those taken by some of our trading partners when they have balance of payments problems. The hon. Member for the Cities of London and Westminster (Mr. John Smith) is a considerable authority on financial matters. He knows that when the Australians have balance of payments problems, as they have had on many occasions, they do not play about with devices like this. They just clap on physical controls and close the ports, much to our discomfort on many occasions. Would the hon. Gentleman like the Government to do that?
  Mr. Shaw: I am grateful to the hon. Gentleman, because that opens up an even greater area of disagreement between himself and his Front Bench, and it is therefore all the more important for the Financial Secretary to make the matter clear.
  I believe that there is great doubt about what will be the effect of this legislation, and on re-reading the speeches of Ministers I have come to the conclusion that they themselves are in doubt about it. I believe that in many cases the effect will be very small, and that people will find their way around this quite easily. On the other hand, I believe that there will be certain cases where this Measure will hit very hard. It will be a blunt instrument. As my hon. Friend the Member for the New Forest (Mr. McNair-Wilson) and others have said, it will hit the smaller companies. Because of the uncertainty, there is real merit in the Amendment. Let us take this thing gradually, to see what the effect is, before putting on the full impact, if that is justified.
  Mr. Harold Lever: There seems to be some confusion in the minds of the Opposition. They suppose that because the Government cannot predict, or pretend to predict, with exactness what will be the consequence of what they do, they are entitled to describe this Measure as impracticable. The hon. Member for the Cities of London and Westminster (Mr. John Smith), on no evidence, asserted that the scheme would prove unworkable. I do not know what he means by unworkable. It will work in the sense that its intention will be effective, namely, that it will collect a 50 per cent. deposit on the appropriate imports. I can put the hon. Gentleman's mind at rest if he

  1335
  feels that that will not happen. We have every reason to believe that it will. It will be workable in the sense that we want it to work, namely, to collect a deposit of 50 per cent. on the appropriate goods.
  Hon. Gentlemen opposite must not make debating points on a serious issue of this kind, points in which they cannot seriously believe. They cannot seek to impale me on juvenile argumentative forks of saying that I cannot predict what it will be, it may be very grave, or it may be nothing at all, and they want me to commit myself either to saying that something major and injurious will result from the 50 per cent. deposit, or something so trifling that it was not worth bringing in the Bill.
  When I discussed this on Second Reading I made it clear, and my hon. and learned Friend the Minister of State at the Treasury reinforced this in his reply, that what we expected to happen was not a major cut-down of imports but a significant and useful marginal effect, the exact amount of which could not be determined. The effect could not be determined, not because we did not give enough thought to it, but because, in the nature of things, one cannot determine in advance what will be the precise effect of a precise level of deposit upon our imports.
  I have no doubt that that consideration was in the minds of those distinguished Members of the Tory Party who were enthusiastic for a Measure of this kind until we brought it about. The right hon. Member for Barnet (Mr. Maudling) has no greater powers of prediction than I have on this matter, nor has the Leader of the Opposition, nor have the other numerous Tories who were anxious to have this Measure. It does not imply idleness, so I can only say that those hon. Gentlemen opposite who rose, one after the other, from the Opposition benches and wanted this 50 per cent. applied, not reduced, to an even wider range of goods, including food, also presumably did not know what would be the consequence. It is a juvenile argument, if I may say so with respect to the Opposition. When one puts on a tariff, one does not know with any precision what will be the effect, but with a new deposit scheme of this kind it was in-
  1336
  evitable that there would be a fairly wide range within which one could not guess the effect.
  As my hon. Friend the Member for Westhoughton (Mr. J. T. Price), who seems to be the only Member to take this point as a premise to his argument, said, this is not a scheme intended to encourage imports. It is intended to have a marginal and useful effect on imports, without causing serious disruption or dislocation to anybody, but still to have that marginal effect in reducing an import bill which is high in relation to our exports.
  It is suggested that we ought to try a lower rate than 50 per cent. Why did we pick on 50 per cent.? The hon. Member for Worcestershire, South (Sir G. Nabarro), with immense arithmetical acumen—and others have followed closely on his heels—has come to the conclusion that when the scheme has reached its maximum we shall be taking the equivalent of one quarter of the annual turnover of a firm exclusively dependent on imports, or one quarter of the import turnover of any firm, and this will result, on the calculation of an 8 per cent. interest rate of borrowing, in the equivalent of 2 per cent. of the costs of that firm.
  The whole point of the scheme in marginally discouraging the importer is to make him think twice, particularly in the area of over-ordering. When someone is deciding on the orders he will give, we want to get a deposit of a size which, while not crippling anyone, will cause him to query whether the import is basic to his business, and whether he must have it. We want a deposit which will be sufficiently discouraging to keep imports to the necessary minimum, and we are confident that this figure will have that effect.
  8.0 p.m.
  I am asked why the rate should be 50 per cent. instead of 30 per cent. I shall not content myself by asking, in reply, why it should be 30 per cent. rather than 50 per cent. The answer is that 50 per cent., as calculated in the manner initiated by the hon. Member for Worcestershire, South shows that, on the turnover we would expect to have, a liquidity effect at the rate of £100 million a month, roughly, from non-bank sources, namely,

  1337
  a sum building up to £600 million in the course of the next six months. If we had a lower rate we would have proportionately a smaller sum of money.
  Mr. Emery: I was considerably distressed by one point made by the Financial Secretary. He suggested that the rate was imposed to ensure that ordering would be kept to a minimum. is he suggesting that industry should get away from the economic order quantity, thereby increasing industrial costs even more?
  Mr. Lever: I am sorry to have caused the hon. Member unnecessary distress. I shall spell out my arguments in more detail so that he will apprehend them. When I said that it would keep orders to a minimum, I did not mean that firms should order the minimum in relation to some abstract need; I meant the minimum in relation to the needs of the firm, taking into account the obvious point that he has made that, in certain circumstances, a larger quantity is compatible with efficiency and the needs of the firm.
  I was making the point that if an import house was bringing in foreign motor cars, in envisaging its import schedule over the months ahead, instead of taking a rather generous view and erring on the over-optimistic side in respect of the stock it should take it would have second thoughts and try to keep down its order in the future to the minimum required for the legitimate and necessary purposes of its business.
  This scheme will act as a marginal discouragement to what might be called anticipatory buying when firms are making up their minds about their import schedules.
  Mr. John Smith: This is a new point in our discussions and a very good and interesting one. But is it not clear that those who, in the past, have been in a position to stock up are still in a position to do so? The people who will be squeezed are those without the money to stock up. They will have to resort to other means of getting it, or will have to cut their orders because they have not got it.
  Mr. Lever: That intervention was on a less sophisticated level than one would have expected from the hon. Member.
  1338
  If a man uses his cash in the form of an interest-free deposit the economic and financial pressure is the same as if he went out to borrow the money. In one case he pays interest in order to stock up and in the other he forgoes interest in order to indulge in the luxury of stocking up. In any case this marginal pressure tends to affect decision-making on import ordering. It is not a harsh pressure but a reasonable and gentle pressure, which will marginally improve the import situation.
  Why should the rate be fixed at 50 per cent.? As far as good judgment can go, we believe that we should begin the scheme, at any rate, on the basis that we shall get a liquidity effect of approximately £100 million a month. We have taken power in the Bill to reduce that liquidity effect if we find, as the £100 million a month builds up, that it should be moderated. We have taken power not to increase the rate but to decrease it.
  We believe that for an immediate impact £100 million a month is a good starting point, but we are ready to see the effects of that liquidity pressure, month by month or even week by week, always having in our hands the right to reduce the rate.
  Mr. Pardoe: Can the hon. Gentleman relate that £100 million a month, in terms of the liquidity which he is removing, to the increase that he would expect in total bank lending each month during that period? If the £600 million or £700 million figure is the top level, what would that be as a proportion of bank lending to industry?
  Mr. Lever: Speaking without notice, I believe that the total amount of bank lending is about £5,000 million and that the last reduction in the ceiling amounted, in total bank lending, to £100 million. The trouble about the bank lending ceiling is that it has no direct impact upon non-bank liquidity—the liquidity of private companies and individuals outside the banking system.
  We believe that it will be desirable and helpful in judging the amount of liquidity required to have regard to the general strategy, which is to move our balance of payments into surplus. This is an intermediate measure to speed up the process of moving into surplus.

  1339
  I want to make one other point relating to the fears which have been expressed that some people may be driven into bankruptcy, or that small firms will be specially hit by this Measure. The answer is that all firms will be affected only in relation to non-exempted imports. All firms will have to find deposits strictly in relation to their turnover. The bigger the turnover, the bigger the deposit. The smaller the firm, the smaller the turnover, presumably, and the smaller the deposit. All firms, big, medium and small, will not be paying away the money; they will be depositing it with the customs.
  Mr. Burden Mr. Burden rose—
  Mr. Lever: I hope that the hon. Member will let me finish this point. I promise him that he will get his impetuous urge to question me gratified before I am finished. All firms, large, medium or small, will pay this to the customs. It may be paid into any name they designate. Those who are named will get the money back. if a firm names its bank—the bank which has paid it the money—the bank will get that money back. Every person who is subjected to this deposit liability will have in his possession a gilt-edged, guaranteed, six-months' Government obligation, and it is not conceivable that any firm which is not wholly incompetent will allow itself to be ruined rather than to make the necessary financial arrangements.
  Hon. Members must bear in mind that this scheme ruins nobody. They must not argue, as has been argued, that because it ruins nobody it will have no effect. It is not intended to ruin anybody, and it will not ruin anybody. No firm need to go into bankruptcy because of the relatively modest amount of interest charged that it will have to pay in procuring the necessary finance, and it is inconceivable that any firm will be without the finance.
  I have dealt with the availability of finance; it is equally available to the small, medium and large firm. This is a selective import deposit on certain goods and not on others but, as between all importers and some classes of goods, there is an equal effect, so that when firms market their goods the additional burden of this import deposit on them will be exactly the same as it is on all their
  1340
  competitors. The notion that this will ruin them in relation to their competitors because of the interest charge—because their competitors will be paying the same interest charge—or because they cannot lay their hands on the money, is entirely unjustified.
  Mr. Burden: I apologise for not having been present throughout the debate. It is not true to say that small firms will not be affected more than bigger firms. Some small firms live entirely on imports. Some big firms are in the same position. There is also a spreadover. But a small importer with a small liquidity will find it far more difficult to cover the money that he has to find to pay the import charge.
  Mr. Lever: It is not the size of the firm that will determine the amount of the deposit; it is the size of the import turnover in non-exempted goods. It does net necessarily have an impact on liquidity. It has an impact of a more diffuse character on the liquidity which exists in the country and which, for the reasons I have given, will be available to all firms, small, medium and large, because a direct Government security will be available to the lenders—
  Mr. John Smith: I do not want to be a bore, but surely the Government must make up their minds whether this is intended to squeeze imports or the economy. Everything that the hon. Gentleman has said—that these firms will be able to get the money at the drop of a hat—shows that it is nothing more than a general squeeze on the economy. Which is it meant to be?
  Mr. Lever: The hon. Member must not present me with these simpliste either/or propositions. The answer is that It will do both. The hon. Member seems to think that doing one excludes doing the other—[An HON. MEMBER: "You said that."]—I have said nothing of the kind. If the hon. Member does not mind the boredom of reading my Second Reading speech, he will find that I explained then that it will do both these things. It will, on the one hand, bring a marginal pressure of the kind I have described again today on importers, calculated, because of the 50 per cent. deposit, to induce them to get their import needs down to the minimum which they

  1341
  believe essential for their business. The second effect of the deposit is that it will produce a general liquidity off-take from the non-banking centre of our economy. I made all that clear on Second Reading, but I am happy to repeat it.
  It is not a crime, however, to have regard to the liquidity situation in one's country, nor is it foolish to suppose that some withdrawal of liquidity would also be desirable in speeding up the process of bringing our exports into surplus against our imports—
  Mr. Tom Boardman: The import deposit, the hon. Gentleman says, will not hit the small or medium firm any more than the large firm, but he does not appear to recognise that many small firms with small capital and limited liquidity are marketing vast quantities of goods and they will not be exempt. How will they overcome this cost?
  Mr. Lever: I will try again. I have obviously been very incompetent in explaining this on Second Reading and, twice, today. The size of the firm is irrelevant. The amount of its personal liquidity does not mean that it cannot find the money for these deposits—
  Sir G. Nabarro Sir G. Nabarro rose—
  Mr. Lever: I will not give way and allow the hon. Member to interject a question within a question before I have replied. I will be happy to answer any of his questions after that.
  The small firm which has not got at its own command the money to pay the deposit may be paid—
  Sir J. Foster: What about the interest?
  Mr. Lever: I will deal with the interest. I have already tried to do so, but I will try again. I will deal first with the capital and then with the interest, which seems to be a less acute question, since the questioner remained seated and did not get up, like the hon. Member for Worcestershire, South.
  The small firm can go to any banking or finance house and ask it to advance the deposit in the firm's name to the Customs. That finance or banking house, or firm, or individual, will have 100 per cent security—
  Mr. Tom Boardman Mr. Tom Boardman indicated dissent.
  Mr. Lever: It is no good the hon. Member shaking his head. What I am saying is the fact. What he is shaking his head about is his fantasy.
  Finance houses will be able to deposit this money with the Customs and the finance house will then enjoy a 100 per cent. Government obligation, repayable in six months. That is the fact; anything else is fantasy. If the hon. Gentleman questions that fact, I will give way to him again.
  Mr. Tom Boardman: I do not want to get on to the next Amendment, but perhaps the hon. Gentleman will say something about the degree of security which is obtained by a non-negotiable document. Second, what about the interest by which the deposit will be discounted by a substantial amount?
  8.15 p.m.
  Mr. Lever: The hon. Member appears to be satisfied about the security of the capital. If not, I will have to take him aside afterwards and go into it in greater detail. As to the interest charged—I do not know whether the hon and learned Member for Middleton and Prestwich (Sir J. Foster) has just arrived or whether he has heard me deal with the point before—that is a relatively small matter. It comes to about 2½ per cent. on turnover, and while this scheme is in force, it will be an outgoing common to every other trader in that line of business.
  Therefore, if I am an importer of wheelbarrows or tin whistles, I will have an additional interest charge—if I am doing £ 1 million turnover, even at 10 per cent.—of about £25,000 a year. That is not insupportable on £1 million turnover. Moreover, I will do that turnover in the confident knowledge that every other importer of tin whistles has the same 2½ per cent. addition to his charges, which he can presumably pass on, or which, if he cannot pass it on, because of the marginal increase in prices, will produce a marginal reduction in imports.
  Again, I say that the object of this scheme is not to encourage imports. Some hon. Members speak as if criticism is justified because the scheme does not actually produce a positive encouragement to imports. That is not the intention of the scheme. It is to impose a

  1343
  marginal additional burden on imports, combined with a selective pressure on liquidity.
  Sir J. Foster: But the hon. Member does not deal with the firm which does not have £25,000. It is as simple as that. A firm which is teetering will not be able to pay that interest. The hon. Gentleman must admit that that is a fact.
  Mr. Lever: I must confess that the number of firms importing to the tune of £1 million a year which are teetering and are without £25,000 must be singularly small. The answer is that the hon. and learned Gentleman's argument could equally apply if we said that a purchase tax charge placed on firms was liable to bankrupt then because they had not the additional working capital—[An HON. MEMBER: "That is not the same thing."] But it is precisely the same thing. The additional working capital for wholesalers and other who have to meet the charge.
  Mr. Burden: With respect, the hon. Member knows that he is out of step here. Wholesalers and manufacturers collect the purchase tax long before they pay it to the Inland Revenue.
  Mr. Lever: We can take other cases of duty. That is not always so, but, so as not to get into side points unduly, I would say that there are many impositions of taxation which impose a 2½ per cent. on turnover burden, such as the much greater burden in tobacco and liquor duties, where bond does not altogether cover it and shop keepers must carry stock, and we are not harried there with ridiculous suggestions that a 2½ per cent. burden shared by every competitor of the business concern is calculated to drive it to bankruptcy.
  The answer is that this is intended to, and will, produce a marginal—only a marginal, not a seriously disruptive—effect on any trader of any size dealing with imports. Therefore, the Committee would be well advised, I think, to accept the Treasury's broad judgment that 50 per cent. is how we should start. We will watch it carefully. Perhaps hon. Members have failed to realise that we have taken the power not to increase this but to reduce it. We will watch it very closely to see what the effects are as this £100 million a month starts to come back.
  Sir Keith Joseph: After listening to the hon. Gentleman, I suggest that my hon. Friends would be wise to invite us to vote on the Amendment. The Financial Secretary asked us to desist from seeking to impale him on juvenile argumentative forks. We on this side ask him to depart and to desist from the juvenile habit of misrepresenting his political protagonists. My right hon. Friends the Members for Barnet (Mr. Maudling) and Enfield, West (Mr. lain Macleod), who spoke of some sort of restraint on import credit, were referring to an Italian system, which as the hon. Member knows, is a world away from the much tougher and tighter scheme which the Government has seen fit to introduce.
  The hon. Gentleman has at this stage defended the choice of 50 per cent. deposit with his usual lucidity, within his own assumptions, but we on this side question the Government's strategy and we question the Bill. We dislike the Government's strategy, because we think that what the country needs is not stifling with marginal increases of protection and marginal increases of bureaucracy, but a great increase in incentives and competition and a great reduction in public expenditure.
  It is all very well for the Financial Secretary to speak of the limitless credit available to businessmen and importers big and small. There will be credit—suppliers' credit, bank credit, credits through various brokers, and even from the reserves of individual importing companies. Large firms of importers will be able to tan these funds, but what the hon. Gentleman totally fails to touch on is the lack of sophistication of the small importer in the credit field. It may well be that there will shortly be consultants in finding the money for deposits. It may well be that the infinite flexibility and variety of our capital market will in a few months enable small importers to cope with the deposits. But, in the immediate future, many small importers face—and the Financial Secretary must understand that we learn this from our constituents—a real danger to the survival of their businesses. There is the credit, but they are not, in the short term, sophisticated enough to collect the money for the deposit.

  1345
  We fear that within a bad strategy and with a bad Bill all that will be achieved will be a marginal reduction in imports, a marginal reduction in stocks of imports, which will be more than offset by a surge of imports when the provision in the Bill is brought to an end. The Measure does no more than apply a short-term palliative to the problems of our economy, and in that we believe that it is damaging to the public interest because there are not the reserve funds available for investment by companies.
  We dislike the strategy and we dislike the Bill. The Financial Secretary admits, as he cannot but admit, that the 50 per cent. is a perfectly arbitrary figure chosen within an area of great imposition to achieve what he rightly admits is only a marginal change. My hon. Friend the Member for Yeovil (Mr. Peyton) has just as much right to pick on 30 per cent. as the Government have to pick on 50 per cent., and I very much hope that he will press the issue to a Division.
  Mr. Peyton: Encouraged by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), I will in a very few moments suggest that we should divide. Before doing that, I would endorse his advice to the Financial Secretary, who is exceedingly skilful in answering a case which he is not invited to answer. The hon. Gentleman used the words "idle" and "inefficient". No one has said that he is idle or inefficient; in fact, most of us believe that he is very energetic and immensely efficient. We do not extend the same
  compliment to all his colleagues. We think that of him, but when we say that this measure is unpredictable in its effect, we do not state it as advice but as a fact. Particularly, we do not agree about the effect on the small business being unpredictable. As the Financial Secretary himself has admitted some unpredictability, we say that at least for an interim period, until the way the Bill works is seen more clearly, it would be sensible to make the rate 30 per cent. rather than 50 per cent.
  Mr. Harold Lever: Let me make it quite clear, so that it does not go abroad from here, that I said that it was unpredictable in its effect on small businesses. What I did say was that one cannot predict with any exactness the effect on the total volume of our imports.
  Mr. Peyton: I entirely accept that. I did not in any way wish to misinterpret the hon. Gentleman, but he admitted that over the general field there was a certain unpredictability. One accepts that as being so, and the Government would even now be more modest if they selected the lower starting point of 30 per cent. rather than 50 per cent. But as we are obviously in very severe difficulty when it comes to convincing the Government of either rectitude or discretion, we must accept that the only thing we can now decently do is to divide the Committee.
  Question put, That the Amendment be made:—
  The Committee divided: Ayes 174, Noes 252.

  Division No. 18.]

  AYES

  [8.24 p.m.

  Alison, Michael (Barkston Ash)

  Bullus, Sir Eric

  Errington, Sir Eric

  Allason, James (Hernel Hempstead)

  Burden, F. A.

  Farr, John

  Atkins, Humphrey (M't'n & M'd'n)

  Campbell, B. (Oldham, W.)

  Fletcher-Cooke, Charles

  Awdry, Daniel

  Clegg, Walter

  Fortescue, Tim

  Baker, Kenneth (Acton)

  Cooke, Robert

  Foster, Sir John

  Baker, W. H. K. (Banff)

  Cooper-Key, Sir Neill

  Gibson-Watt, David

  Beamish, Col. Sir Tufton

  Cordle, John

  Gilmour, Sir John (Fife, E.)

  Bennett, Sir Frederic (Torquay)

  Corfield, F. V.

  Glover, Sir Douglas

  Bennett, Dr. Reginald (Gos. & Fhm)

  Costain, A. P.

  Godber, Rt. Hn. J. B.

  Berry, Hn. Anthony

  Cunningham, Sir Knox

  Goodhew, Victor

  Biffen, John

  Currie, G. B. H.

  Gower, Raymond

  Biggs-Davison, John

  Dalkeith, Earl of

  Grieve, Percy

  Black, Sir Cyril

  Dance, James

  Griffiths, Eldon (Bury St. Edmunds)

  Blaker, Peter

  Davidson, James (Aberdeenshire, W.)

  Hall, John (Wycombe)

  Boardman, Tom (Leicester, S.W.)

  d'Avigdor-Goldsmid, Sir Henry

  Hall-Davis, A. G. F.

  Body, Richard

  Dean, Paul

  Hamilton, Lord (Fermanagh)

  Boyd-Carpenter, Rt. Hn. John

  Deedes, Rt. Hn. W. F. (Ashford)

  Hamilton, Michael (Salisbury)

  Boyle, Rt. Hn. Sir Edward

  Digby, Simon Wingfield

  Harris, Frederic (Croydon, N. W.)

  Brewis, John

  Doughty, Charles

  Harrison, Brian (Maldon)

  Brinton, Sir Tatton

  Drayson, G. B.

  Harrison, Col. Sir Harwood (Eye)

  Bromley-Davenport, Lt.-Col. Sir Walter

  Eden, Sir John

  Harvie Anderson, Miss

  Brown, Sir Edward (Bath)

  Elliot, Capt. Walter (Carshalton)

  Hastings, Stephen

  Buchanan-Smith, Alick (Angus, N & M)

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Hawkins, Paul

  Buck, Antony, (Colchester)

  Emery, Peter

  Hay, John

  Heald, Rt. Hn. Sir Lionel

  Miscampbell, Norman

  Stainton, Keith

  Heath, Rt. Hn. Edward

  Mitchell, David (Basingstoke)

  Steel, David (Roxburgh)

  Heseltine, Michael

  Monro, Hector

  Stodart, Anthony

  Higgins, Terence L.

  Montgomery, Fergus

  Stoddart-Scott, Col. Sir M.

  More, Jasper

  Summers, Sir Spencer

  Hiley, Joseph

  Morgan, Geraint (Denbigh)

  Tapsell, Peter

  Hill, J. E. B.

  Morrison, Charles (Devizes)

  Taylor, Sir Charles (Eastbourne)

  Hirst, Geoffrey

  Munro-Lucas-Tooth, Sir Hugh

  Taylor, Edward M. (G'gow, Cathcart)

  Holland, Philip

  Murton, Oscar

  Taylor, Frank (Moss Side)

  Hordern, Peter

  Nabarro, Sir Gerald

  Temple, John M.

  Howell, David (Guildford)

  Nott, John

  Thatcher, Mrs. Margaret

  Hutchison, Michael Clark

  Onslow, Cranley

  Turton, Rt. Hn. R. H.

  Iremonger, T. L.

  Orr, Capt. L. P. S.

  van Straubenzee, W. R.

  Irvine, Bryant Godman (Rye)

  Orr-Ewing, Sir Ian

  Vaughan-Morgan, Rt. Hn. Sir John

  Jenkin, Patrick (Woodford)

  Osborne, Sir Cyril (Louth)

  Vickers, Dame Joan

  Jennings, J. C. (Burton)

  Page, Graham (Crosby)

  Waddington, David

  Joseph, Rt. Hn. Sir Keith

  Page, John (Harrow, W.)

  Wainwright, Richard (Colne Valley)

  Kaberry, Sir Donald

  Pardoe, John

  Walker-Smith, Rt. Hn. Sir Derek

  Kerby, Capt. Henry

  Percival, Ian

  Wall, Patrick

  Kershaw, Anthony

  Peyton, John

  Ward, Dame Irene

  Kitson, Timothy

  Powell, Rt. Hn. J. Enoch

  Webster, David

  Lancaster, Col. C. G.

  Price, David (Eastleigh)

  Wells, John (Maidstone)

  Legge-Bourke, Sir Harry

  Prior, J. M. L.

  Whitelaw, Rt. Hn. William

  Lewis, Kenneth (Rutland)

  Pym, Francis

  Williams, Donald (Dudley)

  Lubbock, Eric

  Quennell, Miss J. M.

  Wills, Sir Gerald (Bridgwater)

  MacArthur, Ian

  Renton, Rt. Hn. Sir David

  Wilson, Geoffrey (Truro)

  McNair-Wilson, Patrick

  Rhys Williams, Sir Brandon

  Winstanley, Dr. M. P.

  Maclean, Sir Fitzroy

  Ridley, Hn. Nicholas

  Wolrige-Gordon, Patrick

  Macmillan, Maurice (Farnham)

  Ridsdale, Julian

  Wood, Rt. Hn. Richard

  Maddan, Martin

  Rossi, Hugh (Hornsey)

  Woodnutt, Mark

  Maginnis, John E.

  Russell, Sir Ronald

  Wright, Esmond

  Marten, Neil

  Scott-Hopkins, James

  Maude, Angus

  Shaw, Michael (Sc'b'gh & Whitby)

  TELLERS FOR THE AYES:

  Maxwell-Hyslop, R. J.

  Smith, Dudley (W'wick & L'mington)

  Mr. Anthony Royle and

  Mills, Peter (Torrington)

  Smith, John (London & W'minster)

  Mr. Reginald Eyre.

  Mills, Stratton (Belfast, N.)

  Speed, Keith

  NOES

  Abse, Leo

  Davies, Ednyfed Hudson (Conway)

  Hamilton, William (Fife, W.)

  Albu, Austen

  Davies, G. Elfed (Rhondda, E.)

  Hamling, William

  Allaun, Frank (Salford, E.)

  Davies, Dr. Ernest (Stretford)

  Hannan, William

  Alldritt, Walter

  Davies, Harold (Leek)

  Harrison, Walter (Wakefield)

  Allen, Scholefield

  Davies, Ifor (Gower)

  Hart, Rt. Hn. Judith

  Anderson, Donald

  Davies, S. O. (Merthyr)

  Haseldine, Norman

  Archer, Peter

  Delargy, Hugh

  Hattersley, Roy

  Ashley, Jack

  Dell, Edmund

  Hazell, Bert

  Ashton, Joe (Bassetlaw)

  Dempsey, James

  Healey, Rt. Hn. Denis

  Atkins, Ronald (Preston, N.)

  Dewar, Donald

  Heffer, Eric S.

  Atkinson, Norman (Tottenham)

  Diamond, Rt. Hn. John

  Henig, Stanley

  Bacon, Rt. Hn. Alice

  Dickens, James

  Herbison, Rt. Hn. Margaret

  Bagier, Gordon A. T.

  Dobson, Ray

  Hilton, W. S.

  Barnes, Michael

  Doig, Peter

  Hobden, Dennis

  Beaney, Alan

  Dunn, James A.

  Howarth, Harry (Wellingborough)

  Bence, Cyril

  Dunnett, Jack

  Howie, W.

  Bidwell, Sydney

  Dunwoody, Mrs. Gwyneth (Exeter)

  Hoy, James

  Binns, John

  Eadie, Alex

  Hughes, Emrys (Ayrshire, S.)

  Bishop, E. S.

  Edwards, William (Merioneth)

  Hughes, Roy (Newport)

  Blackburn, F.

  Ellis, John

  Hunter, Adam

  Boardman, H. (Leigh)

  English, Michael

  Hynd, John

  Booth, Albert

  Ennals, David

  Irvine, Sir Arthur (Edge Hill)

  Boston, Terence

  Evans, Fred (Caerphilly)

  Jackson, Colin (B'h'se & Spenb'gh)

  Boyden, James

  Evans, Ioan L. (Birm'h'm, Yardley)

  Jackson, Peter M. (High Peak)

  Braddock, Mrs. E. M.

  Fernyhough, E.

  Jay, Rt. Hn. Douglas

  Bray, Dr. Jeremy

  Finch, Harold

  Jeger, George (Goole)

  Brooks, Edwin

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Brown, Hugh D. (G'gow, Provan)

  Fletcher, Ted (Darlington)

  Jenkins, Hugh (Putney)

  Brown, R. W. (Shoreditch & F'bury)

  Foley, Maurice

  Jenkins, Rt. Hn. Roy (Stechford)

  Buchan, Norman

  Foot, Michael (Ebbw Vale)

  Johnson, James (K'ston-on-Hull W.)

  Buchanan, Richard (G'gow, Sp'burn)

  Forrester, John

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  Callaghan, Rt. Hn. James

  Jones, J. Idwal (Wrexham)

  Cant, R. B.

  Fowler, Gerry

  Jones, T. Alec (Rhondda, West)

  Carmichael, Neil

  Fraser, John (Norwood)

  Kelley, Richard

  Carter-Jones, Lewis

  Freeson, Reginald

  Kenyon, Clifford

  Coe, Denis

  Gardner, Tony

  Kerr, Mrs. Anne (R'ter & Chatham)

  Coleman, Donald

  Ginsburg, David

  Kerr, Dr. David (W'worth, Central)

  Conlan, Bernard

  Gordon Walker, Rt. Hn. P. C.

  Lawson, George

  Corbet, Mrs. Freda

  Gray, Dr. Hugh (Yarmouth)

  Leadbitter, Ted

  Craddock, George (Bradford, S.)

  Greenwood, Rt. Hn. Anthony

  Ledger, Ron

  Crawshaw, Richard

  Grey, Charles (Durham)

  Lee, Rt. Hn. Frederick (Newton)

  Crosland, Rt. Hn. Anthony

  Griffiths, David (Rother Valley)

  Lee, John (Reading)

  Cullen, Mrs. Alice

  Griffiths, Eddie (Brightside)

  Lever, Harold (Cheetham)

  Dalyell, Tam

  Griffiths, Will (Exchange)

  Lever, L. M. (Ardwick)

  Davidson, Arthur (Accrington)

  Hamilton, James (Bothwell)

  1348

  1349

  Lewis, Arthur (W. Ham, N.)

  Oakes, Gordon

  Silverman, Julius

  Lewis, Ron (Carlisle)

  O'Malley, Brian

  Skeffington, Arthur

  Lomas, Kenneth

  Oram, Albert E.

  Small, William

  Loughlin, Charles

  Orbach, Maurice

  Snow, Julian

  Lyons, Edward (Bradford, E.)

  Orme, Stanley

  Spriggs, Leslie

  Mabon, Dr. J. Dickson

  Oswald, Thomas

  Steele, Thomas (Dunbartonshire, W.)

  McBride, Neil

  Owen, Dr. David (Plymouth, S'tn)

  Stonehouse, Rt. Hn. John

  McCann, John

  Owen, Will (Morpeth)

  Strauss, Rt. Hn. G. R.

  MacColl, James

  Padley, Walter

  Summerskill, Hn. Dr. Shirley

  Macdonald, A. H.

  Page, Derek (King's Lynn)

  Swain, Thomas

  McGuire, Michael

  Palmer, Arthur

  Swingler, Stephen

  McKay, Mrs, Margaret

  Pannell, Rt. Hn. Charles

  Symonds, J. B.

  Mackenzie, Gregor (Rutherglen)

  Park, Trevor

  Taverne, Dick

  Mackintosh, John P.

  Parker, John (Dagenham)

  Tinn, James

  Maclennan, Robert

  Parkyn, Brian (Bedford)

  Urwin, T. W.

  McMillan, Tom (Glasgow, C.)

  Pavitt, Laurence

  Varley, Eric G.

  McNamara, J. Kevin

  Pearson, Arthur (Pontypridd)

  Wainwright, Edwin (Dearne Valley)

  MacPherson, Malcolm

  Peart, Rt. Hn. Fred

  Walker, Harold (Doncaster)

  Mahon, Peter (Preston, S.)

  Pentland, Norman

  Wallace, George

  Mahon, Simon (Bootle)

  Perry, George H. (Nottingham, S.)

  Watkins, David (Consett)

  Manuel, Archie

  Prentice, Rt. Hn. R. E.

  Watkins, Tudor (Brecon & Radnor)

  Mapp, Charles

  Price, Christopher (Perry Barr)

  Weitzman, David

  Marks, Kenneth

  Price, Thomas (Westhoughton)

  Wells, William (Walsall, N.)

  Marsh, Rt. Hn. Richard

  Price, William (Rugby)

  Whitaker, Ben

  Mellish, Rt. Hn. Robert

  Probert, Arthur

  Whitlock, William

  Mendelson, John

  Randall, Harry

  Wilkins, W. A.

  Mikardo, Ian

  Rees, Merlyn

  Willey, Rt. Hn. Frederick

  Millan, Bruce

  Roberts, Albert (Normanton)

  Williams, Alan (Swansea, W.)

  Miller, Dr. M. S.

  Roberts, Gwilym (Bedfordshire, S.)

  Williams, Alan Lee (Hornchurch)

  Milne, Edward (Blyth)

  Robinson, Rt. Hn. Kenneth (St. P'c'as)

  Williams, Clifford (Abertillery)

  Mitchell, R. C. (S'th'pton, Test)

  Rodgers, William (Stockton)

  Williams, Mrs. Shirley (Hitch'n)

  Morgan, Elystan (Cardiganshire)

  Roebuck, Roy

  Williams, W. T. (Warrington)

  Morris, Alfred (Wythenshawe)

  Rogers, George (Kensington, N.)

  Wilson, William (Coventry, S.)

  Morris, Charles R. (Openshaw)

  Rose, Paul

  Winnick, David

  Moyle, Roland

  Ross, Rt. Hn. William

  Woodburn, Rt. Hn. A.

  Mulley, Rt. Hn. Frederick

  Rowlands, E.

  Woof, Robert

  Murray, Albert

  Shaw, Arnold (Ilford, S.)

  Wyatt, Woodrow

  Neal, Harold

  Sheldon, Robert

  Newens, Stan

  Short, Rt. Hn. Edward (N'c'tle-u-Tyne)

  TELLERS FOR THE NOES:

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Silkin, Rt. Hn. John (Deptford)

  Mr. Joseph Harper and

  Norwood, Christopher

  Silkin, Hn. S. C. (Dulwich)

  Mr. Ernest Armstrong.

  Mr. John Page: I beg to move Amendment No. 4, in page 1, line 17, at end insert:
  (2) The Commissioners shall in every case issue a receipt of an import deposit to the person by whom it was paid, which receipt shall be equally acceptable as a negotiable instrument as is a warehouseman's warrant issued by an authorised warehouseman.
  The Deputy Chairman (Mr. Gourlay): With this Amendment it will be convenient to discuss Amendment No. 10, in line 22, at end insert:
  'or to any assignee of that person where notice of such assignment has been given in writing to the Commissioners'.
  Amendment No. 81, in line 22, leave out:
  'by the Commissioners to that person'
  and insert:
  'shall be made by the Commissioners to that person or to his assignee and when so made'.
  Amendment No. 82, in line 24, at end insert:
  (3) For the purposes of this section an assignee shall be the person to whom the person who has paid the import deposit has assigned the right to repayment thereof and shall include the assignee of an assignee.
  1350
  (4) Written notice of an assignment shall he given to the Commissioner not less than seven days before the date on which the relevant repayment is due to be made.
  Amendment No. 14, in page 2, line 46, leave out subsection (10).
  Amendment No. 83, in Clause 2, page 3, line 32, at end add:
  When an assignee (as defined in section 1 of this Act satisfies the Commissioners that if he had imported the goods upon which the import deposit has been paid he would have been entitled to remission of such import deposit under the provisions of Schedule 2 to this Act the Commissioners shall forthwith repay the import deposit to such assignee but such repayment may be subject to such conditions and restrictions as the Commissioners may think fit to impose for the purpose of securing that the goods are disposed of or used in a way qualifying for remission.
  Mr. John Page: This is a small and rather detailed Amendment but one which has real importance and significance. It deals with the receipt given by the Commissioners for the duty deposited for the period of 180 days. Nowhere in the Bill or in the Customs and Excise instructions on the scheme—that is, Notice No. 481—is any mention made of a receipt, how

  1351
  it is to be given, or what form it shall take.
  I have twice inquired of the Customs and Excise Department of the Board of Trade about this receipt. I congratulate the Department on its extreme courtesy and remarkable calmness under fire. I imagine that the number of inquiries from importers must be great. On the occasions when I and when friends of mine have spoken to the Department, those responsible have been calm, efficient and helpful.
  I understand that at present no receipt is given for this deposited duty. I find this surprising, because I am not in the habit of putting down £5,000 or £5 million, or whatever one has to put down nowadays under such schemes, without obtaining a receipt. However, the practice apparently is that an importer goes to the Customs and Excise taking with him two copies of Form 139 which have to be deposited with the Collector concerned. Form 139 is difficult and badly worded. This matter should be considered over the next year or however long the new imposition is in force.
  If the importer, or the person making the deposit, who can be someone else, wishes to have an acknowledgment that the deposit has been left, he can produce a third copy of Form 139, which is then stamped with the Collector's office stamp. I was courteously informed by the Customs and Excise Department that this is considered to be, not a receipt, but an acknowledgment.
  When goods are left with an accredited warehouseman in present circumstances, and even in the good old days pre-22nd November, the importer or the person who caused the goods to be left with the warehouseman is given a receipt or a certificate, and this is considered to be negotiable. I want confirmation that the receipt acknowledgment which the Customs and Excise gives to an importer will be equally negotiable.
  Although, after the Second Reading and the debate on the last two sets of Amendments, there may be a sense of déjà vu about it, I am jolly well going ahead to consider the objects of this scheme and to put the matter in its full context. First, is it the Government's intention to ruin a number of small im-
  1352
  porters? Certainly not, we have been told, but if it happens, that is too bad. I assure the Minister that a good many small importing firms are extremely worried.
  Is it the object to put up the basic price of imported goods by 2 to 2½ per cent.? I understand that the answer to that question is, "Yes". [An HON. MEMBER: "More."] I hear one of my hon. Friends say "More", and that may well be so. Many of the non-exempted goods are raw materials, certain kinds of steel, for example, or, in the industry in which I have an interest, synthetic rubber. These basic raw materials for manufacturers will go to one factory for fabrication, perhaps to another for further fabrication, next to a third for assembly into whatever the finished article may be, a motor car, domestic appliance, television set, and so forth. Then the articles will go to the public. When the 2½ per cent. basic increase is taken into account at the retail end, it will mean a rise of about 6 per cent. in the price of the component within the finished article which is sold.
  If the imported article is, say, a Japanese transistor radio—
  The Deputy Chairman (Mr. Gourlay): Order. The hon. Gentleman must address his remarks to the Amendment, which deals with the receipt given for the deposit and would require that that receipt shall be acceptable as a negotiable instrument. His present observations are somewhat wide of the Amendment.
  Mr. Page: I accept your reproof, Mr. Gourlay. You have been sitting in your place, and I missed the last Amendment, for a reason which I could not avoid, so I shall try to be particularly gentle with you, though I think it important that the background should be fully realised.
  8.45 p.m.
  I come now to a critical point in my argument, the question of the reduction of the amount of cash in circulation. If the Customs receipt is negotiable, it may be used as a collateral for a further loan from a foreign bank or merchant bank to provide the cash needed to pay the duty deposit. I cannot believe that it is the Government's intention to drive the importer to borrow more foreign currency.

  1353
  The Minister of State has said—I think that it was on Second Reading—that there are quite a lot of advantages. If the money is lent to us, we have more foreign currency brought into the country for six months. I see the force of that argument, but the interest rates may be very high. Though it may be nice for the Treasury to have that cash in hand for six months, it may have to pay 4 or 5 per cent. on the total at the end of the period across the exchanges to the foreign lender.
  [Mr. GURDEN in the Chair]
  While there is no statutory authority that warehousemen's certificates and warranties may be used as collateral for security, there is judicial authority, with many cases on record, recognising the commercial procedure of using such warranties for collateral at banks. Moreover, by specific exclusion under the Bill of Sale Act, 1878, whereby such warranties became valid without central registration, there is a tacit recognition that in the general course of business those warranties are acceptable for collateral.
  That is the nub of the point I am trying to make, and I hope that we shall have confirmation from the Minister of State that what I have just said applies to the receipts and acknowledgments given by the Customs and Excise. I hope that he will tell the Committee that he will look into the whole question of the form in which the receipt is given.
  What is the maximum time that an importer may have to make some kind of deposit? People say that it is 180 days, and that is what it would be generally thought to be, except by experts, such as there are in the Committee. In fact, by the time the Bill becomes an Act it might be about 200 days, by the use of the bond procedure which was permitted under the previous Order.
  The fact that the time that the bond was held by the Customs is not deducted from the 180 days is small-minded, mean, tricky, vicious, vindictive, dishonourable and altogether typical of the present Government.
  Mr. Kenneth Baker: The Amendments are meant to be helpful, and therefore I hope that they may be accepted by the Government. The whole purpose of the six Amendments is to help
  1354
  the importer to find the money to pay the deposit. We are trying to create negotiable documents, which is our way of trying to meet the suggestions made by the Financial Secretary on Second Reading.
  The hon. Gentleman spoke at length about the ingenuity of the London capital market and of financiers to find a way to produce the money required for these deposits. I agree with him. The London capital market is the most sophisticated in the world. It still works very well, even after four years of Socialism. There is no doubt that it will find ways of raising this money.
  There are many ways of raising it. Anyone opening his newspaper on Monday morning this week will have seen the advertisements from estate agents, for example, offering to lend money on a sale and leaseback basis. This is one way of helping importers faced with finding the deposit. Other ways have been suggested. The most obvious way, which has been overlooked by the Government, is that many large companies tend to be flush with cash at the moment because their dividends have been restrained and, on the whole, wages have been restrained. One of the features of the balance sheet of many large companies is a preponderance of cash. These are two obvious ways in which importers will find the money.
  We suggest a third way—by making the receipt of the warehouseman discountable. As the Financial Secretary said, one cannot get a better security than a receipt which has the Government's name to it payable in six months. This is gilt edged and quite acceptable. The Financial Secretary said that only a quarter of an hour ago. We ask that these gilt-edged guarantees, the 100 per cent. securities, should be negotiable documents, which means very simply that it can be passed from hand to hand and is just like a bill of exchange. To use the analogy of the Financial Secretary, it is like the tins of salmon which are moved round and round, and eventually they will be cash. This will certainly ease the situation of importers, large and small, in finding the deposit. It is a sophisticated financial device, but one which we should create.
  Incidentally—and here I anticipate the reply of the Minister of State because he is probably as unfamiliar with the workings of the London money market as the

  1355
  Chief Secretary was with of the workings of the Foreign Exchange market—if it is a negotiable and discountable document, it does not increase the credit base. I suspect that is one of the arguments which he will adduce in trying to defeat our Amendment. It simply makes it very much easier for importers to raise the money. Such a Bill could be discounted in the London money market and it would be a very good Bill indeed.
  These are constructive Amendments. They are not aimed at trying to undermine the Government's strategy, mid-term or long-term. I hope that the Government will be reasonable and will accept them.
  Mr. Tom Boardman: I wish to take up what my hon. Friend the Member for Acton (Mr. Kenneth Baker) said about the need for negotiability. The Government seem to have completely overlooked the commercial necessity of providing some form of security if the necessary liquidity is to be found. I am sorry that the Financial Secretary is not present, because when we were debating the last Amendment he made light of this problem and suggested that it presented no difficulty for firms, small or large, in finding the necessary cash.
  The Clause provides that the deposit shall be repaid to the person who paid it. That does not mean that it must be paid by the importer, as the Financial Secretary agreed; it can be paid by a merchant bank which can have it repaid to it. If we overlook the large burden of interest rates and the trouble with the discount rate, this is practicable. But it will not always happen in that way. Often, a person may wish to import and to use his own resources and pay for the goods himself in the expectation that he will complete the order and get the money back.
  There are such things, even under the Labour Government, as death, bankruptcy and liquidation. What will happen if an importer, having put down a deposit and having received the goods, is killed, or goes bankrupt, or goes into liquidation? These deposits are not negotiable. In practice, what will probably happen, and what is happening today, is that many small firms which have not managed to tap these resources, some of them
  1356
  overseas perhaps, at high rates of interest, will go to their bank manager and say, "Will you please help us out?". Despite the difficulties which they now suffer, the banks are trying to co-operate, but on a short-term basis. They agree to help until the importer can find a more permanent source of finance.
  Once the bank has put down the deposit, however—even if the bank puts it down itself and, therefore, has the receipt made in its name—renegotiation will be impossible because the importer could not go to somebody like a merchant bank and say, "The bank has loaned me £X to get me out of the awful mess caused by the Government, but only for one month. Can you help me when I have to refund it?" because the repayment cannot be endorsed across to the merchant bank. It is not a negotiable document. The purpose of the Amendment is to make it negotiable.
  I make no argument about whether the Amendment of my hon. Friend the Member for Harrow, West (Mr. John Page) concerning warehousemen's receipts, or whatever they are called, is better than the Amendment of myself and my hon. Friend the Member for Acton. The documents must, however, be in a form which can be negotiated if we are to avoid all the difficulties for these small importers, who will have a big job to make ends meet and to survive the next year or so.
  Although the Financial Secretary later went back on his argument, he implied that the size of the deposit would depend on the size of the firm; it would hit the large firm harder than a small one, on whom the load would be less. What, clearly, was not recognised is that a very large number of importing agents import millions of Es worth of goods on very small margins, possibly of 2½ per cent. If they are financed in the way that the City can arrange these things, their margins might very often be even smaller. If those firms have to provide deposits on imports of, say, £2½ million, they might have to find interest of up to or over £100.000.
  Amendment 83 deals with the slightly different point of the remission of duty when the exporter is not the importer. Under the Bill, I understand, the duty will be remitted to the importer under certain conditions. One of the conditions

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  which an importer has to meet in the majority of cases is that he exports either all the imports or a proportion of them.
  What the Bill does not provide is that the duty will be remitted, although the exporter is not himself the importer. No doubt, the Minister of State will put me right if I have misunderstood the point, but as the Bill is drafted, to get remission of duty, the importer must satisfy the commissioner that the goods will be used for export by him. In practice, in the majority of these operations, somebody imports a raw material which is not excluded from the schedule.
  9.0 p.m.
  For instance, finished leather is not excluded from the Schedule. Finished leather is imported by firms which have been established in the trade of leather importers for generations, and which have expert knowledge of markets and leathers. At the moment of import they do not know to whom the leather will go; some will go for home consumption and some for export. The purpose of the Amendment is to provide that the importer can sign the import receipt to a purchaser, a manufacturer-exporter, so that the manufacturer-exporter can, with that receipt, on satisfying the Commissioner of the quantity which he is exporting, reclaim the deposit paid for the material. It is on a slightly different but very important point.
  I emphasise that by quoting from a letter which I have received from a well-known firm of shoe manufacturers which is a leader in the export market:
  "On checking with the local customs officer today, we understand that some relief from this measure could be obtained by us if we became our own importers. The amount would be calculated on a percentage basis from historical records of what we normally re-export in the form of shoes."
  The first point is that the firm can only get the deposit back if they become their own importers. The letter continues:
  "It will not be easy for us to suddenly become importers of leathers, as this we con-skier to be the function of agents in this country who have to stand by deliveries with regard to grades, quality, selections etc.
  From inquiries we have made it is obvious that some of the smaller agents or importers, who are without financial backing, will find it impossible to make these deposits and it would appear that the onus to do so in order to obtain adequate supplies will be on us.
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  Whichever way it is done in order to maintain supplies, it will, in our opinion, mean increases in the prices of our raw materials of something in the order of 4 per cent."
  That is the problem of a company with a large export trade, and it is precisely the sort of case which has inspired the Amendment.
  Amendments Nos. 81 and 82, which support my hon. Friend's Amendment No. 4, are in order to make the receipt for the deposit in the form of a negotiable document. Amendment No. 83 is on a different point, to enable the firm which does not itself import to be in a position to reclaim the deposit on that portion of the goods which is re-exported.
  If the Government have a genuine interest in trying to avoid the bankruptcy and liquidation of small firms and in encouraging increased export trade, they will accept the Amendments, or at any rate, the principles behind them.
  Sir J. Foster: The necessity for the Amendment is that Clause 1(2) does not allow for the import deposits to be either assignable or negotiable. Is the Minister able to say whether the scheme under Clause 1(2) which I am about to put forward will work? The importer tells a bank that he must find £100,000 for a deposit. The bank agrees to pay the deposit for him. The Government then owe the bank £100,000. The difficulty which the Amendment is designed to overcome is that the owing is not represented by a document saying, "H.M.G. owe the XY bank £100,000". I agree that the credit base would not be extended by the Amendment, but could the bank take the form of acknowledgment for the deposit referred to by my hon. Friend the Member for Harrow, West (Mr. John Page), and write an order saying, "Please pay to the blank account the sum of £100,000"?
  It is assumed that, as in the City of London, there are names which can be relied upon not to go back on their word. That is the whole basis of credit in the City of London. It occurred to me that a signed order to the Government with the name of the account not filled in might satisfy Clause 1(2).
  Obviously the Commissioners will not press £100,000 into the hands of the XY Bank. When the 180 days terminate, the Commissioners will pay it into the

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  bank account of the person paying the deposit. On the 180th day, the Customs could not say, "But the account named is not your account; it is just a number." Again, ex hypothesi, the person who signed the order to H.M. Customs saying, "Please pay £100,000" will not write another order to get the money himself.
  I would have thought that the Commissioners had to obey the order of the person who paid the deposit. They must pay the account designated by the person who pays the deposit. They will not have a lot of detectives going round saying, "This is not your account. We are not really paying the person who paid the deposit, because here is his signature properly sealed, and so on."
  Would the Minister of State hazard an opinion as to whether that kind of document might not get a certain amount of assignability and negotiability? Let us assume that the XY Bank hands it to AB, who is willing to discount it. Let us say that he works on a 6 per cent. discount and gives the bank £94,000, expecting to get £100,000 on the 180th day. The person making the deposit writes into the Customs merely filling up the number of the account, saying, "I will leave it blank so that AB can pass it down the line and anyone can fill in the account name." When the Customs get it on the 179th day, surely they are bound to pay at the order of the person who made the deposit? I do not see how they can refuse.
  Can the Minister of State comment on that? It is relevant, because it throws some light on the need for the Amendment. The hon. and learned Gentleman may say that such a scheme will not work at all. In that event, the Amendment is all the more necessary from our point of view.
  Mr. John Nott: My hon. Friend the Member for Harrow, West (Mr. John Page) has raised an interesting point. Customs and Excise Form 139 which, with a stamp, is the form which the importer can receive from the Customs and Excise if he so desires, could be used as collateral for a loan from a bank. Indeed, it would be open to the person who has received Form 139 to assign it to a bank so that it could be used as collateral for a loan.
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  But I do not see how Form 139 could possibly be deemed to be a negotiable instrument. I understand the definition of a negotiable instrument to be something which has an inherent title embodied in it so that, without any kind of assignment whatsoever, as a piece of paper it gives title to whomsoever holds it at any point of time, whether a Treasury bill, a bill of exchange, or a bearer bond as opposed to registered stock. I do not see that this is a negotiable instrument. But Form 139 would, to any banker who desired to accept it as collateral, be acceptable as such, and the banker could ask that the title to it should be assigned to him to provide proper security.
  If this is right—it may not be—it seems that the interesting point in the Amendment revolves around the rate of interest. If the Customs issued a receipt for the imported item which said "Customs and Excise promise to pay after 180 days" a particular sum, this would command Government rates of interest or quasi Government rates of interest, because it would in effect be a Government guarantee to repay after 180 days. If it was a receipt whereby a Government agency promised to repay, it is probable that the importer could borrow against the security of that receipt at a highly favourable rate of interest, whereas he could only borrow against Form 139 at the going market rate or at what the banker thought to be the credit rating of the importer if the security of the Government was not involved, but it was purely the security of the person to whom Form 139 had been made out by the Customs.
  This may or may not be right. Therefore, the important point is: do the Government wish to help the financing of these import deposits or do they wish to inhibit them? If they wish to help the financing of these import deposits it seems perfectly reasonable for the Customs and Excise to issue a receipt which will enable the importer to borrow against it at Government rates of interest. If the Government do not wish to help, it merely allows Form 139 to be issued and for it to be used as collateral against a loan. I wonder whether the Minister of State could clarify this point when he answers the debate.
  Mr. Charles Fletcher-Cooke: We owe a debt to my hon. Friend the Member for Harrow, West (Mr. John Page) for starting this interesting debate. It became clear as the debate progressed, particularly from the flood of light that my hon. Friend managed to throw on the practice of the Customs and Excise, that, whatever else might be right or wrong, we need a proper receipt for these deposits from the Customs and Excise as a matter of course, not merely on demand. It is absurd in a commercial and mercantile country that the Customs and Excise should not automatically give a properly authenticated receipt for the deposit of what will be large sums of money in many cases, that it should only be obtainable on request and that, even in those circumstances, it should not be considered a receipt.
  9.15 p.m.
  Then comes the interesting problem, raised by various Amendments, as to what is or should be the status of this receipt. My hon. Friend the Member for Harrow, West suggested that it should be made a negotiable instrument, and he parallels this with the warehousemen's warrant, which has never been made a negotiable instrument, but which has been accepted as such in commercial circles ever since it was excluded from any possibility of operation as a bill of sale by the Bill of Sale Act. My hon. Friend asks that the Government should proclaim it a negotiable instrument, and thus make the right to the deposit returnable to whoever produces the negotiable instrument, even though no notice has been given to the Customs and Excise that the receipt has been transferred. As my hon. Friend the Member for St. Ives (Mr. Nott) said, that is the difference between negotiability and assignability. The assignabality arises only when notice is given to the debtor, but with a negotiable instrument no such notice is required.
  I think the Minister of State will say that negotiability would have the effect of monetising these receipts. If they are negotiable in this way, it will mean that they will become monetised, and this will increase the velocity of credit and thus increase its base. I fear that that is what we shall be told, and that one of the object; of the Bill is to decrease the credit base rather than to increase it.
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  I do not think that that objection would arise, or arise in any material way, if these receipts were made assignable, because that would not materially increase the velocity of their movement, and it would, as so many of my hon. Friends have said, enable some very important credit to be obtained which I do not think will be obtainable under present circumstances, in the sense that, as I read the Bill, Customs and Excise are only obliged, and perhaps only entitled, to pay to the person who originally made the deposit.
  I should very much like to hear from the Minister of State whether he accepts the modifications to that obligation proposed by my hon. and learned Friend the Member for Northwich (Sir J. Foster), who suggested that that obligation and that privilege of repaying only to the person who made the deposit could somehow be modified by the instructions of that person to pay to somebody else or to someone else's account, whether numbered or named. As I read it, there is no possibility of that in the Bill as drafted.
  We say that because we think these should be made assignable, that does not really arise. They should be made assignable for the many examples given by my hon. Friend the Members for Acton (Mr. Kenneth Baker) and Leicester, South-West (Mr. Tom Boardman). I think perhaps the most vivid is the case of the importer who may himself have paid the deposit in the first instance, thinking that he would be able to afford to be out of his own money before the six months, and be able to weather that storm, but who, after a month, having paid his deposit, finds that he is desperately short of working cash, perhaps not for reasons connected with importing at all, but for other reasons, and wishes to take his receipt to a bank or to some other person and say, "This is very good security. I want to assign this to you, in return for your letting me have my deposit sufficiently discounted".
  For the life of me, I cannot see why that cannot be done in just the same way as it would be done in the case of an ordinary commercial document. Why should not this document of title be assignable and thus enable the importer to get the money that he needs so desperately?

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  If it is not assignable—if the payment has to be made to the importer after the six months are up—the bank, or whoever it is, will charge the importer a very much higher rate of interest, because during those five remaining months the importer may go bankrupt. If he goes bankrupt, the money will go into the general pool and the person who has left the money will have no preferential claim on whatever is left from the bankrupt's estate. It therefore seems to be quite wrong to leave this monopoly repayment in the hands of the importer because money will be very tight. I know that the Government want it to be tight but, as we heard in answer to the last Amendment, they do not want it to be so tight that it will bankrupt many small traders.
  In the example that I have given, unless after a month or so of having his money on deposit the trader can get money on reasonable terms he will go bankrupt, and he will be able to get it on reasonable terms only if he can assign, in the proper legal sense of the word, the document of title to his deposit. It is not possible to elaborate the case. It seems so reasonable, on commercial grounds, that I shall wait with interest to hear why the Minister of State says that it cannot be done—if he has to say that. If he were going to accept one or more of our moderate Amendments I feel that he would have risen earlier.
  I come finally to the Amendment on a somewhat different subject—Amendment 83. That was the one on which my hon. Friend the Member for Leicester, South-West spoke so cogently. That tries to prevent a distortion of our export trade by widening the import privilege or the import allowance—if I may so phrase it—in the case where the importer is not the same person as the exporter but when the article imported is genuinely and demonstrably included in the exported article, albeit exported by someone else.
  If this Amendment or one on the same lines is not accepted, we fear that the course of trade will be enormously distorted, because it will be in the interest of importers to identify themselves with export businesses of which they may have very little knowledge, and which they
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  may have very little skill in dealing with. This will lead to all sorts of impromptus and tergiversations in order to get the benefit of a very reasonable drawback and one which in other circumstances has always been extended in the cases envisaged in Amendment No. 83.
  The Minister of State will know that an Amendment to like effect appears as an Amendment to the Chancellor's Amendment at the end of the Schedule. This point is raised now in the form of a preliminary canter. If the Minister of State cannot tell us tonight I hope that he will tell us tomorrow, or whenever it comes up, that this reasonable suggestion has been adopted, because the alternatives—if he considers what may happen if the Amendment is not adopted—are very serious.
  Therefore, I hope that he will tell us that the Customs and Excise will pay the import deposit back to persons to whom, they have had notice, the certificate has been assigned. I hope that he will see that a proper form of certificate is automatically issued and that he will view favourably the suggestion in Amendment No. 83 that the export privilege should be assignable—this is another aspect of assignability—and not restricted to the named importer, in which case it might be of very little value to the importer, the exporter or the country.
  The Minister of State, Treasury (Mr. Dick Taverne): There are some points raised by the hon. Member for Harrow, West (Mr. John Page) and one raised in one other speech with which I do not intend to deal now, if the Committee will excuse me. The hon. Member for Harrow, West discussed briefly what goods should or should not be exempt. Of course, we will have ample opportunity to discuss this on the Schedule. He also went into a tirade about the inequity, as he saw it, of making the maximum time before repayment 200 days. That also arises on another group of Amendments and would be better discussed then.
  Issues arise over the very interesting Amendment No. 83, forcefully moved by the hon. Member for Leicester, South-West (Mr. Tom Boardman), which, as the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) recognised,

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  fall to be considered when we discuss the problems of re-exports under the Second Schedule. I shall certainly consider with care all that he has said, and the particular difficulties which arise and how far they can or cannot be met in terms of the Government Amendment, at that stage of the Bill.
  Apart from these issues, a number of very important points have been brought forward. First is the question of the form on which the name of the person concerned will be entered and how far this can be left blank. Subsection (2) of Clause 1 provides that the import deposit is repayable to the person named on the entry as having paid it. This does not necessarily mean the importer. It would, of course, be impossible to restrict it to the importer, if we had wished to do so in any event, because, in many cases, duties will be paid by forwarding agents and it would have caused unreasonable inconvenience if we had refused this facility for the import de posit.
  We shall not always know who the importer is, so an importer can arrange for the deposit to be paid for him by someone else and can assign to that person at the time of payment the right to receive the repayment. But somone must be named. One cannot say that the repayment must be made to a particular account. There is no reason why the bank should not be named if that is the arrangement which the importer has reached. If a receipt for the deposit payment is asked for, that person can hold the receipt. How far this is collateral or not is a question which shows a wrong approach. As the Clause stands, this receipt, if requested, would be evidence of credit-worthiness and could be used by someone in need of money to show his credit-worthiness and obtain that money.
  Sir J. Foster: If the hon. and learned Gentleman meant to dismiss my scheme on the grounds that one cannot leave the name out, I would point out that that was not my suggestion. The name at the bottom would be A.B., the person who paid the deposit. It would be a mandate on the certificate telling the Customs to pay account No. N.61, say. I challenge the hon. and learned Member to say that that is not a valid mandate.
  9.30 p.m.
  Mr. Taverne: The only obligation of the Customs is to pay the person named—
  Sir J. Foster: is the Minister of State suggesting that the Customs will go round with £100,000 in notes? He cannot be. The Customs have to pay into an account. The hon. and learned Gentleman cannot mean that the Customs go round with the notes. If he does—God help him.
  Mr. Taverne: The Customs pay the person named, and as I understand it there is no reason why they should not pay the person named in the form in which he asks to be paid. If it is paid for someone else it can also be assigned to that person at the time of payment—
  Mr. John Page Mr. John Page rose—
  Mr. Taverne: I will give way in a moment, but let us just go on to what actually happens now. The hon. Member for Harrow, West (Mr. John Page) is quite right in saying that form C139 is the form on which a stamp can be placed by the Customs if the importer or the person named wishes to have a receipt. I will certainly see that the form is looked at in order to find out whether it is possible to improve on it, but that is what happens now.
  A receipt will be issued, if desired, through Form C139. It is the intention to convert the lower part of C139 into a payable order, and to send that to the address originally filled in. That is the shape that Form C139 can take—
  Mr. Nott: I understood the point made by my hon. and learned Friend the Member for Northwich (Sir J. Foster) to be that either the money can be paid in to the account of the depositor at, say, Barclays Bank, or the depositor can give an instruction that the money be paid to Barclays Bank. Those are quite separate things. Can a depositor give instructions at the time of paying the deposit that he wishes it to be repaid to someone else? That is the important point.
  Mr. Taverne: If that is the form it takes, in effect what is happening is that one is getting an assignable document, which is the point that I intended to deal with later.
  Mr. Boardman: Does the Minister of State say that the document itself will be evidence of credit? The document itself is no more evidence of credit than is a share certificate in someone else's name. To be shown a share certificate in a person's name is no evidence of his credit, unless it can be transferred. One does not advance large sums of money until one has security for it. The person having the share certificate may owe £1 million elsewhere, so the certificate itself is no evidence of credit.
  Mr. Taverne: It is certainly evidence of creditworthiness to the extent that it is clear that at the end of 180 days he will receive from the Customs the sum received as deposit.
  Mr. John Page: We are delighted to see that one of the four Board of Trade Ministers has at last joined him in his lonely moment on guard, because this is essentially a Board of Trade matter. I understand the hon. and learned Gentleman to have said that something could be written at the bottom of form C 139. For the sake of clarity, would he repeat that statement? It did not come across to me?
  Mr. Taverne: The intention is to convert the lower part of form C 139 into a payable order and to send that to the address originally filled in.
  The substantial question raised by this Amendment is whether or not this should become a negotiable instrument.
  Mr. Patrick Jenkin: I do not know whether I am being unduly obtuse, but I have totally failed to understand the effect of what the hon. and learned Gentleman has told the Committee. Is this a form which will be sent to the person who has paid the deposit so that the money still belongs to that person? There is no possibility of his having to charge it or assign it? Is that the effect?
  Mr. Taverne: This is not something which makes it into an assignable document. The actual issue before the Committee is whether or not (a) this should be a negotiable document and (b) whether there are advantages in making it assignable. The hon. Member for Acton (Mr. Kenneth Baker) said that he anticipated the answer I would give, but I do not think he has anticipated entirely correctly. It is very much part of this scheme to
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  restrict credit. That is the whole purpose about which the Financial Secretary spoke earlier. This is on top of the restriction of lowering the bank ceiling. There is £600 million worth of deposits which will build up and which in themselves in so far as they are not composed of money lent from abroad go to restrict the amount of liquidity available in the economy.
  To some extent making this negotiable would tend to defeat the intention of the scheme in that respect because the importer through the return for his deposit will be provided as is the intention of the Amendment with a marketable security which at an appropriate rate of discount he could use to put himself in funds. Quite apart from the question of the velocity of turnover of credit to which the hon. and learned Member for Darwen referred there is a further answer which I must give to the hon. Member for Acton. If this happens it is bound to reduce to some extent the effect of the scheme on the liquidity of the economy because what would be created in effect would be a negotiable instrument payable by the Customs which is the equivalent of a gilt-edged security so the funds would be drawn almost entirely into the market for import deposits at the expense of public sector debt and that would be bound to have some effect on liquidity. The whole purpose of the scheme is twofold. One part of the main purpose is to reduce the amount of liquidity.
  The alternative was put forward by the hon. and learned Member for Darwen that these certificates should be made assignable even if they were not negotiable. The difference between the two points in practice will not be very great because if notice is given these documents will be negotiable. They can be sold, they will have the same effect although to a lesser degree and this is less objectionable than making them fully negotiable when notice is given to the Customs.
  Mr. Nott: I understand the argument of the hon. and learned Member but surely it only expands the amount of liquidity in the system at any time if this particular type of receipt can be used as a collateral against loans from the Bank of England. If it is just a promise to pay by the Government and the banking system cannot borrow against it from

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  the Bank of England I do not think it will expand the credit base at all. Only if the banks can use it as part of their liquidity ratio that it expands the credit base.
  Mr. Taverne: I do not think the hon. Member can deny that this is bound to have effect on the public sector debt and in this respect it is bound to have an effect on liquidity as a whole. These are some of the reasons why, somewhat reluctantly, I must oppose these Amendments. I understand the motives of hon. Members who have put them forward, but it is our major purpose to see that liquidity is restricted and this is something which will have a major effect on the economy and an interim effect on imports, quite apart from the particular deterrent effects it will have on individual importers. For these reasons I must ask the Committee not to vote for these Amendments.
  Mr. Fletcher-Cooke: The Minister of State has been somewhat obscure on the crucial issue as to the degree of assignability of these receipts. As I understand it, though I may have got it wrong, there is what might be called a degree of assignability permitted at the beginning of the six months; there is total assignability permitted at the end of the six months, because, to quote the Minister's words, which I took down, there is "no reason why it should not be assigned at the time of the payment"; but there is no assignability allowed between the two.
  It is just between the two—the beginning and the end—that there needs to be assignability. It is just in those cases where the importer needs to replenish the capital of which he may have exhausted himself, thinking that he would be able to ride out the six months but finding that he cannot. It is clear, particularly from the intervention of my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) that, unless these receipts are assignable in the sense that a good title to this repayment can be transferred from the original payer to a third person, they are not much use to the person wishing to borrow money. This much has emerged from this somewhat obscure debate.
  Mr. John Page: I seek knowledge, which I am sure will be helpful to those on the Treasury Bench. Any form of
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  receipt which is given, if it ultimately becomes a receipt, could be used as collateral if there were a lender prepared to consider it. Is it fully understood that the Minister of State said that it must not be used? By making it a nonnegotiable document the Minister of State said that it must not be negotiated.
  Mr. Fletcher-Cooke: I do not think that that Minister of State forbade people to lend money on the security of these receipts. I say that in the commercial world such a receipt would not be much use as security in the circumstances of a borrower of doubtful credit. This is a great imposition on the small trader, who will not be able to assign the debt which is owing to him by the Government during the period in which it is maturing. It is a monstrous interference with the normal course of business and finance that a debt cannot he assigned if it is desired to be assigned. It is an innovation in our financial arrangements. I do not think that it would happen very frequently.
  I do not think it was right of the Minister to say that there is not much difference between negotiability and assignability. There is all the difference in the world. A negotiable instrument is monetised. A debt that can be assigned is not monetised, because the velocity is infinitely less, but it is a great convenience and a great reassurance to the trader.
  Unless the Minister of State can give an assurance that he will reconsider this, as I think he should, I suggest to my hon. Friends that we in due course recognise that the Government, having given great and smooth words to small traders when we were dealing with the last group of Amendments, now show their true spots, because they are perverting the normal course of trade and finance in such a way as to say that the man who really needs his credit desperately while what is owing to him is maturing, cannot get it. For these, amongst other reasons, I suggest that in due course we divide.
  9.45 p.m.
  Mr. Taverne: I take the hon. and learned Gentleman's last point, that there is a difference between assignability and negotiability, and that the effect on liquidity is much less in the

  1371
  case of assignment. Without any undertaking that we shall meet the point which the hon. and learned Gentleman made, I give the assurance that I shall look at the question of assignment again.
  Mr. Tom Boardman: In view of that assurance, I shall not press the point which I had intended to make, but I ask the Minister of State to bear in mind that a document showing that someone is entitled to money is no assurance or guarantee whatever to another person lending money unless he is guaranteed that it is not also available to cover borrowing elsewhere.
  Will the hon. and learned Gentleman read what was said by the Financial Secretary on the earlier Amendments, when he gave bland assurances that the small importer had no cause for concern, that liquidity was all right, and the cash would be there? There is a stark contrast between that speech and what the hon. and learned Gentleman has said in reply to these Amendments. I welcome the assurance that he will look at the matter again.
  Mr. John Page: In the last minute and a half, the Minister of State went a long way to help us on this Amendment. He has told us that, after the points which have been raised in the debate, he is prepared to look again at the question of the assignability of the receipt and give us his second thoughts, presumably on Report, if not before if he can find a way of bringing the matter up for discussion. That being so, the position is somewhat altered.
  May I have an assurance also on the form of the receipt? The hon. and learned Gentleman said that he would look at the receipt carefully, but I understood from the Board of Trade that it did not regard the present form with the stamp as a receipt. There must be a proper receipt automatically given. Unless such a receipt is available, import depositors are put in a difficult position. An acknowledgment for an interest-free loan for six months is not enough. A proper receipt on an appropriate form should be given.
  Will the Minister of State also discuss with his right hon. Friend at the Board of Trade whether better instructions can
  1372
  be given immediately, as from tomorrow morning at 10 o'clock, to the Commissioners on the kind of receipt or acknowledgment which they give to depositors of cash? Such a receipt is vital to all concerned in the commercial and importing world. Perhaps the hon. and learned Gentleman will comment on these other questions.
  Mr. Taverne: We shall look at the form again, and, as I said, part of it would be altered. That will be the form to be retained by the Customs, which will then automatically become the order for payment. The form will, therefore, be altered, and I can look also to see whether a receipt could be incorporated which could be handed to the importer.
  Mr. Page: The tear-off "gift coupon" at the bottom of the form is in no way a receipt. This is a convenience. I take it that the Minister will look at the receipt and the assignability again. With those undertakings, I beg leave to withdraw the Amendment.
  9.30 p.m.
  Mr. Robert Sheldon: There is the very important point that when we were discussing the whole purpose of the Bill one of the arguments in its favour was the reduction of liquidity. If my hon. and learned Friend now makes the documents negotiable we shall create a new kind of bank note, which will completely destroy that purpose of the Bill.
  Mr. Taverne: I do not know whether my hon. Friend was present when I made this point. I said that I could not meet the Amendment on making the documents negotiable, but that I would look at the question of assignability, which does not have such a great effect on liquidity as creating a new negotiable instrument would have.
  Amendment negatived.
  The Temporary Chairman (Mr. Gurden): The next Amendment selected is Amendment No. 6, with which we may discuss Amendments No. 97, in page 1, line 19, leave out from 'paid' to complete' in line 23 and insert:
  'in the form of a warrant issued by the Commissioners dated for payment 180 days after the receipt of the import deposit and issued on the receipt of the import deposit as proof by the Commissioners of the'.

  1373
  No. 11, in page 1, line 24, at end insert:
  (3) Any such payment by the Commissioners shall be, at the request of that person, by way of a post-dated warrant made payable to that person aid sent to him prior to the date on which the import deposit becomes repayable. The date of the post-dated cheque shall be the date on which the import deposit becomes repayable.
  and No. 12, in page 1, line 24, at end insert:
  (3) There shall be issued to the person paying the import deposit, if he so wishes, sterling certificates of deposit maturing six months from the date of issue, of value equivalent to the nearest £50,000 to the import deposit paid; and whenever, such sterling certificates of deposit are issued, payment by the Commissioners under subsection (2) above shall be made to the bearer of such certificates upon their maturity.
  Mr. Patrick Jenkin: I beg to move Amendment No. 6, in page 1, line 18, after 'repayable', insert:
  'forthwith and without demand having been made'.
  We very much appreciated the Minister of State's readiness to look again at the question of assignment, and I move the Amendment without prejudice to the question of assignability.
  The Amendment is directed to a different point—the intention that the money should be repaid on the 180th day. Its purpose is to place on record in the Bill clearly and unequivocally that it is the duty of the Customs and Excise to repay the deposit automatically on the due date. I have no doubt that the Minister will say that that is the Government's intention. If so, let it be clearly stated in the Bill.
  The Financial Secretary has made great play of his belief that the money market will be able to provide the credit necessary to pay the deposits, and that credit will be available even to the smallest importer. It is clear that in some cases it will be more appropriate that it should be the lender who pays the deposit and is the person named in the document. Any doubt as to the certainty and immediacy of repayment on the 180th day is bound to make it much more difficult to obtain loans.
  There is apprehension in business circles on this point. Those who have tried to obtain repayment of import duty in the past have experienced long and
  1374
  exasperating delays. In some cases they have not been able to obtain repayment for up to nine months. It will be of value to them in giving them confidence in the operation of the scheme if the Bill contains the words in the Amendment.
  The mills of the Customs and Excise may grind very small, but they grind exceedingly slow. It would utterly defeat the purpose, which is that importers should obtain the credit in order to make their imports, and would merely increase the cost of the scheme to the importer, if the repayment were not made on the due date. Therefore, the Amendment is essential. It in no way detracts from the Government's intention; it merely implements it, and dots the i's and crosses the t's.
  I shall leave it to my hon. Friends the Members for Honiton (Mr. Emery) and Yeovil (Mr. Peyton) to advance the arguments in greater detail on how the object of the other two Amendments should be achieved. However, on the last Amendment, the Minister of State said that, even without assignability, the document which the Customs and Excise would issue would have the effect of a warrant payable in the forms set out in Amendment No. 97. It may well be that the hon. and learned Gentleman will be able to meet that, too, without prejudice to the question of assignability. Whether the more elaborate suggestion of my hon. Friend the Member for Yeovil—that it should be sterling certificates of deposit—is acceptable is rather more doubtful, but no doubt the Minister of State will wish to comment on that.
  As to the immediacy and the automaticity of the repayment, let it be stated firmly and unequivocally in the Bill.
  Mr. Emery: In view of what the Minister of State said on the last Amendment, I hope that my Amendment will be acceptable to the Government.
  Instead of the elaborate procedure in subsection (2), Amendment No. 97 simplifies the matter and tells the Commissioners what they will do. Their responsibility to repay the money 180 days after the receipt of the import deposit is made definite by instructing them to issue a warrant to repay the money 180 days from receipt of the import deposit.

  1375
  From a purely administrative point of view, that is something which the Government must welcome. It stops them having to issue a receipt. It stops them having to file the receipt. It stops them having to take action later to issue a cheque and to have that cheque put in an envelope, posted and crossed off. It meets the point of Amendment 6 that payment shall be made on the day that it is due. The Government must know that, unless they are willing to send out some cheques way before the date on which they are due, they will not available for payment into banks exactly 180 days after the deposit has been received. That difficulty can be overcome by accepting my Amendment.
  It is obvious that a warrant could be assigned. In a legal sense, one can always argue about what is an assignment and what is negotiability. All I ask the Minister to do is to follow the criteria which he expounded on the last Amendment so that the warrant may be assigned. This would simplify the procedure in every way and make for greater efficiency in operating the scheme.
  10.0 p.m.
  I am against the scheme, but if we are to have it, let us have it operating sensibly. Let us, as the Opposition, try to ensure that the Government make some sense of it. I must not pursue that line too strongly in case the Government feel that something is hidden in my Amendment when it is not. It is purely an administrative convenience to simplify the procedure and to ensure that the person having made the deposit can have in his possession as a receipt a warrant which is encashable 180 days after the deposit has been made. If that does not make business sense to the Government, we will never get anything out of them.
  Therefore, in the most serious plea that I can make to the Minister of State, I hope that he will accept the principle, if not the wording, of the Amendment. I am not necessarily a Parliamentary draftsman. If the hon. and learned Gentleman assures us that he will deal with the matter on Report, I am willing to accept his assurance. What we want is the principle. I believe that it makes sense. It is what industry, commerce and the small trader would like and I
  1376
  am certain that it would be sensible for the Civil Service, because it would be bound to cut down a considerable amount of its work.
  [MR. SYDNEY IRVING in the Chair]
  Mr. Michael Shaw: I support as strongly as I can both the Amendment moved by my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) and Amendment No. 97 of my hon. Friend the Member for Honiton (Mr. Emery). It is essential to have certainty about the time of repayment of the deposit. Here again we come down in particular to the smaller company.
  During the last few years of almost continuous credit squeeze, time and time again one has seen the smaller companies faced with additional demands for cash resources in one way or another because of the greatly extended credit which has been taken generally by trade, working on very narrow margins between their bank balance and their limit with the bank, having to budget carefully every month to keep within the limit. If even Government money which is owed to them on a specific date cannot be guaranted to them on that date, there will be trouble in many businesses.
  A typical example has been the switching over of the Selective Employment Tax to computer repayments. They have not been coming through on the dates specified but many companies have relied on receiving the money on a given date. When it has not come through by the end of the month, they have had to do a lot of explaining to their bank managers. Those sums, however, are nothing like the amounts which could be paid by way of import deposits.
  Mr. Emery: Would my hon. Friend continue his argument by saying that where repayment has not come by the automatic procedure and somebody then has to claim for it, the repayment does not appear in 24 or 48 hours but is delayed sometimes for weeks or months? That is something that we could avoid by the Amendment.
  Mr. Shaw: There are all sorts of possibilities which could lead to embarrassment, particularly for the smaller firm. What we must provide—the right is built

  1377
  into the Bill, and we are trying to protect that right—is that the money comes automatically into the hands of those who have paid the deposit at the time when it has been promised. I therefore wholeheartedly support these Amendments and plead with the Minister of State to give them the utmost sympathetic consideration.
  Mr. Nott: There are four possible ways in which the money can be repaid. First. there is the method which, I understand, exists as the Bill is drafted, that form C139 can be used as evidence of the creditworthiness of the importer. Secondly, the Minister of State has said that he will consider whether something can be worked into that procedure to enable Form C139 to have some assignability so that it can be lodged as collateral security and the persons lending the money will know that they are entitled to receive payment when it is due.
  Thirdly, there is the system under the Amendment, namely, a form of certificate of deposit under which a document would be created payable forthwith on the due date. The objection of the Minister of State to this will be one objection which he had to the so-called negotiable instrument referred to in a previous Amendment, namely, that if a certificate of deposit is created, money will be drawn out of the market which would otherwise be lent to the Government. I think that this would be an admirable solution, and I can think of nothing better than a system which would divert money on the gilt-edged market which is now being lent to the Government to finance the private sector.
  Mr. Michael Shaw: There is one other argument, the question of what happens if the date of repayment is short.
  Mr. Nott: In that case there is a fourth alternative, and that is the suggestion that the document should be a full-blooded negotiable instrument, the same as a Treasury Bill, to count as part of the liquidity of the banks, which could be lodged as collateral with the Bank of England and would therefore expand the credit base.
  In replying on the previous Amendment the Minister of State implied that a negotiable instrument was unacceptable to the Treasury as it would increase liquidity in
  1378
  the economy. In my view the certificate of deposit does not increase liquidity in the economy, since it cannot be lodged as collateral with the banks. When last year the Chief Secretary to the Treasury introduced the Clause in the Finance Bill on certificates of deposit he made it clear that this was an acceptable development because the sterling certificate of deposit does not expand the credit base.
  The only possible objection by the Treasury is that money which would otherwise be lent to the Government might now be diverted into certificates of deposit and, in effect, lent to the private sector. I fully support the Amendment, because this is a highly desirable objective. The Government are able to borrow money on the gilt-edged market far too freely, and I fully support any Amendment which would prevent them doing so.
  Mr. Alison: I wish to elaborate on Amendment 12, dealing with sterling certificates of deposit. It follows on logically from the series of Amendments to which the Minister of State has already directed his mind. In the proposal for sterling certificates of deposit we are putting before the Minister of State an idea which already bears the imprimatur of the Government's approval, since it was a feature of the 1968 Finance Bill.
  If the form of words relating to the sterling certificate of deposit is accepted, this is what I understand will happen, the deposit will come to the Customs and Excise with his deposit of £50,000. I mention this sum since it is the minimum sum for which a sterling certificate of deposit is available. On receiving the £50,000, the Customs and Excise will make available through the banking system a sterling certificate of deposit for the equivalent amount. I ask the Minister of State to bear in mind that when the importer has deposited his £50,000 with Customs and Excise and Customs and Excise have, through the banking system made available to him a sterling certificate of deposit, from the Government's point of view that £50,000 is now tied up and the liquidity has to that extent been immobilised or frozen. The advantage of the sterling certificate of deposit from this moment on is that, while the Government remain in the position of having had this amount of liquidity immobilised, the individual importer, because he is holding a recognised and

  1379
  authorised bearer negotiable instrument, can walk out into the market, discount it and get his own money back. But he will only get it back from another saver, so that there is thereby no extra liquidity injected into the system.
  I hope that the Minister of State will bear in mind that this is a perfectly reasonable proposal which ensures that the same amount of liquidity is frozen but that the saving effect is achieved by people who want to save and not people who have been forced to save. There will always be some companies which have liquid funds against a Bill coming in and which are happy to buy these certificates of deposit off the individual importer. It leads to a freezing of the market and the most rational use of resources. In addition, the Government's purpose in securing the freezing of liquidity remains intact.
  I want to remind the Minister of State of two key comments of his hon. Friend the Financial Secretary about the idea behind the sterling certificate of deposit. On Second Reading, he said:
  "… what is intended to happen, is that a man who really must have the import will go to the inconvenience and modest expense required to obtain finance."
  All that the Financial Secretary envisaged for the importer was some inconvenience and modest expense. I suggest that a sterling certificate of deposit amply meets those criteria. It is moderately inconvenient because he has to discount it and suffer the modest expense of losing the interest on the money if he discounts it before it matures.
  The Financial Secretary's other comment was to make it clear that the idea was not to immobilise importers and make it impossible for them to obtain their finance. He said:
  "It will, of course, be said that people can borrow to cover the deposits that are required and that they may borrow at home and abroad. This was perfectly well taken into account and foreseen by the Government. If people borrow at home, they will be mopping up liquidity which would be available to finance other consumption."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 752–60.]
  That is what happens with the sterling certificate of deposit. He recognises that people can borrow from other people and is happy that they should do it.
  1380
  All that we propose in the sterling certificate of deposit is that there is an open, above board and recognised fashion by which the person who wants to save at a given moment is able to do so and the person who wants his liquidity at a given moment is able to do so by discounting these certificates.
  I want the Minister of State to confirm categorically that it is the aim and object of the Government not to immobilise the funds in the hands of importers but merely to make it more inconvenient for them. We want to be sure that he is not trying simply to force importers to lodge millions of £s worth of their assets for six months.
  As we understand the scheme, the Government intend that there should be a reasonable let out. These sterling certificates of deposit will have that effect. I hope that the Minister of State will not tell us, as he tried to do on the basis of the assignable instruments which we discussed earlier, that sterling certificates of deposit are in danger of adding to the liquidity of the system.
  The recent issue of "The Barclays Bank Review", dealing with this question of liquidity and sterling certificates of deposit, said:
  "They will not be eligible at the Bank of England as security or as margin for advances to the discount market. The bank will neither discount nor purchase C.D.s either on its own initiative or, if they are tendered to it, on the initiative of the discount market. The Bank of England will not regard C.D.s held by clearing banks as liquid assets for the purpose of the agreed liquidity ratio."
  It is clear that not only do the sterling certificates effectively tie up liquidity as the Government wish for six months, although they tie it up in the hands of those who want it tied up, but at the same time they have no effect on the liquid basis of the joint stock banks or of the wider banking system. The Government cannot disallow this proposal on the basis of adding to liquidity.
  The Minister of State must bear in mind that the Government are squeezing importers more severely in reality than they claim to be doing in their overt statement. The Chancellor, on Friday, 22nd November, when he announced these Measures, said two things which do not marry up. He told us that the joint stock banks, the London clearing banks and the Scottish banks would have

  1381
  to reduce their advances by £100 million. He went on, almost in the same breath, as we have been reminded by the Minister of State this evening, to point out that the deposits required by the Customs and Excise would run at the rate of £100 million a month. He is taking £100 million out of bank credit, on the one hand, and is trying to press £600 million into bank credit, on the other. It will not in fact fit into that source of credit. The Financial Secretary said that there is no intention of making life unbearable, so why are we not to be given the sort of let out provided by C.D.S?
  I remind the Minister of State that the squeeze on the banks will be more severe than he pretends. Barclays Bank says that it proposes to call in up to £50 million worth of advances in response to the Chancellor's squeeze, and they represent merely a quarter of the advances of the London clearing banks. I believe that overall their restrictions will run into £200 million. I believe that the Government must give some flexibility and the c.d.s should do that without harm to the scheme. May we have a positive and constructive reply?
  Mr. A. G. F. Hall-Davis: My hon. Friends have spoken mainly about the financial aspects of these Amendments. Briefly, I should like to refer to the administrative aspects.
  We have heard that the purpose of the enactment is to mop up liquidity and to restrict credit. I hope that the Minister of State will make it clear that the object of the Bill is not to mop up manpower. We have enough people engaged in a form of bureaucratic occupation in the economy at present as a result of the various statutes of this Government. It would be a great pity if this number was further increased unnecessarily by the method of operation of the Bill.
  We had an interesting exchange on this point on Second Reading. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), with his usual acumen, referred to the Prime Minister's undertaking that future Bills should include any forecasts of changes in the non-industrial and industrial staff in Government Departments. This drew from the Minister of State, who I under-
  1382
  stand will be replying, the fact that some 250 members of the Customs and Excise would be drawn into the operation of the Bill. I do not suppose that I could draw the Minister of State into giving an estimate of the number of staff in the private sector who would be drawn into the operation of the Bill who were not previously required for this type of activity, but I suspect it may be very large.
  I think it likely that many firms and offices not normally concerned with import documentation will feel the administrative impact of the Bill. This is another reason why, wherever possible, the administrative aspects should be made simple. I suggest that if Amendment No. 6 is accepted it might help companies and enterprises to decide what system of documentation to initiate to ensure that their credit, extended for the Government, is not for one day longer than it need be. This might help them to devise a simpler system, without so many checks and counterchecks as will be necessary otherwise. I hope that not only when discussing this Amendment, but generally in the Bill, the Minister of State and his colleagues at the Treasury will pay attention to making the administrative burden on the private sector as light as possible. I hope that the Minister will consider this series of Amendments with that in mind as well as the financial aspects.
  Mr. Taverne: Perhaps I might refer, first, briefly to the question of the sterling certificates of deposit. On the last Amendment—and it is really with very much the same subject that the hon. Member for Barkston Ash (Mr. Alison) was concerned—I said that the main aim of the Government was to reduce liquidity, and that we would therefore look at the question of the assignments which would not necessarily have a great impact on liquidity as a way in which the question of borrowing could be dealt with, and the same would apply to the sterling certificates of deposit.
  The hon. Member for Honiton (Mr. Emery) should not read too much into what I have said. I have made it clear that I shall look at the question again with an oven mind. I have not committed the Government to implementing the kind of Amendment which was put

  1383
  forward. We have to look at the questions which have been raised in the debate. We also have to look at how this will affect the automatic payment of the deposits, with which Amendment No. 6 is concerned. It is the desire of all concerned that these payments should be made automatically, and we would not wish to introduce anything which would make it more difficult, or which would attract more manpower, to secure this automatic repayment. All these questions will have to be gone into.
  The objection to the form of the Amendment put forward by the hon. Member for Honiton is that again one is in the realm of negotiable instruments. This is something which I rejected, and it will not be in our review when we look at the question of assignments.
  The real question is whether one should insert words of the kind asked for by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin). There is no dispute about the aim. Hon. Gentlemen opposite and the Government want to ensure that these deposits are repaid on the dot, and that there is no delay. It is not like the cases in the past where there have been delays by Customs. There have been disputed cases. In this kind of case there will be no difficulty, or at least one cannot foresee any difficulty, in deciding when, and to whom, this particular deposit will be repayable. It is not like those other cases, as I think the hon. Member for Wanstead and Woodford appreciated, where there have been disputes and delays. As I read the Clause, I do not see that anything of value will be added if one inserts the words "forthwith and without demand" because it is clear that this will have to be repaid at the end of the 180 days.
  As I said to the Committee before, the repayment system is intended to be worked by means of control forms which will be filled up at the time the deposit is paid. The lower part of the form, C139, which bears the name and address of the person paying the deposit, will be converted by means of a special overprinting machine into a repayment document. It is in any event intended to make this into the repayment document. These forms will be filled in in date sequence, and repayment will be posted
  1384
  in time to reach the recipient by the 180th day.
  The trader will not need to apply for repayment. I can give a complete assurance to the Committee that there will be no such need. There will be automatic repayment, which will reach the person by the 180th day and the addition of the word "forthwith" might even add some uncertainty, because even last week there was some discussion about what it meant. It would be much better to leave the wording as it stands, with the clear obligation that repayment must be made after 180 days.
  Mr. Emery: I must press the hon. and learned Gentleman on this point so that he can help the Committee. If, due to Government error, repayment is not made available to the company after 180 days, will the Government undertake to be responsible for the interest on the money due to their error, when the money is not received by the person making the deposit?
  Mr. Taverne: I shall consider the question whether provision should be made if repayment is late. I do not think that the hon. Member is worried about its being one day late. If the scheme and the law are to be complied with, there will have to be repayment by the Government after the 180 days and there is every intention that this will be part of the automatic process. The care that we must exercise in considering the question of assignment is to see that this automatic process is not interfered with. I agree that it is vital that this period of 180 days shall not even be a period of 181 days.
  Mr. John Wells: In cases where a unit is assigned to a third person, will the 180 days apply to the third person without any fault or fail?
  Mr. Taverne: I do not believe that the hon. Member was present when we discussed the last series of Amendments. The question of assignment is one which we shall re-examine. No specific undertaking has been given that we shall provide for assignment, but we must ensure that the automatic principle is not infringed.
  Mr. Alison: Are we to understand by the Minister's helpful indication that he

  1385
  will again consider the question of assignment and, by implication, negotiability? Do we understand that the Government accept in principle that the concept of the burden of lending to the Government being transferred from shoulders which do not wish to bear it, namely, the importer, to shoulders which may be willing to bear it, the intermediate lender, has been accepted, and that this principle will
  1386
  be followed through, provided that it does not lead to extra liquidity?
  Mr. Taverne: I do not go back on anything that was said by my hon. Friend the Financial Secretary. This is a form of credit selection which works through the importer, and in the first place it is the importer who will have to find the money.
  Sir D. Glover: I do not know about my hon. Friends, but I thought that that reply was most unsatisfactory. I thought that the hon. and learned Gentleman would thank my hon. Friend the Member for Honiton (Mr. Emery) for his Amendment and accept it without any further argument. I cannot see why he has to say that he will take it back and consider the question of negotiability. So long as the Government do not increase credit rates it does not make a ha'p'orth of difference to the Government whether the deposit is paid to a third or fourth party at the end of six months.
  If the Amendment were accepted it would cut down 75 per cent. of the administration. It would make it far easier for people to organise this scheme. Some hon. Members have talked about depositors with £50,000, but the sort of people that I visualise will get into serious trouble over these import deposits. After listening to the Government we would be far wiser to call them credit deposits. It is really a credit deposit, since it has little to do with imports. The importers who will face serious difficulty are not those who can put down £10,000, £50,000 or £100,000, but the small manufacturer importing one component, a replacement for his machinery, on which he would have to put down £1,000 or £2,000. He has no creditability at all. He will be prepared, because he has to have that component, to sell his £1,000 deposit for £900 or even £800. He will not have that creditability to borrow that money on the open market.
  10.30 p.m.
  But if the Chancellor would allow this to be a negotiable security, the difficulty would be removed. The Government do not seem to appreciate that, if the money has to be paid to the original depositor, people who do not know much about the small firms will not help to finance the deposit. By allowing a negotiable bond to be arranged, the Government would overcome the Customs administration and this great difficulty for small people. The Minister of State gave us little assurance that the Government were seized of the urgency of this problem and would deal with it before Report.
  Mr. Nott: The Minister of State dealt very lightly with the possibility of the payment arriving a day late, which is conceivable when we know that the mails cannot be relied upon. Therefore, when considering the form and the assignability on it, he must give the depositor the option of getting his money back by a banker's payment, so that he knows he will get it on the due date and will not have to rely on the mail. Sums of £100,000 or £200,000 may be involved and it is not good enough to hope that the mail will arrive on the due date.
  Mr. Emery: The Minister of State dealt with my points in cavalier fashion. He entirely set aside the efficiency point, of ensuring that there are not two sets of documents issued by the Commissioners, one being the warrant. If he wants to hold the increase in the Civil Service to 250, he must accept my Amendment immediately.
  I was most concerned that he seemed to misunderstand the fact that a day late, on £600 million, could mean an expense of £120,000 or £130,000. That may not mean very much to the Minister, but it certainly does to industry and commerce, and particularly to the small firm.
  If the Government are so sincere and so desolate, and do not want to see anything go wrong, if they want to be sure that payment shall be on the correct date, why do they not give an undertaking that if payment is late they will be responsible for paying the consequent interest? If they mean all they say, let them put their faith in the efficiency of their administration, and say: "If anything goes wrong, we must pay the cost." Why must industry always have to pay the cost—why must it always be the importer? The Minister should give the Committee a much fuller answer than we have so far had.
  Mr. A. P. Costain: Is not the right answer to give a Post-dated order at the time the deposit is made? Would not that meet the problem?
  Mr. Emery: That is really what my Amendment seeks.
  Mr. G. B. Drayson: I am astonished that the Minister of State should even suggest that these payments

  1389
  might be late. When he was talking about automatic repayment, he said: "This is something which will hive to be gone into". Is he telling the House that the Bill has been brought before us without the Government having gone into the question of how repayment is to be made?
  Mr. Taverne: I do not know whether the hon. Gentleman was present during our debate on the previous group of Amendments, but the point was made that we would look at the question of whether or not these receipts should be made assignable. On automatic repayment, I said that we would like to look at the possibility of assigning the receipts. As the scheme stands, there is no doubt that the repayment will be automatic.
  Mr. Drayson: The chance of a person receiving his repayment late can be guarded against by making certain that the documents arrive several days, if not weeks, early, and bear the date on which repayment is due. If payment is made in the form of post-dated cheques, there is no question of their arriving late. I am sorry if I misunderstood the hon. and learned Gentleman on the question of automatic payment.
  Mr. Patrick Jenkin: We have had a good debate on this series of Amendments, and perhaps we should draw it to a close. I say at once that the Minister has gone some way to meeting some of the points we have made. We particularly note his unequivocal statement about the date and the immediacy of repayment, and the fact that the deposits will be repaid without demand. I have no doubt that traders will take comfort from what he has said.
  In passing, I point out that lie said that it would have to be repaid. The words in the Bill are "become repayable", and a number of people have thought that this might be one of those things known to the law as debitum in praesenti solvendum nunquam, which I translate as money which is owed but which never is actually paid. It is therefore right that we should have had the reply we got on that point.
  The Minister of State paid scant respect to the varied points made by my hon. Friends the Members for Honiton (Mr. Emery) and Barkston Ash (Mr. Alison). It is perfectly clear that the Amendment tabled by my hon. Friend the Member for Honiton does not enter into the realms of negotiability at all, but deals purely with the question of assignability. The Minister has said that he will look at that point, but he might perfectly well have said that he would examine it in relation to this particular form of machinery. My hon. Friend made clear that he looked on this Amendment primarily as machinery to simplify administration.
  As to the argument about certificates of deposit, my hon. Friend the Member for Barkston Ash made a very convincing case which went a long way to meet any reasonable objection the Government might have. While recognising that the Minister of State has gone some way, we nevertheless regard these matters of sufficient importance as to advise my hon. Friends to put down a marker and to vote for this Amendment.
  Question put, That that Amendment be made:—
  The Committee divided: Ayes 164, Noes 232.

  Division No. 19.]

  AYES

  [10.41 p.m.

  Alison, Michael (Barkston Ash)

  Boyd-Carpenter, Rt. Hn. John

  Dance, James

  Allason, James (Hemel Hempstead)

  Brewis, John

  Davidson, James (Aberdeenshire, W.)

  Astor, John

  Brinton, Sir Tatton

  d'Avigdor-Goldsmid, Sir Henry

  Atkins, Humphrey (M't'n & M'd'n)

  Bromley-Davenport, Lt.-Col. Sir Walter

  Dean, Paul

  Awdry, Daniel

  Brown, Sir Edward (Bath)

  Deedes, Rt. Hn. W. F. (Ashford)

  Baker, Kenneth (Acton)

  Buchanan-Smith, Alick (Angus, N & M)

  Digby, Simon Wingfield

  Baker, W. H. K. (Banff)

  Buck, Antony (Colchester)

  Donnelly, Desmond

  Beamish, Col. Sir Tufton

  Bullus, Sir Eric

  Doughty, Charles

  Bennett, Sir Frederic (Torquay)

  Burden, F. A.

  Drayson, G. B.

  Bennett, Dr. Reginald (Got. & Fhm)

  Campbell, B. (Oldham, W.)

  Eden, Sir John

  Berry, Hn. Anthony

  Carlisle, Mark

  Elliot, Capt. Walter (Carshalton)

  Biffen, John

  Clegg, Walter

  Emery, Peter

  Biggs-Davison, John

  Cooke, Robert

  Errington, Sir Eric

  Birch, Rt. Hn. Nigel

  Cooper-Key, Sir Neill

  Eyre, Reginald

  Black Sir Cyril

  Corfield, F. V.

  Farr, John

  Blaker, Peter

  Costain, A. P.

  Fletcher-Cooke, Charles

  Boardman, Tom (Leicester, S.W.)

  Currie, G. B. H.

  Fortescue, Tim

  Body, Richard

  Dalkeith, Earl of

  Foster, Sir John

  Gibson-Watt, David

  Maddan, Martin

  Scott, Nicholas

  Gilmour, Sir John (Fife, E.)

  Maginnis, John E.

  Scott-Hopkins, James

  Glover, Sir Douglas

  Marten, Neil

  Shaw, Michael (Sc'b'gh & Whitby)

  Godber, Rt. Hn. J. B.

  Maude, Angus

  Smith, Dudley (W'wick & L'mington)

  Gower, Raymond

  Maxwell-Hyslop, R. J.

  Smith, John (London & W'minster)

  Grieve, Percy

  Mills, Peter (Torrington)

  Speed, Keith

  Griffiths, Eldon (Bury St. Edmunds)

  Mills, Stratton (Belfast, N.)

  Stainton, Keith

  Hall, John (Wycombe)

  Miscampbell, Norman

  Steel, David (Roxburgh)

  Hall-Davis, A. G. F.

  Mitchell, David (Basingstoke)

  Stodart, Anthony

  Hamilton, Lord (Fermanagh)

  Montgomery, Fergus

  Stoddart-Scott, Col. Sir M.

  Hamilton, Michael (Salisbury)

  More, Jasper

  Summers, Sir Spencer

  Harrison, Brian (Maldon)

  Morgan, Geraint (Denbigh)

  Taylor, Sir Charles (Eastbourne)

  Harvie Anderson, Miss

  Morrison, Charles (Devizes)

  Taylor, Edward M. (G'gow, Cathcart)

  Hawkins, Paul

  Munro-Lucas-Tooth, Sir Hugh

  Temple, John M.

  Hay, John

  Murton, Oscar

  Thatcher, Mrs. Margaret

  Heald, Rt. Hn. Sir Lionel

  Nabarro, Sir Gerald

  Thorpe, Rt. Hn. Jeremy

  Heseltine, Michael

  Nott, John

  Tilney, John

  Higgins, Terence L.

  Onslow, Cranley

  van Straubenzee, W. P.

  Hiley, Joseph

  Orr, Capt. L. P. S.

  Vaughan-Morgan, Rt. Hn. Sir John

  Hill, J. E. B.

  Osborn, John (Hallam)

  Vickers, Dame Joan

  Holland, Philip

  Page, Graham (Crosby)

  Waddington, David

  Hordern, Peter

  Page, John (Harrow, W.)

  Walker-Smith, Rt. Hn. Sir Derek

  Hornby, Richard

  Pardoe, John

  Wall, Patrick

  Howell, David (Guildford)

  Peel, John

  Walters, Dennis

  Hutchison, Michael Clark

  Ward, Dame Irene

  Iremonger, T. L.

  Percival, Ian

  Weatherill, Bernard

  Jenkin, Patrick (Woodford)

  Peyton, John

  Webster, David

  Joseph, Rt. Hn. Sir Keith

  Pike, Miss Mervyn

  Wells, John (Maidstone)

  Kershaw, Anthony

  Price, David (Eastleigh)

  Whitelaw, Rt. Hn. William

  Kitson, Timothy

  Prior, J. M. L.

  Williams, Donald (Dudley)

  Lancaster, Col. C. G.

  Pym, Francis

  Wilson, Geoffrey (Truro)

  Legge-Bourke, Sir Harry

  Quennell, Miss J. M.

  Winstanley, Dr. M. P.

  Lewis, Kenneth (Rutland)

  Renton, Rt. Hn. Sir David

  Wolrige-Gordon, Patrick

  Lubbock, Eric

  Rhys Williams, Sir Brandon

  Woodnutt, Mark

  McNair-Wilson, Patrick

  Ridley, Hn. Nicholas

  Wright, Esmond

  MacArthur, Ian

  Ridsdale, Julian

  TELLERS FOR THE AYES:

  Maclean, Sir Fitzroy

  Royle, Anthony

  Mr. R. W. Elliott and

  Macmillan, Maurice (Farnham)

  Russell, Sir Ronald

  Mr. Hector Munro

  NOES

  Abse, Leo

  Davies, Ifor (Gower)

  Hamilton, James (Bothwell)

  Albu, Austen

  Delargy, Hugh

  Hamling, William

  Allaun, Frank (Salford, E.)

  Dell, Edmund

  Hannan, William

  Alldritt, Walter

  Dempsey, James

  Harper, Joseph

  Allen, Scholefield

  Dewar, Donald

  Harrison, Walter (Wakefield)

  Anderson, Donald

  Diamond, Rt. Hn. John

  Hart, Rt. Hn. Judith

  Atkins, Ronald (Preston, N.)

  Dickens, James

  Haseldine, Norman

  Atkinson, Norman (Tottenham)

  Dobson, Ray

  Hattersley, Roy

  Bagier, Gordon A. T.

  Doig, Peter

  Hazeil, Bert

  Barnes, Michael

  Dunn, James A.

  Hefter, Eric S.

  Bence, Cyril

  Dunnett, Jack

  Henig, Stanley

  Bidwell, Sydney

  Dunwoody, Mrs. Gwyneth (Exeter)

  Herbison, Rt. Hn. Margaret

  Binns, John

  Eadie, Alex

  Hilton, W. S.

  Bishop, E. S.

  Edelman, Maurice

  Hobden, Dennis

  Blackburn, F.

  Edwards, Robert (Bilston)

  Horner, John

  Boardman, H. (Leigh)

  Edwards, William (Merioneth)

  Howarth, Harry (Wellingborough)

  Booth, Albert

  Ellis, John

  Hoy, James

  Boston, Terence

  English, Michael

  Hughes, Emrys (Ayrshire, S.)

  Boyden, James

  Ennals, David

  Hughes, Roy (Newport)

  Braddock, Mrs. E. M.

  Ensor, David

  Hunter, Adam

  Bray, Dr. Jeremy

  Evans, Fred (Caerphilly)

  Hynd, John

  Brooks, Edwin

  Evans, Ioan L. (Birm'h'm, Yardley)

  Irvine, Sir Arthur (Edge Hill)

  Brown, Hugh D. (G'gow, Provan)

  Ewing, Mrs. Winifred

  Jackson, Peter M. (High Peak)

  Buchan, Norman

  Faulds, Andrew

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Buchanan, Richard (G'gow, Sp'burn)

  Fernyhough, E.

  Jenkins, Hugh (Putney)

  Callaghan, Rt. Hn. James

  Fitch, Alan (Wigan)

  Jenkins, Rt. Hn. Roy (Stechford)

  Cant, R. B.

  Fletcher, Rt. Hn. Sir Eric (Islington, E.)

  Johnson, Carol (Lewisham, S.)

  Carter-Jones, Lewis

  Fletcher, Ted (Darlington)

  Johnson, James (K'ston-on-Hull, W.)

  Chapman, Donald

  Foley, Maurice

  Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)

  Coe, Denis

  Foot, Michael (Ebbw Vale)

  Jones, J. Idwal (Wrexham)

  Coleman, Donald

  Forrester, John

  Jones, T. Alec (Rhondda, West)

  Conlan, Bernard

  Fowler, Gerry

  Kenyon, Clifford

  Corbet, Mrs. Freda

  Fraser, John (Norwood)

  Kerr, Mrs. Anne (R'ter & Chatham)

  Crawshaw, Richard

  Freeson, Reginald

  Kerr, Dr. David (W'worth, Central)

  Crosland, Rt. Hn. Anthony

  Gardner, Tony

  Lawson, George

  Cullen, Mrs. Alice

  Garrett, W. E.

  Leadbitter, Ted

  Dalyell, Tam

  Gordon Walker, Rt. Hn. P. C.

  Lee, Rt. Hn. Frederick (Newton)

  Davidson, Arthur (Accrington)

  Gray, Dr. Hugh (Yarmouth)

  Lever, Harold (Cheetham)

  Davies, Ednyfed Hudson (Conway)

  Greenwood, Rt. Hn. Anthony

  Lever, L. M. (Ardwick)

  Davies, G. Elfed (Rhondda, E.)

  Gregory, Arnold

  Lewis, Arthur (W. Ham, N.)

  Davies, Dr. Ernest (Stretford)

  Grey, Charles (Durham)

  Lewis, Ron (Carlisle)

  Davies, Harold (Leek)

  Griffiths, Eddie (Brightside)

  Lomas, Kenneth

  Griffiths, Will (Exchange)

  Loughlin, Charles

  1392

  1393

  Lyon, Alexander W. (York)

  Oakes, Gordon

  Snow, Julian

  Lyons, Edward (Bradford, E.)

  O'Malley, Brian

  Spriggs, Leslie

  Mabon, Dr. J. Dickson

  Oram, Albert E.

  Steele, Thomas (Dunbartonshire, W.)

  McBride, Neil

  Orme, Stanley

  Stonehouse, Rt. Hn. John

  McCann, John

  Oswald, Thomas

  Strauss, Rt. Hn. G. R.

  MacColl, James

  Owen, Dr. David (Plymouth, S'tn)

  Summerskill, Hn. Dr. Shirley

  Macdonald, A. H.

  Owen, Will (Morpeth)

  Swain, Thomas

  McGuire, Michael

  Page, Derek (King's Lynn)

  Swingler, Stephen

  McKay, Mrs. Margaret

  Palmer, Arthur

  Taverne, Dick

  Mackenzie, Gregor (Rutherglen)

  Pannell, Rt. Hn. Charles

  Tinn, James

  Mackintosh, John P.

  Park, Trevor

  Urwin, T. W.

  Maclennan, Robert

  Parker, John (Dagenham)

  Varley, Eric G.

  McMillan, Tom (Glasgow, C.)

  Parkyn, Brian (Bedford)

  Walker, Harold (Doncaster)

  MacPherson, Malcolm

  Pavitt, Laurence

  Wallace, George

  Mahon, Peer (Preston, S.)

  Peart, Rt. Hn. Fred

  Watkins, David (Consett)

  Mahon, Simon (Bootle)

  Pentland, Norman

  Watkins, Tudor (Brecon & Radnor)

  Manuel, Archie

  Perry, George H. (Nottingham, S.)

  Weitzman, David

  Mapp, Charles

  Prentice, Rt. Hn. R. E.

  Wells, William (Walsall, N.)

  Marks, Kenneth

  Price, Christopher (Perry Barr)

  Whitaker, Ben

  Marsh, Rt. Hn. Richard

  Price, William (Rugby)

  Whitlock, William

  Mulish, Rt. Hn. Robert

  Probert, Arthur

  Wilkins, W. A.

  Mondelson, John

  Rees, Merlyn

  Willey, Rt. Hn. Frederick

  Mikardo, Ian

  Richard, Ivor

  Williams, Alan (Swansea, W.)

  Millan, Bruce

  Roberts, Albert (Normanton)

  Williams, Alan Lee (Hornchurch)

  Milne, Edward (Blyth)

  Roberts, Gwilym (Bedfordshire, S.)

  Williams, Clifford (Abertillery)

  Mitchell, R. C. (S'th'pton, Test)

  Rodgers, William (Stockton)

  Williams, W. T. (Warrington)

  Morgan, Elystan (Cardigarshire)

  Roebuck, Roy

  Wilson, Rt. Hn. Harold (Huyton)

  Morris, Alfred (Wythenshawe)

  Rose, Paul

  Wilson, William (Coventry, S.)

  Morris, Charles R. (Openshaw)

  Ross, Rt. Hn. William

  Winnick, David

  Moyle, Roland

  Rowlands, E.

  Woodburn, Rt. Hn. A.

  Mulley, Rt. Hn. Frederick

  Shaw, Arnold (Ilford, S.)

  Woof, Robert

  Murray, Albert

  Sheldon, Robert

  Wyatt, Woodrow

  Neal, Harold

  Silkin, Rt. Hn. John (Deptford)

  Newens, Stan

  Silkin, Hn. S. C. (Dulwich)

  TELLERS FOR THE NOES:

  Noel-Baker, Rt. Hn. Philip (Derby, S.)

  Silverman, Julius

  Mr. Ernest Armstrong and

  Norwood, Christopher

  Skeffington, Arthur

  Dr. M. S. Miller.

  Mr. John Smith: I beg to move Amendment No. 7, in page 1, line 19, leave out '180' and insert '90'.
  The Chairman: With this Amendment we may discuss the following three further Amendments:
  No. 8, in page 1, line 19, after 'days' insert:
  ', or such shorter period as the Treasury may by order made by statutory instrument provide'.
  No. 9, in page 1, line 20, after 'paid', insert:
  ', or a bond for the deposit given'.
  No. 80, in page 1, line 20, after 'paid', insert:
  'or on the 27th November 1969 (whichever shall be the earlier)'.
  If the Committee wishes, we may have a Division on Amendment No. 9.
  Mr. John Smith: I am still in as much of a fog about the exact aim of the Bill as I expect you are, Mr. Irving. I suspect that the Treasury bunch are in the position which I have sometimes been in as a banker—they do not know for certain what they are doing, but they think that they know how to do it. We have been told by the Chancellor himself that this is to be a selective squeeze against importers. When we ask, with
  1394
  some anxiety, whether some importing firms will go bankrupt—as they certainly should if it is that sort of squeeze—we are told that they will be able to borrow easily against deposit receipts. That has been said several times, including today.
  When we ask whether the deposit receipts are to be assignable or negotiable so that importers can in fact borrow against them, we are told "No"—we must remember that the scheme is intended to restrain the liquidity of importers. We are told that importers will be encouraged to borrow abroad but how can they if they cannot give a security over their deposit receipts. Form 139 is no evidence of creditworthiness; it merely means that a man has assets, excellent assets, no doubt, but he may have enormous liabilities as well.
  Even if the receipts were absolutely freely negotiable, which we are told they are not to be, this would still be a squeeze because it would convert cash into money at six months. It has been correctly said already that, whatever happens to them, these deposit receipts will not be in the nature of bank bills. They would be, if they were freely negotiable, simply in the nature of trade bills, so it would still be a squeeze of a sort.
  The Chairman: Order. I am having difficulty in relating what the hon. Gentleman is saying to the Amendments. I understand that the one he is moving refers to a question of shortening the period.
  Mr. J. Smith: It is going to be all right, Mr. Irving. because 90 days, which is the period that I seek to insert, is the period of a trade bill or bank bill, to which I am perhaps too gradually, coming.
  Even if the squeeze is applied with full rigour—if the whole £600 million or £700 million comes straight out of the pockets of the importers and goes straight into the Bank of England and remains there, and there is no borrowing against it, it will still not withdraw cash from the system for very long. It will simply help the Government over their next funding operation. Therefore, it should be accepted that the receipts can be borrowed against. Now if money is to be borrowed it is much better that it should be borrowed against something with a currency of 90 days than 180 days. Ninety days is a well-known, commonly accepted period for the financing of imports; 180 days is not.
  It is true that one can get a credit for 180 days through an acceptance house, by arranging that one's 90 day bill will be renewed. Nevertheless, a six-month period is a very tiresome thing, and a 90-day period is absolutely acceptable in all circles all over the world. Such a thing fits perfectly into our financial system.
  An additional reason for making the Amendment has emerged from our discussions. We have in effect been trying today to devise a new financial instrument, and that is very difficult. It cannot be done in one afternoon. It would probably take a Bill of its own, and a lot of case law. For example, we have been talking about the making of payments late.
  What would the Minister say about the idea of paying a bill of exchange a day late? There was talk of posting cheques to people, and that at a time when the Government had introduced, to their great credit, the Giro system, which is an up-to-date and flexible method of making payment. The whole
  1396
  discussion about payment was steam-age stuff. The Government had much better accept that the deposit receipts should in effect be 90-day trade bills of exchange. They will then be a form of squeeze on importers that everybody understands and which will not take a moment of explanation. They will be absorbed into the system, but will be a squeeze nevertheless. The Government will in this way also have what in their rather split way, they want—a simultaneous general squeeze on liquidity.
  It is for that reason that I propose that we leave out 180 and insert 90. In case that is too categorical and unacceptable, I have also put down Amendment No. 8, to enable the Government to shorten the period from 180 days should they ever wish to do so. If we are to have this completely untried expedient, it is very foolish for the Government to tie their hands as to the period and to leave themselves no flexibility. They have a flexibility with the rate, but it would be as well to have flexibility with the period as well, so that they can either reduce the impact of the scheme or, if it appears desirable, can make these deposit receipts conformable to the existing financial system, which depends on the 90-day bill.
  11 p.m.
  Mr. McNair-Wilson: I support my hon. Friend for the Cities of London and Westminster (Mr. John Smith). We put down this Amendment because so far we have had an unconvincing answer from the Financial Secretary on the reasons for the 50 per cent. deposit. He was unable to satisfy us as to why that figure was arrived at.
  We are now in the presence of another situation where the Government will have to give us a clear indication of why they have settled on 180 days and not another period. I fear that we are making slow progress with this Bill, but this is largely due to the Government's intransigence.
  We are assured that there is no intention of ruining companies, and here is a reasonable Amendment suggesting that we should try, to some extent at least, to lessen the burden on import companies. We are asking the Government to realise that this sensible Amendment will make it possible for a number of small

  1397
  companies who will be hit by this legislation to find the money more easily and to pay interest over a shorter period. If we can look at the 90 days in the concept of keeping down costs to the people of this country, if we can keep down interest, we shall help to solve this problem. This is important to many companies with goods in transit. I know that a later Amendment covers this point, but many companies will find themselves with goods on the high seas for which they will have to pay a deposit. If they could have this relief it would go a long way to mitigating their situation.
  A small company which is an importer of high capital cost goods is, as the Bill stands, likely to have to find large sums of money. If we can get the Government to accept this Amendment, so that they have to find the money only for 90 days instead of 180, we would go some way towards meeting a valid point.
  Mr. Tom Boardman: I support this Amendment for the reasons given by my hon. Friends the Members for the Cities of London and Westminster (Mr. John Smith) and the New Forest (Mr. McNair-Wilson). I support it, too, because of what we have been told tonight about the problems which will face importers, particularly small ones, of raising capital. I shall confine myself to Amendment No. 80 which is in my name and is being discussed at the same time. This puts a term on the period for repayment, to provide that it shall be after 90 days, as I hope, or 180 days as the Bill stands. or 27th November, 1969, whichever shall be the earlier.
  I recognise that this involves the problem that large sums of money might be flooded into the economy on 27th November, 1969, if all the import deposits that have been paid over the preceding six months are then repayable. I recognise that this is a problem, but it is not one of our seeking.
  First, however, I query the position under the Bill as drafted. Clause 3(4) causes me confusion. It states that
  "Duty under section 1 of this Act shall cease to be in force at the expiration of a period of one year beginning with the date on which this Act is passed".
  We were told this afternoon that no duty was imposed by the Bill. It was, only,
  1398
  a question of money being loaned to the Government interest-free. Does the fact that duty ceases to be in force mean that all deposits will be automatically repaid on that day, or what does it mean?
  To be consistent with the argument put to us earlier by the Attorney-General that import deposits are not a duty, when the duty ceases to be in force the lending of the deposits must automatically terminate and the deposits must forthwith be repaid. If that is the correct interpretation, as it appears to me to be the logical one, my Amendment is quite unnecessary and I will not take further time to debate it. My interpretation is that the duty ceases to be in force because it would be repaid on the day stated in Clause 3 (4), but on the assumption that I may be wrong, I press the Amendment for other reasons.
  I ask the Committee to consider the problem that will arise when deposits are paid by a number of firms over a period towards the end of the life of this short-term Bill or when it is suddenly brought to an end, either on the date provided in Clause 3 (4) or as provided in a subsequent Measure.
  Money which has been deposited by firms on the preceding day will be stuck in the Government vaults free of interest for a further 180 days. Firms which, by good luck or for other reasons, have deposited the money on the day after it ceases to he in force, will not have to give a deposit. Therefore, there will be two types of importer. For six months, one importer will have deposited a large sum of money which will not earn anything for him, whereas his next-door neighbour, who happened by chance to import the goods or get them released a day later, will not be faced with that burden. That is monstrously wrong and it will make for unbalanced competition between the two.
  I ask the Minister, in replying, to give an assurance about this. I hope that he will go so far as to accept Amendment No. 80, which would set a terminal date for the repayment of all deposits. Otherwise, how will he play fairly with those two categories of people? It will distort competition and result in unfairness, and so I hope that the Government will consider carefully the point made in the Amendment.
  Mr. Edward M. Taylor: My hon. Friends who have

  1399
  spoken to the Amendment have concentrated on the effect which the Amendment will have on small importers. The reason for my intervention is one which you, Mr. Gourlay, will appreciate, and that is the effect of the Amendment on large heavy industries. There is a concentration of heavy industry in Scotland. There is an important ship-building industry and an important engineering industry, and I feel that the Government cannot have considered the effect of the 180 days on industries the reorganisation of which is being given every encouragement and incentive by the Government.
  I know that you, Mr. Gourlay, have a special interest in ship-building. The Government have introduced a Bill and have published the Geddes Report giving industry encouragement to go ahead with a major programme of reorganisation, involving substantial capital spending and the importing of substantial quantities of machinery. The importation of machinery is not a matter of choice. It is not a matter of considering the purchase of a German, Italian or American machine when there is a perfectly good British equivalent. The industries are so large and involve such substantial sums of money that certain machines can be bought only abroad. Unless there is the freedom and facility to import such foreign machines, the prosperity and capital reorganisation of the industry insisted on by Government Ministers will be held back. Machines like the Schichau Monopol and the Sicomat, which have an important part to play in shipbuilding reorganisation, cost a great deal of money. The payment of a deposit of 50 per cent, for 180 days could seriously affect the liquidity of shipyards, and the liquid position of the shipbuilding industry is serious.
  Substantial numbers of orders have fortunately been received in some areas. Employment is guaranteed for a certain period, but not on a profitable basis. One shipyard in Scotland is faced with a liquidity problem, which hon. Members representing the Fife area have been fighting strenuously. I hope that the Government will support the Amendment—
  Mr. Diamond: I have been listening carefully to the hon. Gentleman, but I
  1400
  still do not know which Amendment he is speaking to. Several Amendments are being discussed. Would he be kind enough to say to which Amendment he is speaking?
  Mr. Taylor: I suggest to the Minister that when I am speaking of such an important industry as the shipbuilding industry he should not make such an intervention. The Minister well knows that the Amendment to which I am speaking is the one relating to 180 or 90 days. This could be life or death to the shipyards, and an intervention asking what Amendment I refer to will not be received very graciously in places where industrialists are wondering where the money to pay the import deposits will come from. This kind of attitude causes resentment on the part of industrialists when they are faced with a serious problem. I hope that the Minister will give serious attention to the effect of the Amendment on the shipbuilding and engineering industries which are facing reconstruction. Have the Government considered this?
  In every measure imposing import duties since 1932 special regard has been had, and exemption has been given, to the shipbuilding industry. The Bill gives exemption only for components of ships and not for machinery imported for a major reconstruction. It might be sensible if the Government said that they wanted to discourage this kind of spending and to stop shipyards buying foreign machines. But they do not say that. They have introduced another Shipbuilding Industry Bill which encourages firms to do it and provides some of the cash for it. Now the Government come forward with a policy providing exactly the reverse. They have two policies put forward by two Ministers which conflict with each other.
  11.15 p.m.
  In replying to the Amendment on whether the period should be 90 or 180 days, perhaps we could be told whether any calculation has been made of the cost of 180 days to the shipbuilding industry, at present engaged in a massive programme of reorganisation. At present, the industry is in a desperately ill-equipped state, with most of its money tied up in contracts. It has a very real problem to find cash. Has the industry been consulted about the effect that 180

  1401
  days will have upon it? Has anyone outside been asked to estimate it? Have the Government considered the relative effects of 180 and 90 days on Scottish industry generally?
  We have heard how the Government's proposal will affect the financial institutions in the City of London, and certainly they are important. Anything which interferes with the natural movement of money is important to the country. We have heard about the likely effect on small importers and on agriculture. But surely it is clear that the major effect of this kind of Measure will be on heavy industries which are engaged on reorganisation and require to import substantial amounts of foreign machinery which they cannot obtain at home. Industry in Scotland is basically heavy industry. In some cases, it is declining; in others, it is reorganising. What will be the relative effects in Scotland, and what will be the effects on the United Kingdom generally?
  So often, the Government bring forward Measures without thinking about the effect of them on different industries and different parts of the country. We had an outstanding example with the Selective Employment Tax, and we know the effect that that has had on Scotland. This Measure should be considered in the same light: will it have the same effect throughout the country?
  I hope that this part of the Bill will not have a seriously adverse effect on the shipbuilding industry and that it will not discriminate against Scotland, where so many of our people are employed in heavy industries. My fear is that it will have both results and, for that reason, I am solidly behind my hon. Friends in supporting this Amendment.
  Mr. A. G. F. Hall-Davis: I want to address my remarks specifically to Amendment No. 8, and I start with the very strong point made by my hon. Friend the Member for Cities of London and Westminster (Mr. John Smith) that this is a new procedure and must be, to a large degree, a leap in the dark.
  There has been much discussion on the basis that, in terms of restricting the volume of imports, it may have little
  1402
  effect. But at this stage of the Bill, we should consider its provisions in the light of what should be done if we find that it bites very deeply into imports.
  It is certain that it will bite progressively. The first deposits will be found more readily, but, as the weeks go by, importers will have increasing difficulty in finding the deposits. It has been suggested that those dealing with imported goods entirely will have 25 per cent. of their annual turnover locked up at the end of the relevant period.
  Let us consider that it does bite deeply and perhaps sufficiently deeply to be disruptive of our commercial and industrial activities; or, perhaps, if hon. Members think that is unlikely, let us consider what I think is a more probable eventuality, but at least one which the Chief Secretary would be prepared to consider. Let us suppose that the British people overcome the handicaps of an incompetent Government and that the economy comes back on course smartly in the next few months. In that event, what would be the best way of relaxing the impact of these levies? Would it be better to reduce the percentage of value deposited, or would it be better to shorten the period?
  In Clause 1(11) the Government have given themselves full flexibility as to the percentage on deposit and the categories of goods. I suggest—I hope constructively, like my hon. Friends have done—that he should give reasons why, in either of the circumstances to which I have referred, a reduction in the period of deposit would be preferable to a reduction in the percentage. I think there would be more impact on the level of imports from a 50 per cent. deposit for three months than from a 25 per cent. deposit for six months.
  There will be a critical percentage below which overseas exporters will extend credit in the form of deferred payment for the whole of the six months because they will look on it as merely deferring the profit element of their price. In addition, if we have a deferment of payment by overseas exporters to us, it will result in a short-term benefit to our balance of payments, but it will not reduce imports and it will not help us to reduce the fearsome amount of overseas debt.

  1403
  I hope the Chief Secretary will pay more attention in his arguments and considerations to a true improvement in the balance of payments rather than a temporary influx of hot money or a deferment of payments overseas. That is what we should be aiming at. A reduction in the period rather than in the percentage will help towards an early winding up of the scheme; at least, so it seems to me.
  If one is not going to chop it off suddenly, and it may not be desirable to do this, there are reasons of administrative convenience for reducing the period rather than reducing the percentage. The Government have given themselves the flexibility in subsection (11), and I believe that by tabling this Amendment No. 8 my hon. Friends have drawn attention wisely to the desirability of having the same flexibility in terms of the time for which the deposits would be held. The Government would be well advised in their own interest to give themselves this flexibility in respect of this Amendment.
  Mr. Fletcher-Cooke: May I refer to Amendment No. 9, if I dare, and ask the Chief Secretary to consider whether the Government are really taking gracefully the percentage they had to concede over the Ways and Means Resolution.
  Amendment No. 9 seeks to insert into the subsection the provision that the beginning of the period of 180 days should start either on the day on which the deposit was paid
  "or a bond for the deposit given."
  The Chief Secretary will recollect that the House triumphantly enforced, if that is not too strong a word, its right to guard most jealously the powers of the Executive under the Provisional Collection of Taxes Act concerning the Ways and Means Resolution. It was conceded that for the deposits required on the day after the Ways and Means Resolution was passed, the duty need not be paid, but that a bond was acceptable in lieu. From the way that the subsection is now drafted, it looks as if the Government are, in practice, concerning all material things, trying to claw back what the House insisted upon. I do not think that this is right. It means that those importers who took advantage of the vigi-
  1404
  lance of the House and on that day deposited a bond instead of paying the money will be without their money for about 200 or 210 days, according to the date of receipt of the Royal Assent, which was not what the House intended when it extracted from the Government the admission that a bond was a suitable alternative.
  A bond costs money, very often. An importer would have to get security from a reputable bank. A small man would need an indemnity from a person of substance, for which he would have to pay. So that, for the period from the passage of the Ways and Means Resolution until the Royal Assent to the Bill, such an importer will be paying something for those days to get his goods out of the warehouse. If the Bill is left unamended, he will have to pay a further full amount of 180 days of interest. Therefore, such a man who took advantage of the vigilance of the House, as he was entitled to do, will be prejudiced to the extent of having to pay interest on money, or charges for a bond, not for 90 days as we hoped, not for 180 days as the Government pretend, but for something over 200 days. This is wrong. Therefore, I hope that the Chief Secretary will accept Amendment No. 9, which I regard as a symbol of the importance of the House of Commons over the raising of taxes and revenue.
  Mr. John Biffen: My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) has spoken very cogently about the reasons why the Government should accept Amendment No. 9 and so vindicate the watchfulness of the House.
  I will speak briefly to Amendment No. 7. I do so on very much broader grounds than those indicated by my hon. and learned Friend. We are being asked to pass this legislation against a developing background of very tight general credit conditions. The totality and extent of that may not have been apparent on Second Reading, but I believe that it is more apparent now, particularly after the remarks of Mr. Robarts and the clearing banks about the significance that they saw in the totality of the Government's proposal.
  If this Measure is being enacted against the background of a general credit

  1405
  squeeze, it invalidates the argument for various aspects of the credit squeeze, and also highlights the immense unfairness that can derive to certain people who are caught by the particular credit squeeze conducted against the background of a general credit squeeze.
  11.30 p.m.
  There are many reasons why we should be suspicious of the Government's attitude. Perhaps the brief exchange between my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) and the Chief Secretary a few moments ago indicated the casual attitude of the Government to matters which are deeply felt on this side of the House, and by people outside the House whose interests are affected.
  I ask the Committee to reflect on the words of the Financial Secretary during the Second Reading of the Bill, when he said:
  "The most that will happen here, and what is intended to happen, is that a man who really must have the import will go to the inconvenience and modest expense required to obtain finance."—[OFFICIAL REPORT, 28th November. 1968; Vol. 744, c. 760.]
  Anybody who believes that those calm words will assuage the fears of those who read this morning's statement by Mr. Robarts and the clearing banks is a born optimist.
  We know that in as much as this Measure bites it will bite particularly severely on that element of the business community which always finds trading difficulties in periods of particularly tight credit, namely, the small business community. If one wanted to make a catalogue of thoughtless and foolish activities by this Government against any one section of the community, that catalogue would be longest in respect of the small business community, and, if only as some penance for their past misdeeds, the Government should be prepared to accept the Amendment.
  Sir J. Foster: I propose to speak briefly to Amendment No. 9, and to remind the Chief Secretary that on a previous Amendment the Financial Secretary said that the position would be the same for people importing the same kind of goods. Because of the way in which the Bill is drafted, a person who imported goods before the Bill became law will have to pay more. As my hon. and
  1406
  learned Friend the Member for Darwen (Mr. Fletcher-Cooke) said, a person who imported goods on 27th November will have paid for a bond, he will pay the deposit, and he will then have to pay the interest for 180 days from the day on which he paid the deposit, plus the cost of the bond. That is contrary to the assurance given by the Financial Secretary that the position would be the same for everybody.
  It is no use the Chief Secretary saying that the man should have foreseen this and paid the deposit on 27th November. The whole point of the argument is that he could not pay the deposit. He could only give security, and therefore, as the Bill is drafted, Customs and Excise could not say that the deposit had been paid on 27th November. Surely the right hon. Gentleman will agree that it is unfair on those importers who happened to be importing goods between 27th November and when the Bill became law that they should pay more than those importers who imported after the Bill became law?
  I do not know whether the right hon. Gentleman was in the House at the time, but it is within the recollection of my hon. Friends that the Financial Secretary said several times—because he got rather impatient with us as he thought we were rather dumb—that the position would be the same for all importers. Because of the way the Bill is drafted, a person who imports goods from 27th November to when the Bill became law will have to pay the cost of the bond—£X. He will have to pay the interest on the money he borrows for 180 days, plus £X, and he will be at a disadvantage compared with those who imported after the Bill became law.
  I hope the Chief Secretary will assure us that the position will be the same for all importers. If the hon. Gentleman meant all importers of the same kind, I think that that is rather a specious answer. If the hon. Gentleman meant that that was the position for all importers who imported on the same day, the assurance was worth nothing. For those reasons I hope that the Chief Secretary will look at Amendment No. 9 again and explain why—if he wants to retain the Bill in its present form—he thinks it fair that importers of goods between 27th November and the date when the

  1407
  Bill became law should pay more than importers of the same kind of goods after the Bill became law.
  Mr. Peyton: I feel sure that the Committee is grateful to you, Mr. Gourlay, for having in your wisdom permitted a fairly wide-ranging debate on the Amendments, although this may have been confusing to the Chief Secretary, who was rather unwisely led—perhaps he was not the first—to under-rate the Parliamentary skill and strength of conviction of my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor). The Committee was happy to see my hon. Friend winning that brief but heated exchange.
  I want only to go back to the point raised by my hon. Friend the Member for Oswestry (Mr. Biffen) and to refer to the general background against which the Amendment was moved. We always regret the doctrinaire approach of the Treasury, the Board of Trade, and the customs and excise authorities to these problems. They say that it will be the same for everybody. The inconvenience of borrowing money and the cost of borrowing money are waved aside, and the impact upon the individual firm is forgotten. The Government are playing a game which might be called the game of the last straw. We have a camel, and we go on and on and on piling straws on its back, and at some time, somehow, that almost invincible, almost unconquerable camel will fall down; one of its vertebrae will give way. The only point of real and vibrating interest to me is the question whether there will be a cheer or a sigh from the Treasury when that happens.
  Mr. John Smith: Surely this situation is much more like the story of the donkey. A man had a donkey and was training it to live without food, and just as the donkey was getting used to this it died.
  Mr. Peyton: That modesty which I have been endeavouring to advocate to the Treasury Bench leads me to say "Thank you very much" to my hon. Friend. I do not think that I can usefully add to what he has so eloquently said. I hope that the Treasury will at some time learn something about camels and donkeys, and I also hope that those
  1408
  who advise the present incumbents of the Treasury Bench will begin to learn some degree of the modesty which they evidently cannot teach their masters.
  Mr. Diamond: I owe it to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) to explain something which he has completely misunderstood. Those who have known over many years how I conduct my Committee work will have no difficulty, I hope, in accepting what I am about to say. Your predecessor in the Chair, Mr. Gourlay, called a number of Amendments and said that there would, if necessary, be a Division on Amendment No. 9, the only one which is "top-hatted", that is, which has the name of a Member of the Opposition Front Bench attached to it. I naturally thought that this was the main Amendment. Until the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) spoke, no one referred to that Amendment; I thought that it would not be moved and that I would not have to reply to it.
  I have listened to every speech, and I listened with care and patience to the hon. Member for Cathcart, who was speaking about shipbuilding, which is dealt with in the Schedule, where there is a number of relevant exceptions, which would be discussed when we reached the Schedule. I was, therefore, honestly wondering which Amendment the hon. Member was speaking about, and when he said "this Amendment" I naturally asked "Which?". He did not follow me, so I got up to make it clear—
  Sir J. Foster: I thought that my hon. Friend had mentioned the 90 or 180 days question before he referred to shipbuilding. If that is in HANSARD, the right hon. Gentleman will agree that he is wrong, and if it is not, I will agree that I am wrong. I believe that it is a simple mishearing.
  Mr. Diamond: That may be so, but I am not accusing the hon. Member for Cathcart; I am simply explaining why I asked which Amendment it was.
  The essential point in Amendment No. 7 is a reduction from 180 to 90 days, which, as the hon. Member for the Cities of London and Westminster (Mr. John Smith) said, is a familiar period. But that does not alter the fact that the Government feel that, with the other

  1409
  elements of the scheme, we need 180 days to make a sufficient impact in both respects which have been discussed time and again on Second Reading and in Committee. Therefore, I can hold out no hope that we shall reduce the period.
  On the following Amendment, a number of hon. Members kindly suggested that the Treasury should take power to alter the period by Statutory Instrument if we changed our minds in future. I am grateful for that suggestion, but so satisfied are we that this part of the scheme must be maintained that we are not seeking that power and must reject that suggestion.
  The Committee will appreciate that there are four major elements in this scheme, on three of which powers are taken in the Bill, and, if Amendments are accepted, Orders will be laid before the House under which a reduction can take place in those three aspects of the Bill.
  11.45 p.m.
  As to the fourth aspect, we are not even asking for power to reduce that period of 180 days, so satisfied are we that we do not need it by itself. Obviously, if power to reduce the whole scheme is taken, that will have its effect on the period for which deposits are payable but, by itself, we are satisfied that this power will not be needed, and, indeed, it is an essential part that there shall be what I might call an orderly repayment.
  Mr. Graham Page: Do I understand correctly from the right hon. Gentleman that if power is exercised under Clause 3(4) to terminate the whole of the Act, the deposits will thereupon become repayable? If not, they will be held illegally, because there will then be no Act in operation authorising the Government to hold them.
  Mr. Diamond: That is not what I am advised. I take the point, and in fact an hon. Gentleman has mentioned it in this very debate. I am advised that the effect of the subsection is that the deposits will be repayable, notwithstanding the scheme has ceased to be in force, 180 days after they have been paid. That is the intention, that is the proposal, and that is the effect, I am advised, of that subsection.
  Mr. Graham Page Mr. Graham Page rose—
  Mr. Diamond: We are in Committee and I shall give way again if the hon. Gentleman wishes to pursue the debate—it must be for him—but I have answered him, I think, very clearly. No Amendment has been tabled on that point. I have been asked about it now by two hon. Gentlemen, and I hope that I have given a very clear answer. The effect and the intention go hand in hand. If the whole scheme comes to an end under that subsection, deposits are repayable 180 days after they have been paid, and not before, and certainly not on the cessation of the scheme, just as, if the Act continues for a year in the normal way, the deposits will be repayable 180 days after they have been paid.
  The fourth Amendment seeks to make all the repayments on a certain day. The hon. Member for Leicestershire, South-West (Mr. Boardman) wanted a terminal date. He put the case, which the Government feel is overwhelmingly true, in better language than I myself could have used. He said that he recognised that this would have the danger of large sums flooding into the economy. That is the situation. That is why it is essential that there should be orderly repayment, and that is why I am sorry I cannot accept the Amendment, or anything approaching it, or any variant of it. There has to be orderly repayment, and that means 180 days after each deposit has been paid.
  Amendment 9 stands out on its own, and my answer is that in this part of the Bill, as in any other part, a deposit will be repaid 180 days after the cash has been paid. The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) put the case very fairly—and he was supported by his hon. and learned Friend the Member for Northwich (Sir J. Foster)—not that the importer would be out of the deposit on the goods for more than six months but that he would be out of that money and might, in addition, be out of further money, and the further money would be the premium he paid, if such were paid, on obtaining the bond. As the hon. and learned Member for Darwen was the first to admit, it does not necessarily follow that in every case payment is made for a bond. A bond may be given for any consideration between the banker and his customer. One could

  1411
  not possibly know without inquiry. In some cases a bond is given without any additional cost to the borrower, the giver of the bond. In other cases a premium may have been paid.
  I have tried to find what sort of premium each person has paid. One can only get a line on what the market is and what it might be for a variety of importers. The figures I have been given go down to as far as a small fraction of 1 per cent. I cannot say what they go up to. I have already dealt with cases in which some ay have paid nothing at all. Either the bond giver has paid nothing or a fraction of 1 per cent., or conceivably at the highest, he might have paid a half of 1 per cent. I cannot see that the market is such that he would have to pay more than that.
  The question is, should that be taken into consideration somehow or other and inquiries be made from the depositor of the bond whether he paid anything and whether this should be taken specially into consideration. This is a very small sum. In some cases—I do not know in exactly how many—the security has taken the form of cash. That, of course, would be 100 per cent. cash. In those cases where cash has been paid we are certainly prepared to treat that cash as having been paid under the Act, although it was not. That is to say, repayment will take place 180 days after the cash has been paid.
  The alternative would be to treat that cash has having been a security and to say when the Act comes into force, "Here is a cheque for £X, being your security. Now give me a cheque for the identical amount for the deposit." That would be an unnecessary and slightly ridiculous exercise, so we are prepared to accept that where cash was paid as a security the date on which it was paid is the first of the 180 days.
  Sir J. Foster: The right hon. Gentleman said, first, 100 per cent. cash and then he referred to "cash". I imagine that if a proposition was paid in cash that also would be counted in the importer's favour.
  Mr. Diamond: I thought that I said, "I imagine 100 per cent." If I did not
  1412
  perhaps the hon. and learned Gentleman will allow me to insert "I imagine 100 per cent." because, as he rightly said, the principle is cash and so far as I am aware security in cash would have to be 100 per cent. to be adequate security.
  Sir J. Foster: It is not clear from what the right hon Gentleman said whether he means that it is 100 per cent. or part bond, part cash.
  Mr. Diamond: I am grateful to the hon. and learned Gentleman who has great capacity in these matters. If it is part bond and part cash, it comes within the principle I have enunciated. Whatever cash is paid, the date on which it becomes repayable is 180 days and the amount is automatically repaid.
  I hope that I have answered the various points which have been raised. I recognise that on this major Amendment there is due cause of anxiety. I have discussed with my hon. Friend the Financial Secretary the statement he made. Unfortunately, I was not here to hear it. My hon. Friend assures me that there is nothing in what he said which is inconsistent with what I am now saying. It would hardly be possible, as between two close Treasury colleagues, that such an inconsistency could ever arise. At all events, my hon. Friend tells me that, and as I was not here I am glad to hear it. That is the point which the Government are putting to the Committee and I hope that it will be found acceptable.
  Mr. Patrick Jenkin: I should have liked to have been able to say that we welcome the Chief Secretary to our deliberations on the Bill. He has delivered himself of the characteristic speech in which he has said "No" in rapid succession to four successive Amendments. Therefore, I feel that our welcome must be tinged with a good deal of regret.
  We have had a number of powerful speeches, notable those by my hon. Friends the Members for Cities of London and Westminster (Mr. John Smith), Glasgow, Cathcart (Mr. Peyton), arguing that the period of 180 days should be reduced to 90. The very valuable point was made that the Treasury should take power to cut the period by Order. My hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman) raised doubts as to the effect

  1413
  of Clause 3. Perhaps we shall be able to deal with that point when we reach that Clause and have a brief debate on the Question, "That the Clause stand part of the Bill". I share the doubts expressed by my hon. Friend the Member for Crosby (Mr. Graham Page) as to whether the Chief Secretary has had proper advice as to what the effect will be if the scheme is terminated prematurely under Clause 3(4).
  I believe that the whole House will agree that the point of principle which was alluded to by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) and which is raised by Amendment No. 9 is perhaps the most serious issue which the Committee faces on this group of Amendments. I regarded the Chief Secretary's rejection of the case made by my hon. and learned Friend as very disappointing. Our case is that the Government tried to operate the scheme from 27th November on the footing that cash would immediately be payable by way of deposit. Thanks to the vigilance of a number of my hon. Friends and hon. and learned Friends, that was found not to be possible. Indeed, the headlines in the evening papers on the day of the debate—I see that the Financial Secretary is recollecting the occasion with pleasure—pointed out that the scheme on that footing was not legal, that the Government had no power to demand cash, and that under the Provisional Collection of Taxes Act, 1968, until the Bill becomes law the only operation of the Money Resolution is that they could demand security.
  Whether it had to be squeezed out of the Financial Secretary or whether he saw the point, it having been put to him, and acceded with good grace, I leave history to judge. I gained the impression that the Financial Secretary, once he was seized on the point, conceded it fairly rapidly.
  Towards the end of his speech the Chief Secretary suggested that nothing that the Financial Secretary said in the debate on the morning of 26th November committed the Government. Omitting a very long parenthetical phrase thrown in by the Financial Secretary, I quote this from his speech:
  "… the scheme will be operated so that from the passing of this Ways and Means Motion, this duty of Customs will be im-
  1414
  posed in a way that provided that security is given to the satisfaction of the Customs … that will suffice to cover the period between the passing of this Motion and the legislation."—[OFFICIAL REPORT, 26th November, 1968; Vol, 774, c. 262–63.]
  I understood that to mean, and on a proper interpretation of the words it could only mean, that the period of 180 days should run from 27th November or such later date as a bond was taken, and that the bond was all that could be demanded before the date on which the Bill became law.
  12 p.m.
  The Government cannot have it both ways, as they are trying to do. They are trying to operate this scheme, in a sense, retrospectively, back-dated to 27th November. They must accept the consequence that the period should run from the date when the bond is given, the date when the import is made and the goods are entered for warehousing.
  I cannot accept that the Chief Secretary has made a valuable concession, saying that the Government are graciously pleased to regard cash paid as security as qualifying for the 180-day period. As one of my hon. Friends said sotto voce at the time, "I should jolly well hope so". But we are demanding more than that. The Government must face the consequence of their election that the scheme should operate from before the date when the Bill comes into effect. As a matter of honour, the period of 180 days should run from the date when the bond is first given, and they cannot demand that the security should, in effect, go over for 200, 210 or, perhaps. 220 days. That would be utterly unconscionable.
  I ask my right hon. and hon. Friends to express their strongly held views on this matter by dividing on Amendment No. 9.
  Amendment negatived.
  Amendment No. 9 proposed: In page 1, line 20, after 'paid', insert—
  'or a bond for the deposit given'.—[Sir K. Joseph.]
  Question put, That the Amendment be made:—
  The Committee divided: Ayes 113, Noes 163.

  Division No. 20.]

  AYES

  [12.03 a.m.

  Alison, Michael (Barkston Ash)

  Harvie Anderson, Miss

  Peyton, John

  Allason, James (Hemel Hempstead)

  Hawkins, Paul

  Pike, Miss Mervyn

  Baker, Kenneth (Acton)

  Hay, John

  Price, David (Eastleigh)

  Baker, W. H. K. (Banff)

  Heseltine, Michael

  Prior, J. M. L.

  Biffen, John

  Higgins, Terence L.

  Pym, Francis

  Black, Sir Cyril

  Hiley, Joseph

  Rhys Williams, Sir Brandon

  Blaker, Peter

  Hill, J. E. B.

  Ridley, Hn. Nicholas

  Boardman, Tom (Leicester, S.W.)

  Holland, Philip

  Rossi, Hugh (Hornsey)

  Boyle, Rt. Hn. Sir Edward

  Hordern, Peter

  Royle, Anthony

  Brewis, John

  Howell, David (Guildford)

  Russell, Sir Ronald

  Brinton, Sir Tatton

  Hutchison, Michael Clark

  Sandys, Rt. Hn. D.

  Buchanan-Smith, Alick (Angus, N & M)

  Jenkin, Patrick (Woodford)

  Scott, Nicholas

  Burden, F. A.

  Joseph, Rt. Hn. Sir Keith

  Shaw, Michael (Sc'b'gh & Whitby)

  Campbell, B. (Oldham, W.)

  Kershaw, Anthony

  Smith, John (London & W'minster)

  Carlisle, Mark

  Kitson, Timothy

  Stainton, Keith

  Clegg, Walter

  Legge-Bourke, Sir Harry

  Steel, David (Roxburgh)

  Cooke, Robert

  Lubbock, Eric

  Stodart, Anthony

  Cooper-Key, Sir Neill

  MacArthur, Ian

  Stoddart-Scott, Col. Sir M.

  Dalkeith, Earl of

  Macmillan, Maurice (Farnham)

  Taylor, Sir Charles (Eastbourne)

  Davidson, James (Aberdeenshire, W.)

  McNair-Wilson, Patrick

  Taylor, Edward M. (G'gow, Cathcart)

  d'Avigdor-Goldsmid, Sir Henry

  Maddan, Martin

  Thorpe, Rt. Hn. Jeremy

  Drayson, G. B.

  Maginnis, John E.

  Tilney, John

  Eden, Sir John

  Maxwell-Hyslop, R. J.

  van Straubenzee, W. R.

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Mills, Peter (Torrington)

  Waddington, David

  Emery, Peter

  Miscampbell, Norman

  Walters, Dennis

  Errington, Sir Eric

  Mitchell, David (Basingstoke)

  Ward, Dame Irene

  Eyre, Reginald

  Monro, Hector

  Webster, David

  Farr, John

  Montgomery, Fergus

  Wells, John (Maidstone)

  Fletcher-Cooke, Charles

  More, Jasper

  Whitelaw, Rt. Hn. William

  Fortescue, Tim

  Murton, Oscar

  Williams, Donald (Dudley)

  Foster, Sir John

  Nabarro, Sir Gerald

  Wilson, Geoffrey (Truro)

  Gibson-Watt, David

  Nott, John

  Winstanley, Dr. M. P.

  Gilmour, Sir John (Fife, E.)

  Onslow, Cranley

  Wolrige-Gordon, Patrick

  Glover, Sir Douglas

  Osborn, John (Hallam)

  Woodnutt, Mark

  Grant-Ferris, R.

  Page, Graham (Crosby)

  Wright, Esmond

  Hall, John (Wycombe)

  Page, John (Harrow, W.)

  Hall-Davis, A. G. F.

  Particle, John

  TELLERS FOR THE AYES:

  Hamilton, Lord (Fermanagh)

  Peel, John

  Mr. Bernard Weatherill and

  Hamilton, Michael (Salisbury)

  Percival, Ian

  Mr. Humphrey Atkins.

  NOES

  Allaun, Frank (Salford, E.)

  Edwards, William (Merioneth)

  Jackson, Peter M. (High Peak)

  Alldritt, Walter

  Ellis, John

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Anderson, Donald

  English, Michael

  Jenkins, Hugh (Putney)

  Armstrong, Ernest

  Ennals, David

  Jenkins, Rt. Hn. Roy (Stechford)

  Atkins, Ronald (Preston, N.)

  Ensor, David

  Johnson, Carol (Lewisham, S.)

  Atkinson, Norman (Tottenham)

  Evans, Fred (Caerphilly)

  Johnson, James (K'ston-on-Hull, W.)

  Bacon, Rt. Hn. Alice

  Evans, Ioan L. (Birm'h'm, Yardley)

  Jones, J. Idwal (Wrexham)

  Bagier, Gordon A. T.

  Ewing, Mrs. Winifred

  Jones, T. Alec (Rhondda, West)

  Barnes, Michael

  Fernyhough, E.

  Kerr, Mrs. Anne (R'ter & Chatham)

  Bennett, James (G'gow, Bridgeton)

  Fletcher, Ted (Darlington)

  Lawson, George

  Bidwell, Sydney

  Foley, Maurice

  Lee, Rt. Hn. Frederick (Newton)

  Binns, John

  Foot, Michael (Ebbw Vale)

  Lever, Harold (Cheetham)

  Bishop, E. S.

  Forrester, John

  Loughlin, Charles

  Booth, Albert

  Fowler, Gerry

  Lyon, Alexander W. (York)

  Bray, Dr. Jeremy

  Fraser, John (Norwood)

  Lyons, Edward (Bradford, E.)

  Brooks, Edwin

  Freeson, Reginald

  Mabon, Dr. J. Dickson

  Brown, Hugh D. (G'gow, Provan)

  Gardner, Tony

  McBride, Neil

  Buchan, Norman

  Gregory, Arnold

  McCann, John

  Buchanan, Richard (G'gow, Sp'burn)

  Grey, Charles (Durham)

  MacColl, James

  Cant, R. B.

  Griffiths, Eddie (Brightside)

  Macdonald, A. H.

  Chapman, Donald

  Griffiths, Will (Exchange)

  McGuire, Michael

  Coe, Denis

  Hamilton, James (Bothwell)

  McKay, Mrs. Margaret

  Coleman, Donald

  Hamling, William

  Mackenzie, Gregor (Rutherglen)

  Conlan, Bernard

  Hannan, William

  Mackintosh, John P.

  Crawshaw, Richard

  Harper, Joseph

  Maclennan, Robert

  Crosland, Rt. Hn. Anthony

  Harrison, Walter (Wakefield)

  McNamara, J. Kevin

  Dalyell, Tam

  Haseldine, Norman

  MacPherson, Malcolm

  Davidson, Arthur (Accrington)

  Hattersley, Roy

  Mahon, Simon (Bootle)

  Davies, Dr. Ernest (Stretford)

  Healey, Rt. Hn. Denis

  Manuel, Archie

  Davies, Harold (Leek)

  Henig, Stanley

  Marks, Kenneth

  Dell, Edmund

  Herbison, Rt. Hn. Margaret

  Marsh, Rt. Hn. Richard

  Dempsey, James

  Hilton, W. S.

  Mikardo, Ian

  Dewar, Donald

  Horner, John

  Millan, Bruce

  Diamond, Rt. Hn. John

  Howie, W.

  Mitchell, R. C. (S'th'pton Test)

  Dobson, Ray

  Hoy, James

  Morgan, Elystan (Cardiganshire)

  Doig, Peter

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Morris, Charles R. (Openshaw)

  Dunnett, Jack

  Hunter, Adam

  Moyle, Roland

  Dunwoody, Mrs. Gwyneth (Exeter)

  Irvine, Sir Arthur (Edge Hill)

  Mulley, Rt. Hn. Frederick

  Eadie, Alex

  Jackson, Colin (B'h'se & Spenb'gh)

  Neal, Harold

  Edwards, Robert (Bilston)

  1416

  1417

  Newens, Stan

  Price, Christopher (Perry Barr)

  Varley, Eric G.

  Norwood, Christopher

  Rees, Merlyn

  Wainwright, Edwin (Dearne Valley)

  Oakes, Gordon

  Richard, Ivor

  Walker, Harold (Doncaster)

  Ogden, Eric

  Roberts, Gwilym (Bedfordshire, S.)

  Wallace, George

  O'Malley, Brian

  Rose, Paul

  Watkins, David (Consett)

  Oram, Albert E.

  Ross, Rt. Hn. William

  Whitaker, Ben

  Orme, Stanley

  Rowlands, E.

  Whitlock, William

  Oswald, Thomas

  Sheldon, Robert

  Williams, Alan Lee (Hornchurch)

  Owen, Dr. David (Plymouth, S'tn)

  Silkin, Rt. Hn. John (Deptford)

  Williams, Clifford (Abertillery)

  Page, Derek (King's Lynn)

  Silkin, Hn. S. C. (Dulwich)

  Wilson, Rt. Hn. Harold (Huyton)

  Palmer, Arthur

  Silverman, Julius

  Wilson, William (Coventry, S.)

  Parker, John (Dagenham)

  Skeffington, Arthur

  Winnick, David

  Parkyn, Brian (Bedford)

  Swingler, Stephen

  Wyatt, Woodrow

  Pavitt, Laurence

  Taverne, Dick

  TELLERS FOR THE NOES:

  Peart, Rt. Hn. Fred

  Tinn, James

  Mr. Alan Fitch and

  Pentland, Norman

  Urwin, T. W.

  Dr. M. S. Miller.

  Mr. Diamond: I beg to move Amendment No. 16, in page 3 line 4, at end insert:
  'subject to annulment in pursuance of a resolution of the Commons House of Parliament'.
  The Temporary Chairman (Mr. Gurden): With this we are discussing Amendments 17, 18, 26, 31, 32, 39 and 41:
  In page 3, line 4, at end insert:
  '(which shall be laid before Parliament and shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament)'.
  In page 3, line 11, at end insert:
  Any such order shall be subject to an affirmative resolution passed by both Houses of Parliament.
  In Clause 2, page 3, line 25, at end insert:
  '(which shall be laid before Parliament and shall be subject to annulment in pursuance of a resolution of the Commons House of Parliament)
  In page 3, line 25, at end insert:
  'subject to annulment in pursuance of a resolution of the Commons House of Parliament'.
  In Clause 3, page 3, line 42, leave out from 'may' to end of line and insert:
  'appoint by order in a statutory instrument laid before the Commons House of Parliament'.
  In page 3, line 42, after 'instrument', insert:
  '(which shall be laid before Parliament)'.
  In page 3, line 42, at end insert:
  Any such order shall be subject to an affirmative resolution passed by both Houses of Parliament.
  Mr. Diamond: I am speaking to three Amendments which together provide almost exactly for what the hon. Member for Crosby (Mr. Graham Page) is proposing in his Amendments which we are discussing at the same time. They provide for Orders to be laid under three
  1418
  separate Clauses. The first is one reducing the rate of import deposit; the second is adding to the Schedule of exempt goods and the third is shortening the life of the Scheme.
  All three propose that there should be Orders laid before this House. The first two propose that the Orders should be subject to negative Resolution and the third, as was proposed by the hon. Member for Crosby, says that it shall not be subject to any Resolution, either affirmative or negative. These are sensible proposals and we are grateful to the hon. Member for Crosby for suggesting them. The Government put them down in words almost identical to his and for the same purpose. There is one tiny technical difference with which I shall not bother the House.
  12.15 a.m.
  Mr. Graham Page: I am grateful to the Government for accepting two and a half out of my three Amendments. They were put down before the Government's Amendments. Therefore, I am thankful to the Government for adopting them. The Bill as drafted completely ignored Parliamentary control over Statutory Instruments made by the Treasury. To that extent, it was wrong. It did not even provide for the Statutory Instruments to be laid before the House, let alone be discussed by the House.
  The first two Statutory Instruments, in Clause 1(11) and Clause 2(4), both deal with reductions in duty. Therefore, had they come under the Import Duties Act, 1958, they would have been subject to annulment. We accept the Government's wording of the Amendments in those two cases.
  I am not so sure that the Government are right in the case of Clause 3(4). My Amendment provided for the Statutory

  1419
  Instrument which is to bring the Act to an end to be laid before Parliament. By the Government's Amendment, it has to be
  "laid before the Commons House of Parliament".
  This is rather more than a matter of reduction in duty. It is the end of an Act. In those circumstances, it would be right to lay it before both Houses—that is, before Parliament—and not treat it merely as a reduction in duty or, as the Chief Secretary said on the last Amendment, the end of a scheme and lay it merely before the Commons.
  I ask the right hon. Gentleman to look at this again. I think that the right form for subsection (4) of Clause 3 would be to have the Statutory Instrument laid before Parliament.
  Mr. Diamond: I think that the proposal before the Committee is a sensible one, but, of course, I will look at the matter.
  Amendment agreed to.
  Question proposed, That the Clause, as amended, stand part of the Bill.
  Mr. Harold Lever: I wish to speak briefly to deal particularly with a point on which I thought that the Committee would wish to be informed at the earliest possible date—that is, the question of assignability, which was dealt with earlier by my hon. and learned Friend the Minister of State. We have considered the matter most earnestly and we have come to the conclusion that it would not be desirable to accept the Amendment.
  As my hon. and learned Friend undertook to have the matter considered, we thought it desirable that I should take the opportunity on this Question to say that we have given it very anxious consideration since the matter was discussed. I wanted to inform the Committee at the earliest point of time that we could not accept an Amendment, because the fact is that assignability or negotiability in any form would marginally tend to diminish the liquidity effect, not because it creates a new credit base, but because it adds to the mobility of the document. It would, as it were, search out possibly inactive pools of liquidity.
  For example, somebody holding gilt-edged securities would find that he would
  1420
  be offered one of these documents, or might be offered one, if they were assignable. He would sell the gilt-edged securities and could create liquidity in that case, because he would sell the gilt-edged securities and he would take as his investment instead the assignment of the document. It is fairly obvious that there would be this marginal additional tendency because of the mobility—I will not go into the abstract question of velocity—that would arise.
  Although the decision goes as I have explained, my lingering sympathies, as Gladstone once said, remain in the other direction. I and my hon. and learned Friend the Minister of State would have liked to make this concession but, for the reason I have given, it becomes exceedingly difficult to accept.
  Moreover, although I hate to come with a purely administrative argument, one must have some regard to the administration. When it comes to assignability, it is perfectly obvious that the Customs would have to set up a system for dealing with this question. As a document is assignable, presumably it could be assignable several times.
  Mr. Patrick Jenkin: Why?
  Mr. Lever: Because, if it is assignable, presumably the man who has it assigned to him would be able to assign it, too. If a document is by its nature assignable, the assignee can assign as well as the original assignor.
  There is nothing to stop us making a Statute giving it an unusual and unique characteristic of assignability, but even that would add considerably to the administrative burdens. The Customs would have notice of an assignment. It would be their duty to check, in some form for which we would have to make statutory provision, that the assignor had executed the assignment, and that they were therefore free when the date came to make the payment to the person to whom it had been assigned. Although this sounds no great burden, it is a great burden if it is applied over the tens of thousands of cases. The result would be to add to the administrative complications and perhaps even jeopardise what is dear to the hearts of both sides of the Committee, namely, the urgency of ensuring that on the due date repayment is made.

  1421
  For the practical reason which I gave originally and for the administrative reason, which must carry some weight, this suggestion, although it has been carefully and sympathetically considered, cannot be accepted. I thought I should inform the Committee of this at the earliest moment, so that hon. Members may reflect on the matter and take whatever course of action they think is useful.
  Mr. Alison: The Financial Secretary said that one disadvantage of the proposal which he is now disallowing is that it would search out pools of liquidity. May I remind him that on Second Reading he said that if people borrow at home they will be mopping up liquidity which would otherwise be available to finance other consumption or other expenditures. Which is he doing?
  Mr. Lever: Both is the short answer. In the first instance when the deposit is paid no doubt it will mop up liquidity, but if the document is made assignable and mobile it will tend to activate ultimately pools of liquid resources not in fact active. May I give an example of how it might occur, if it is not tedious to the House. This is not an idle objection on our part.
  Supposing that I finance a transaction for an importer and I get the deposit in my name and am content that my money is so invested. My money, which otherwise would have been active, will now become tied up in the deposit financing the import. It is not assignable. If it were to be made assignable, and I wanted to use my money again, I might go to the holder of short dated gilt-edged who is entirely content to hold his short dated gift-edged, and persuade him to sell his gilt-edged and get the cash back on the assignment of this document from me. That could happen, and the effect would be that the person with money in short dated gilt-edged would be induced to become liquid only because I was able to assign to him the equivalent of his gilt-edged security in the form of this document. There would thus be the marginal danger and effect of activating funds which otherwise would remain tied up.
  Mr. Alison: Will the Financial Secretary agree that this would not be the case with a sterling certificate of deposit, which is a perfectly authorised negotiable
  1422
  bearer security which the Bank of England can recall, so that this situation would not arise?
  Mr. Lever: The sterling certificate of deposit would be more dangerous for this purpose. It would be negotiable, that is to say, assignable plus, and it would be a bearer document if it followed the existing sterling certificate of deposit; so it would have something worse than assignability. It would have bearer assignability in a form which would be tantamount to money, and money would almost be created in the form of certificates of deposit.
  Mr. Nott: It is only if the Government buy the gilt-edged security that additional money is sought out. If the gilt-edged security is bought by someone in the private sector, the argument of the Financial Secretary is completely invalid. It is, after all, in the Financial Secretary's hands whether or not the Government buy the security.
  Mr. Lever: I hope that the Committee will not seek to lead me into an indiscreet answer on the Government's open market and gilt-edged buying policy. It is a very interesting subject, but I must content myself by saying that even supposing the Government sometimes supported the market, which I will not necessarily admit, that would be enough to justify my argument. Let us suppose that nine times out of ten the effect was the innocent one put forward by the hon. Member for St. Ives (Mr. Nott) in which somebody else bought the gilt-edged security, and in only one case in ten the Government bought the security, there would be that marginal activation where none had existed. It would bring new liquidity into activity. I think the hon. Gentleman will concede that, to make his point overwhelming, he would have to ask the Government to abstain from supporting the gilt-edged market—[Interruption.] It is obvious from that reaction that there are a few gilt-edged holders on the benches opposite—
  The Temporary Chairman (Mr. Gurden): Order. I hope that this discussion will not go on too long. This Amendment is not in the Clause as it stands. I allowed a passing reference to it as an explanation of what went on before. The Amendment was not

  1423
  accepted and is, therefore, not in the Clause at the moment.
  Mr. Harold Lever: If you please, Mr. Gurden. I will pass from that immediately and deal briefly with the cost of the bond and my words in connection with it.
  I emphasise that, when I said that importers would be affected equally, it was plain that I was dealing with the interest point, and the interest will be the same for all importers. They will have 180 days' interest to pay on the deposit, wherever they make it. I am surprised that the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) should have any doubt about what my undertaking meant in relation to the taking of a bond. It was clear that we were discussing the problem of whether the Customs, under the guise of taking security, should exclusively take cash, which right hon. and hon. Members opposite thought was illegal. I took their point and accepted that they should not. There was no question in anyone's mind about the length of time of holding the cash. That was far from our thoughts. We were on a very important constitutional point. I was grateful to hon. and learned Gentlemen opposite for raising the point and, without pain, when I thought that it was right, I took it upon myself to give that undertaking.
  If the hon. Gentleman will read my words, it is plain that there was no consideration or discussion of the date of holding of the cash thereafter. We were on the very narrow and important point of whether, in the guise of taking security, the Customs should be entitled, in advance of the Act, to take cash.
  Mr. Patrick Jenkin: I hope that he will equally accept that when, that afternoon, the point was put to me, would the 180 days run, I had no doubt in my mind that that was what the Financial Secretary intended. He now says that he did not, but I submit that the words that I read suggest that it could have been either way.
  Mr. Harold Lever: I listened to the words, and I hope that the hon. Gentleman will reflect on this. The words struck me and everyone in the Govern-
  1424
  ment as confirming what I have just said. I can assure the hon. Gentleman that, if he looks at them again, he will come to the same conclusion.
  In those circumstances, I hope that I have not troubled the Committee unduly in explaining this matter and that right hon. and hon. Gentlemen will see fit to accept the Clause.
  Mr. John Page: I am sure that my right hon. and hon. Friends are as disappointed as I am at this quick reaction—not necessarily the speed of it, but what has come from it.
  The Financial Secretary mentioned "the innocent one". The Minister of State at the Treasury was left without a P.P.S. for the whole of this important debate until the last 10 minutes, when the Minister of State at the Board of Trade came in. Hurried messages were being passed to the hon. and learned Gentleman which he had to read at the Dispatch Box.
  It is very disappointing, and the Financial Secretary showed this by the way he rose to the fly that he was offered, about other Treasury Ministers being present to hear the very cogent arguments of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke).
  Mr. Harold Lever: I have heard about them.
  Mr. Page: That is not the same as hearing them first-hand from my hon. and learned Friend.
  There is nothing that we can say except that we are extremely disappointed with the hon. Gentleman's answer.
  12.30 a.m.
  Mr. Kenneth Baker: I, too, would like to thank the Financial Secretary for coming here at this late hour and making an authoritative statement on the Government's policy on the negotiability and assignability of these deposits.
  Earlier we debated this question for nearly three hours and we on this side of the Committee were misled by the statements from the Government Front Bench. Indeed, if only we had had the statement from the Financial Secretary three hours ago we would be three hours nearer to getting this Bill.
  Mr. Burden: I should like the Financial Secretary to give a little further explanation about the matter referred to by the Minister of State, Treasury in the debate on 28th November, when he said:
  "My hon. Friend the Member for Heywood and Royton asked whether the 50 per cent. deposit would be 50 per cent. net of cash discount or gross. It will be 50 per cent. of the value of the goods, and for this purpose value is as defined in the Customs and Excise Act, which is the value of the goods on a sale in the open market, and not necessarily the price paid by the importer for them."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, cc. 866–7.]
  This is a serious matter, as I am sure the Financial Secretary will agree. It could lead to a dispute as to whether the price on the invoice was the amount that was to be charged to Customs Duty or whether some amount higher than that on the invoice would be charged. There might well be a dispute about this, and the Customs authorities would apparently have a right arbitrarily to set a higher figure than the price paid by the importer for the goods. This could delay the importer getting the goods for a considerable period and he might suffer loss as a result. Indeed, if fashion merchandise were involved, a considerable delay could result in the merchandise losing a lot of its value. I am sure that the Committee would like to know in what circumstances the Customs authorities would exercise this right.
  Mr. Harold Lever: This is not a novel point. The same situation arises in relation to import duties. Import duties are normally levied on the invoices, but under a ruling in a recent case in the High Court it has been made plain that the appropriate value is the value as defined by my hon. Friend the Minister of State; I do not wish to repeat his words which have already been read out.
  This has caused no difficulties about tariffs and import duties where the same formula is applied, and I do not apprehend that it will cause any difficulties in this case either. It is a perfectly familiar situation with which the Customs deal every week.
  The Customs are not entitled to fix the price arbitrarily. They have got to fix the price according to the market price. Where there is some significant deviation from the price on the invoice, there may be special company dealings where that
  1426
  remedy is necessary, but in general, it has worked without any difficulty at all.
  The only time that there has been litigation in the history of this matter was the case of a merchant banker of strong views and radical principles who litigated the matter with the Customs and he triumphed and established the principle which has been read out by the hon. Member for Gillingham (Mr. Burden).
  Mr. Keith Stainton: This is concerned with 50 per cent. of the value of the import, whereas the general run of import tariffs is probably of the order of 20 per cent. Therefore, there is a material difference in discussing this point in relation to valuation.
  Mr. Lever: That is so, but the principle is the same. I would think that the principle is the same for Purchase Tax, too. The duty and the Purchase Tax together often exceed 50 per cent. Therefore, the point is not really novel. It is one that has never caused any difficulty and, apart from the solitary and determined merchant banker who won his case and established this principle, we have not had any litigation on the subject of which I am aware.
  Question put and agreed to.
  Clause, as amended, ordered to stand part of the Bill.
  [Mr. HARRY GOURLAY in the Chair]

Clause 2

  EXEMPTIONS AND RELIEFS
  Mr. McNair-Wilson: I beg to move Amendment No. 20, in page 3, line 17, leave out 'fifty' and insert 'one hundred'.
  The Deputy Chairman (Mr. Gourlay): With this Amendment it will be convenient to take Amendment No. 21, in page 3, line 17, leave out 'fifty' and insert 'five hundred', and Amendment No. 22, in page 3, line 17, leave out 'fifty', and insert 'two hundred and fifty'.
  Mr. McNair-Wilson: The reason for introducing this Amendment at the beginning of Clause 2 is because it deals with exemptions and reliefs, and this will eventually take us on to the schedules.

  1427
  The first part of the Clause contains a suggestion by the Government for exempting goods which are imported, provided that their value does not exceed £50. In my estimation it is hard to see why the Government have put in that figure, because it is almost meaningless, unless it is to prevent people bringing in personal gifts of one kind or another. However, it cannot be that, because subsection (2) covers any personal effects of people coming into this country.
  Here is an opportunity for the Government to take a really sensible step in the right direction towards helping those whose case I have been pleading all evening—the small importers. We have, unfortunately, and even at this late hour, faced a Treasury Bench which has been completely intransigent against some very moderate suggestions put out from this side of the Committee. I think that here is an opportunity for them to mend their ways and to genuinely help the small importers.
  I will give one example. One problem is that many small importers are responsible for maintenance contracts to equipment which has already been imported and which has to continue to be serviced tinder a legal contract. This can apply to firms selling motor cars, typewriters, or whatever. If the Government were prepared to extend the £50 to £100, or to whatever figure I can persuade the Minister to accept, I believe that we shall make life substantially easier for these small importers who have to bring in parts to service pieces of equipment.
  Several of my constituents have written to me on this point. At the moment they are legally bound, by an undertaking entered into when the equipment was sold, to service and maintain it. They now find that, under the Bill, they will have to put down money to bring in parts which are not for sale, but for which, in a sense, they have already contracted with their customers. Clearly £50 is a figure which is totaly irrelevant in this context. As I pointed out, I do not understand why the Government bothered to put £50 in. Here is a genuine case of hardship affecting quite a large number of small businesses in this country. Therefore, I ask the Government to look with favour on what I feel certain is a most reasonable Amendment.
  Mr. Biffen: I should like to support the Amendment so ably moved by my hon. Friend the Member for New Forest (Mr. McNair-Wilson), and to advance an argument slightly different from his, which concerned the small business. My concern is that a great deal of the imports in respect of certain engineering products are spares and replacements for imported machinery which has already been installed here. The importation of spares is inevitable. Nothing that the Measure does will in any way deflect imports of that kind. Many of the spare parts will cost relatively small sums, but in many instances they will cost more than £50.
  By raising the figure to the limit suggested in the Amendment moved by my hon. Friend, or perhaps even more acceptable, to show how generous I am, to the limit suggested in the Liberal Amendment, we could facilitate the continuance of a highly essential trade. If the Government were to make this gesture and raise the limit they would show that they were not entirely prejudiced and doctrinaire in their approach to the Bill.
  Mr. Pardoe: My Amendment seeks to increase the figure to £500, primarily for administrative reasons. It seems ridiculous to fiddle around with every minor import, and I should like the Minister to tell us what proportion of these entries would be below the figure which the Government have put in the Bill, and which would be below the figure I have suggested. I am not tied to £500, even though I have put it in the Amendment. I put down that figure to enable us to have a debate, and I am open to other suggestions.
  There is a strong argument for raising the limit in respect of spare parts, and my figure is more reasonable than the one suggested by the Government. My figure will simplify the administration of the scheme at the ports of entry. I remain to be convinced by the Government that that would not be the case.
  Mr. Burden: I hope that the Minister will reconsider this, because it is necessary to ensure that people who use imported machinery to manufacture exports are not hampered in getting spare parts for that machinery. I am sure the Minister will realise that great damage

  1429
  will be done to the Government's strategy if manufacturers are not able to obtain the necessary spares from abroad.
  If the Minister agrees to alter the figure in the Bill, this will be the first occasion on which the Government Front Bench has given way, and I suggest that this is the occasion on which the Minister could well do so.
  Mr. Emery: I hope that the Minister will go one stage further than has been suggested in the excellent speeches of my hon. Friends, particularly that of my hon. Friend the Member for New Forest (Mr. McNair-Wilson). Can the Minister give the House some figures of what will be involved in terms of loss of revenue or loss of income if the £50 limit is increased to £100?
  He must have some views on the matter, otherwise he must have picked a figure out of the sky. If the sums of £50 and £100 are not convenient, would the Minister consider £75 and £250? The Committee has a right to ask the Government why it should be £50. It is a very small amount for imports. What do the Government see as the loss if the Amendment should be carried?
  Mr. David Webster: thought that my hon. Friend would put against that not only the loss on revenue or income but also the change in the cost of collection. I hope that the Minister will give us those figures.
  12.45 a.m.
  Mr. Taverne: The £50 figure is not totally irrelevant. Although it accounts only for a tiny proportion of the total amount of imports it accounts for a considerable proportion of the number of entries. The figure is only 0·3 per cent. in terms of total value but it is about 16 per cent. in terms of the entries which are made for items worth less than £50.
  I was asked if I could give similar figures for the higher amounts involved in the Amendments. I can give those only for £100. If the exemption were extended to £100 it would affect 1·1 per cent. of the total value of imports and 28 per cent. of the entries. On the face of it this would make it an attractive proposition, to argue that this affects only a small amount of the total value vet a considerable proportion of the number
  1430
  of entries, and therefore why should we not extend the amount beyond £100?
  The difficulty about this is the difficulty involved in circumventing the deposit scheme by splitting consignments into small amounts. There is no doubt that this would be done because it is being done with the £50 limit. Consignments of wine are already being split into amounts which bring them under the £50 limit. We chose that limit because at that level there are extra forwarding charges to be paid if extra entries are to be made, and the savings which would result from not having to pay the deposit would more or less be offset by the extra expense incurred by the additional entries.
  In the case of the higher limit it becomes eminently worth while to split consignments into many different lots and in this way a much bigger inroad into the scheme would be made than simply 1·1 per cent. of the total value.
  Mr. John Smith: Is it not possible to do exactly the same thing as we do in the exemption from stamp duty in respect of dealings in property of low value, namely, that a person signs a declaration that it is not part of a larger transaction?
  Mr. Taverne: There are all sorts of administrative difficulties and it is important that we should keep the administration to a minimum. We do not want to employ more people than necessary, and in order to keep the administration to a minimum it is important to avoid these complications.
  There would be major inroads into the scheme if large consignments were to be split in a way in which it would pay importers to split them. Therefore the limit is set rather lower than the Government and the Committee as a whole would like to see.
  Mr. Hall-Davis: I find it difficult to believe the caution and addiction to the minutiae of procedures should reach the point that we have just heard from the Minister of State. We can only contrast the concern of hon. Members on this side of the Committee to keep industry operating smoothly and efficiently with the concern of the Minister to make sure that not even 1·1 per cent. should become 1·5 per cent. or 0·3 per cent., even taking his present estimate, could perhaps

  1431
  become 1·5 per cent. It is incredible that the hon. and learned Gentleman should have made no mention of the importance of spares and replacements arriving in this country rapidly. With industry becoming increasingly heavily capitalised, with production lines at the mercy of a small breakdown in a single stage of the production flow, it is essential that a spare or replacement part should be flown into this country over the weekend and put into operation at the shortest possible notice.
  I ask the hon. and learned Gentleman—although with very little confidence, in view of his previous attitude—to do some mathematics about how many breakdowns in major plants need to be prolonged for an extra 24 or 48 hours for the national interest to be damaged far more than by the possibility of another 0·5 per cent. of imports escaping the levy.
  On the same theme, I turn to his question of splitting the consignments. He said that an advantage of the £50 limit was that if one exceeded it, it imposed the expense of an additional entry, and that therefore there was a double deterrent. I believe that the deterent of sending off two or twenty packages instead of one is so great that, even if it were tried a time or two, it would be rapidly abandoned.
  The Minister of State does not understand how industry works. Industry is not a grocer's shop, bundling up its products in brown paper bags and sticking a label on them. Industry is used to despatching its goods in batches of 20, 50, 1,000 or 5,000. This is particularly so if it is overseas industry, for whom we are only part of the market: they will not change their routines just to escape a levy at this sort of level.
  Some bright spark might try it once or twice, but this will not make serious inroads. We have many times drawn attention to the disproportionate difficulties which the small business will suffer under the Bill. In this situation, there is an opportunity of giving some relief to the truly small operator. There is no question of its being rejected on grounds of equity, for there is no equity in this Measure, especially towards the small businesses.
  1432
  We must thank the Minister of State at least for giving us the available figures. Would anyone say that the possibility of excluding 28 per cent. of the entries—and the fiddling 28 per cent.—which are going to cause the trouble, is not worth lifting the exemption on this vast sum by 0·8 per cent., and even running the risk that it might lift by another 0·2 or 0·3 per cent. because of split consignments?
  If the Minister of State cannot accept the Amendment in the interests of industrial efficiency, of the firms doing the repair work, and of trying to keep the administration down to a minimum, could he not at least give himself a flexible power to vary the limit up to £100, and, if he found this leading to widespread abuse, to bring it back down to £50. At least then industry will have the satisfaction of knowing that the Government made an attempt to accommodate them. The only conclusion one can draw from the reply of the Minister of State, if he does not heed the arguments, is that not only do the Government attach overriding importance to their credit squeeze, but do so at the expense of industrial efficiency and the continuation of smooth production at major plants. That is what they may well be imperilling.
  Mr. Pardoe: The Minister of State gave some very telling figures of the effect this change would have if we increased the amount of £100, for instance. Could he say whether those figures cover all imports or only those which are to be affected by this import deposit? The list of exemptions in the Schedule covers very large bulk deliveries, such as foods and raw materials. That means that his figures may be even more telling if they are only applied to the imports which the Bill affects.
  I fully accept the argument put far-ward by the Conservative Front Bench that the mere act of splitting these parcels is in itself a deterrent to imports. If the purpose is to stop people from importing, or making it difficult, the whole business of having to split consignments into small parcels is a brake on imports. I therefore believe that the Minister does not have a very strong case here. I hope that he will look at the case again and, in particular, give an answer to the statistical questions I have raised.
  Mr. Taverne: The answer is that the 16 per cent. and the 0·3 per cent. are on the chargeable imports involved. Hon. Members have not faced the reality of the arguments, because they have treated it purely as a matter of the 1·1 per cent. If the limit were £100, there would be an inroad of far more than 1·1 per cent. The Customs are in a position to judge, and they find that even with the £50 limit there is a good deal of splitting already going on, and it would be very much greater if the limit were raised to such an extent that the disadvantage of the forwarding charges would no longer be there to offset the advantages in not having to pay the deposit.
  Mr. Burden: The hon. and learned Gentleman says that there is evidence that they are already splitting. How long has this been running, and what evidence is there in the Customs already that goods have been split and sent overseas in this short time just to circumvent these regulations?
  Mr. Taverne: The fact that it is already visible in the short time of the scheme when the limit is as low as £50 strengthens the view that there would be a major difficulty if the figure was raised. When we come to the great difficulties that importers are said to have to encounter, the fact is that most articles are dutiable in any case. If the amount of the deposit which would have to be found were £100 instead of £50, one would have to weigh the marginal further inconvenience of finding the deposit in such cases where duty has to be found in any event compared with the inroads which it would make in the scheme. This leads to me think that the Committee
  would be well advised not to raise the limit.
  1.0 a.m.
  Mr. Stainton: I feel forced to protest at what the Minister of State said. I think he is obliged to quote the increased cost of freightage when parcels are broken up against the potential saving of imports. if we take the £50 limit, of which there is so much evidence of splitting, a rate of interest of 10 per cent., presupposes a saving of £2½. I wager that shipping freight anywhere in Europe, let alone as far as Hong Kong, would exceed that cost. Unless the Minister of State addresses himelf specifically to this point, I am afraid that he will find a very dissatisfied business public in the country.
  [Mr. SYDNEY IRVING, in the Chair]
  Sir K. Joseph: We would like to give the Government a chance to reconsider their answer to this batch of Amendments. If the Minister of State would tell us that they would do that, we would welcome another 24 hours after which they could come back to give us their considered answer. My hon. Friends would welcome that evidence of an open mind on a point which would add a disproportionate inconvenience to a large number of businessmen for an utterly marginal benefit to the Government scheme and would consider withdrawing the Amendment. If not, I am sure they would wish to divide against the Government point of view.
  Hon. Members: Answer.
  Question put, That that Amendment be made:
  The Committee divided: Ayes 105, Noes 147.

  Division No. 21.]

  AYES

  [1.2 a.m.

  Alison, Michael (Barkston Ash)

  Cooke, Robert

  Hall-Davis, A. G. F.

  Allason, James (Hemel Hempstead)

  Dalkeith, Earl of

  Hamilton, Michael (Salisbury)

  Atkins, Humphrey (M't'n & M'd'n)

  d'Avigdor-Goldsmid, Sir Henry

  Harvie Anderson, Miss

  Baker, Kenneth (Acton)

  Drayson, G. B.

  Hawkins, Paul

  Baker, W. H. K. (Banff)

  Eden, Sir John

  Heseltine, Michael

  Biffen, John

  Elliott, R. W. (N'c'tle-upon-Tyne, N.)

  Higgins, Terence L.

  Black, Sir Cyril

  Emery, Peter

  Hiley, Joseph

  Blaker, Peter

  Errington, Sir Eric

  Hill, J. E. B.

  Boardman, Tom (Leicester, S.W.)

  Eyre, Reginald

  Holland, Philip

  Farr, John

  Hordern, Peter

  Boyle, Rt. Hn. Sir Edward

  Fletcher-Cooke, Charles

  Howell, David (Guildford)

  Brewis, John

  Fortescue, Tim

  Hutchison, Michael Clark

  Brinton, Sir Talton

  Foster, Sir John

  Jenkin, Patrick (Woodford)

  Buchanan-Smith, Alick (Angus, N & M)

  Gibson-Watt, David

  Joseph, Rt. Hn. Sir Keith

  Burden, F. A.

  Gilmour, Sir John (Fife, E.)

  Kershaw, Anthony

  Campbell, B. (Oldham, W.)

  Glover, Sir Douglas

  Kitson, Timothy

  Carlisle, Mark

  Grant-Ferris, R.

  Legge-Bourke, Sir Harry

  Clegg, Walter

  Hall, John (Wycombe)

  Lubbock, Eric

  Peel, John

  Taylor, Sir Charles (Eastbourne)

  MacArthur, Ian

  Percival, Ian

  Taylor, Edward M. (G'gow, Cathcart)

  McNair-Wilson, Patrick

  Peyton, John

  Tilney, John

  Macmillan, Maurice (Farnham)

  Pike, Miss Mervyn

  van Straubenzee, W. R.

  Maddan, Martin

  Price, David (Eastleigh)

  Waddington, David

  Maginnis, John E.

  Prior, J. M. L.

  Walters, Dennis

  Maxwell-Hyslop, R. J.

  Pym, Francis

  Ward, Dame Irene

  Mills, Peter (Torrington)

  Rhys Williams, Sir Brandon

  Webster, David

  Miscamphell, Norman

  Ridley, Hn. Nicholas

  Whitelaw, Rt. Hn. William

  Mitchell, David (Basingstoke)

  Royle, Anthony

  Williams, Donald (Dudley)

  Montgomery, Fergus

  Russell, Sir Ronald

  Wilson, Geoffrey (Truro)

  More, Jasper

  Sandys, Rt. Hn. D.

  Winstanley, Dr. M. P.

  Murton, Oscar

  Scott, Nicholas

  Wolrige-Gordon, Patrick

  Nott, John

  Shaw, Michael (Sc'b'gh & Whitby)

  Woodnutt, Mark

  Onslow, Cranley

  Smith, John (London & W'minster)

  Wright, Esmond

  Osborn, John (Hallam)

  Stainton, Keith

  Page, Graham (Crosby)

  Steel, David (Roxburgh)

  TELLERS FOR THE AYES:

  Page, John (Harrow, W.)

  Stodart, Anthony

  Mr. Hector Monro and

  Pardoe, John

  Stoddart-Scott, Col. Sir M. (Ripon)

  Mr. Bernard Weatherill.

  NOES

  Alldritt, Walter

  Fraser, John (Norwood)

  Mitchell, R. C. (S'th'pton, Test)

  Anderson, Donald

  Freeson, Reginald

  Morgan, Elystan (Cardiganshire)

  Armstrong, Ernest

  Gardner, Tony

  Morris, Charles R. (Openshaw)

  Atkins, Ronald (Preston, N.)

  Griffiths, Eddie (Brightside)

  Moyle, Roland

  Atkinson, Norman (Tottenham)

  Griffiths, Will (Exchange)

  Murray, Albert

  Bacon, Rt. Hn. Alice

  Hamilton, James (Bothwell)

  Newens, Stan

  Bagier, Gordon A. T.

  Hamling, William

  Norwood, Christopher

  Barnes, Michael

  Hannan, William

  Ogden, Eric

  Bennett, James (G'gow, Bridgeton)

  Harrison, Walter (Wakefield)

  O'Malley, Brian

  Bidwell, Sydney

  Haseldine, Norman

  Oram, Albert E.

  Binns, John

  Hattersley, Roy

  Orme, Stanley

  Bishop, E. S.

  Hilton, W. S.

  Oswald, Thomas

  Booth, Albert

  Horner, John

  Owen, Dr. David (Plymouth, S'tn)

  Bray, Dr. Jeremy

  Howie, W.

  Page, Derek (King's Lynn)

  Brooks, Edwin

  Hoy, James

  Palmer, Arthur

  Brown, Hugh D. (G'gow, Provan)

  Hughes, Rt. Hn. Cledwyn (Anglesey)

  Parkyn, Brian (Bedford)

  Buchan, Norman

  Hunter, Adam

  Pavitt, Laurence

  Buchanan, Richard (G'gow, Sp'burn)

  Irvine, Sir Arthur (Edge Hill)

  Peart, Rt. Hn. Fred

  Cant, R. B.

  Jackson, Colin (B'h'se & Spenb'gh)

  Pentland, Norman

  Chapman, Donald

  Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)

  Price, Christopher (Perry Barr)

  Coe, Denis

  Jenkins, Hugh (Putney)

  Price, William (Rugby)

  Coleman, Donald

  Johnson, Carol (Lewisham, S.)

  Rees, Merlyn

  Conlan, Bernard

  Johnson, James (K'ston-on-Hull W.)

  Richard, Ivor

  Crawshaw, Richard

  Jones, J. Idwal (Wrexham)

  Roberts, Gwilym (Bedfordshire, S.)

  Dalyell, Tam

  Jones, T. Alec (Rhondda, West)

  Rodgers, William (Stockton)

  Davidson, Arthur (Accrington)

  Kerr, Mrs. Anne (R'ter & Chatham)

  Rose, Paul

  Davies, Dr. Ernest (Stretford)

  Lawson, George

  Rowlands, E. (Cardiff, N.)

  Davies, Harold (Leek)

  Lever, Harold (Cheetham)

  Sheldon, Robert

  Dell, Edmund

  Loughlin, Charles

  Silkin, Rt. Hn. John (Deptford)

  Dempsey, James

  Lyon, Alexander W. (York)

  Silkin, Hn. S. C. (Dulwich)

  Dewar, Donald

  Lyons, Edward (Bradford, E.)

  Silverman, Julius

  Diamond, Rt. Hn. John

  Mabon, Dr. J. Dickson

  Skeffington, Arthur

  Dobson, Ray

  McBride, Neil

  Swingler, Stephen

  Doig, Peter

  McCann, John

  Taverne, Dick

  Dunnett, Jack

  MacColl, James

  Tinn, James,

  Dunwoody, Mrs. Gwyneth (Exeter)

  Macdonald, A. H.

  Urwin, T. W.

  Eadie, Alex

  McGuire, Michael

  Wainwright, Edwin (Dearne Valley)

  Edwards, Robert (Bilston)

  McKay, Mrs. Margaret

  Walker, Harold (Doncaster)

  Edwards, William (Merioneth)

  Mackenzie, Gregor (Rutherglen)

  Wallace, George

  Ellis, John

  Mackintosh, John P.

  Watkins, David (Consett)

  English, Michael

  Maclennan, Robert

  Whitaker, Ben

  Ennals, David

  McNamara, J. Kevin

  Williams, Alan Lee (Hornchurch)

  Ensor, David

  MacPherson, Malcolm

  Williams, Clifford (Abertillery)

  Evans, Fred (Caerphilly)

  Mahon, Simon (Bootle)

  Wilson, William (Coventry, S.)

  Evans, Ioan L. (Birm'h'm, Yardley)

  Manuel, Archie

  Winnick, David

  Fernyhough, E.

  Marks, Kenneth

  Wyatt, Woodrow

  Fitch, Alan (Wigan)

  Marsh, Rt. Hn. Richard

  Fletcher, Ted (Darlington)

  Mikardo, Ian

  TELLERS FOR THE NOES:

  Foot, Michael (Ebbw Vale)

  Millan, Bruce

  Mr. Charles Grey and

  Forrester, John

  Miller, Dr. M. S.

  Mr. Joseph Harper.

  Fowler, Gerry

  Mr. Michael Shaw: I beg to move Amendment No. 101, in page 3, line 21, at end insert:
  (3)(a) No import deposit shall be payable in respect of goods which it is shown to the satisfaction of the Commissioners are entered
  1436
  in the name of a company if it is neither a holding company nor a subsidiary of another body corporate and its turnover does not exceed £500,000;
  (b) the said turnover is to be calculated as though sub-paragraph 13A(2) of Schedule 2 to the Companies Act 1967 applied and relates

  1437
  to the annual accounts made up to a date within the year ended 27th November 1968;
  (c) any such exemption shall not be granted to such a company to the extent that the goods which it imports under this Act exceed £500,000.
  In recent months, the plight of small companies has been brought much more to the attention of the House and the general public, thanks in large measure to my hon. Friend the Member for Croydon, North-East (Mr. Weatherill). This Amendment is designed to give exemption to smaller importing companies, providing that, if a company during its last financial year had a turnover of less than £500,000, it may import up to £500,000 worth of goods before becoming liable to pay import deposits.
  We are not wedded to the figure of £500,000. If Ministers are prepared to meet us in any way, we shall do our best to fall in with them. There is, however, a wide variety of view as to what constitutes a small company. The C.B.I., for example, feels that an Amendment of this kind would be appropriately directed to a figure of £1 million turnover. Under the Companies Act, 1967, it was felt that the appropriate smallness for the purpose of exemption related to turnover was indicated by a limit of £50,000 turnover. Our Amendment falls just about halfway between the two. As I say, we are not wedded to a particular figure. Our concern is for the strong point of principle involved.
  For a concern predominantly engaged in purchasing and merchanting, £500,000 worth of goods imported and sold sets a reasonable and small limit. Indeed, if that were the total turnover of sales, the figure of purchases, even if wholly from abroad, would be less. If the goods were used for manufacture within the company, the amount of foreign goods brought in comprised in the total turnover of less than £500.000 would be considerably less still.
  1.15 a.m.
  The Amendment stands on two legs. The first is the limit itself, on which we are prepared to agree any reasonable figure. The second is the leg of principle. Is it agreed between the two sides of the Committee that there should be some sort of exemption for the small company? We hold that there
  1438
  should be. [AN HON. MEMBER: "Why?"] Because, over the last four years, in Bill after Bill the incidence of burden has pressed particularly hard upon the smaller company, and we are anxious to rectify that as much as we can. We are not convinced by the Financial Secretary's statement on 28th November that
  "The most that will happen here, and what is intended to happen, is that a man who really must have the import will go to the inconvenience and modest expense required to obtain finance."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 760.]
  It will not be easy for all small companies to obtain that finance if they cannot go to their banks. We heard earlier tonight about their difficulties in not being able to use the documents as negotiable instruments. There is clearly a limitation for the company that is not large and does not have the strong financial standing that itself will be a sufficient guarantee to the would-be lender. Private companies do not have the sort of strength by which they can persuade bankers to lend them money without security.
  Apart from the changes in the taxation system, which have fallen very heavily on close companies, that problem of obtaining additional substantial finance has continually bedevilled many small companies. It is not enough simply to consider the new burden that the Bill will place on the small company; we must look at the problem against the general background of financial difficulty. There are the present restrictions on credit, which have been in existence for far too long, and there is the threat of an added squeeze superimposed on already difficult conditions.
  There is another burden that bears particularly hard on small companies. If they are growing, virile companies they are continually expanding, mainly on bank money which tides them over a period of expansion until they can consolidate. This inevitably means that during a time of squeeze they temporarily finance themselves in the hope that the squeeze will ease off, as has always happened in the past, that the policy will be successful and a period of easier credit will lie ahead. The Government have given indications time and again that their policies have been working

  1439
  and that better times were ahead. Therefore, the companies' hope was legitimate. They have worked very close to their margins, and therefore a sudden additional squeeze, such as seems to be coming upon them, bears all the harder. Those are the sort of difficulties that face such companies.
  The final difficulty is that of still further extended credit by their customers. I am sure that further extensions of credit in the trade generally will take place if there is a tighter squeeze in the months ahead. This affects the small manufacturer more stringently than others.
  All those general considerations must be taken into account when considering the additional burden being placed on such companies by the Bill. The small company deserves a break—and more. It deserves practical acknowledgment by the Government that its difficulties are recognised, as is the vital rôle that such companies play in our economy and in the future well-being of this country.
  Mr. Harold Lever: May I congratulate the hon. Member for Scarborough and Whitby (Mr. Michael Shaw) on what, as far as I know, is his first appearance on the Opposition Front Bench. He argued his case with deep earnestness and as much plausibility as the terms of his Amendment permitted. The Amendment combines a high degree of impractibility with a high degree of undesirability.
  Let us examine the tedious detail, not of the drafting, but of the practicality of what the hon. Member proposes. He proposes, in effect, that companies with a turnover not exceeding £500,000 should be exempted from the import deposit. How are we to know whether a company is going to have a turnover of only £500,000? He does not want us to go through the books of a company afterwards, so at the time of importation we will be admitting goods free of duty on the say-so of the importer alone. One can look at the turnover in the year of exemption, but the hon. Member is faced with a serious difficulty. The importers would come in and assure me earnestly that they did not expect to have a turnover of more than £500,000, but then they might have a turnover of several million pounds. Then the bird is flown, the goods are imported and there is
  1440
  nothing we can do about it. The Act will have expired by the end of a year.
  The hon. Member does not argue that it is possible to do what his Amendment purports to do: to exempt firms who, after the deposit scheme comes into force, have a turnover of only £500,000. He is driven to go back to the past and not to rely on the present.
  Mr. Nott: I wonder if the Financial Secretary was going to suggest that companies might wish to split turnover?
  Mr. Lever: I will come to that proposition in a moment. Let us first deal with this point: what the hon. Member wanted us to do in his speech he does not propose in his Amendment. If we followed the Amendment, a firm which imported £500,000 or less last year would be exempt. He is driven to rely on what has happened so far and not on what happens in the period of the scheme. So all a firm which has imported £100 million of goods has to do is to prove that it did not turn over more than £500,000 this year. It would be in a splendid position and could do £100 million in the following year since every competitor of any size would be paying the deposit. It would mean channelling the import trade of this country through the small firms. This ingenious arrangement evades the real problem of relating the deposit to what is happening now. It simply means that any importer who had the good fortune not to import £500,000 last year will have freedom to import more this year. To do what he says he knows is impossible, so the hon. Member does something quite different. He gives unrelated exemption irrespective of the amount imported, provided that the company did not import more than £500,000 last year.
  Mr. Shaw: What about (c).
  Mr. Lever: The hon. Member wants (c) to mean that in some way exemption is not granted to a company whose goods imported exceed £500,000. But the exemption will already have been granted, the bird will have flown, the deposit will not have been paid, the Act will have expired and the Customs Commissioners will be left lamenting and without the millions of pounds of deposit which was to produce all the desirable results that my right hon. Friend the Chancellor of the Exchequer has foreshadowed for the

  1441
  benefit of our country and of our economy. Therefore, ingenious as it is, the Amendment cannot assist us.
  For lose reasons, the hon. Member is on the horns of a dilemma. He has either to use past experience, which is irrelevant, or, if he attempts to use the relevant experience, rely on an ample supply of crystal balls available for the Customs which will enable it to predict with certitude what the company's turnover will be as it commences to import at the beginning of the year. Without those crystal balls, the Customs will be facing considerable difficulties in operating the Amendments proposed by the hon. Gentleman.
  Mr. Michael Shaw: The Financial Secretary has highlighted, very wittily, the problems involved in any Amendment of this nature. What he has not answered is whether he is sympathetic towards any sort of exemption for small companies.
  Mr. Lever: The hon. Member is trying to lure me to do what I never do, certainly not since I have had the privilege of addressing the House of Commons as Minister, and that is to stray from the due order which you, Mr. Irving, so jealously preserve. I can deal only with the Amendment which is before the Committee. I have told the Committee the effects of it, although, if the hon. Member wishes, and if you, Mr. Irvine, do not think that I am straying too wide, I would like to join him in expressing the deepest sympathy with small companies in every difficulty they face.
  I am, in fact, looking personally into some of their tax difficulties with very real sympathy. I am very anxious to help them. I absolutely take the hon. Gentleman's point that the small companies form a vital part of the entrepreneurial atmosphere of the free enterprise section of the economy. I do not want to discourage them in any way. I think that they can all hold their own but, unhappily, for the reasons I have outlined, it would not be desirable to accept the Amendment.
  With all the sympathy which I share with the hon. Member and with hon. Members opposite for all small companies, in all difficulties, of all kinds,
  1442
  nevertheless I must advise the Committee to reject the Amendment.
  Mr. Robert Cooke: Before the Committee comes to a decision, I should like to join the Financial Secretary in expressing sympathy for small companies. My hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) was trying to make their position possible under the existing conditions of squeeze. He particularly mentioned close companies which find it difficult in present circumstances—perhaps at any time—to get finance for expansion.
  Without giving away any trade secrets, I would like to raise with the Financial Secretary the case which he has already been sent by a constituent of mine concerning a small family company which has discovered a piece of equipment manufactured abroad but which is manufactured in only two foreign lands, one some way from this country and one in Europe, one of our most deadly European competitors.
  The company has managed to get the exclusive franchise in the United States of America, Canada and South Africa for this foreign machine, which it wishes to export to those countries. Indeed, the potential export to the United States is, on reasonable estimates, something like 110 million dollars. That is something not to be sniffed at if we can grasp the opportunity.
  My constituent assures me, however, that because of the import deposit on his trade in similar machinery, he will have to find between £50,000 and £60,000 to put down as deposit. This, he say, he simply cannot afford. It will result in the cancellation of all his plans and arrangements for the United States of America and South Africa, and he is quite certain that the whole of the trade which he had hoped to make with those countries—export trade, earning dollars for Britain—must be abandoned, and our European competitor will seize the opportunity.
  1.30 a.m.
  I know that I must not go into too much detail, but the Amendment is aimed at helping the small companies and the Financial Secretary said that he was anxious to help. I have no doubt that he will be out of order in telling me how he proposes to help cases such as

  1443
  the one I raise, but I hope you, Mr. Irving, will allow him to say a few more friendly words to show that he has not closed his mind to finding a way at a later stage of helping companies such as this.
  Mr. Lever: This is a matter which the hon. Member should examine when we come to the Schedules of exemptions; it is not entirely appropriate to this Amendment. May I take this opportunity of insisting that my sympathy for small companies does not derogate from my sympathy for large companies, in appropriate cases, where the difficulties of small companies need sympathy and the difficulties of large companies need sympathy.
  Mr. Michael Shaw: I will gladly reconsider the words of the hon. Gentleman, particularly those expressing what I believe to be his sincere sympathy for the small company. I beg leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Mr. J. Bruce-Gardyne: I beg to move Amendment No. 78, in page 3, line 24, at end insert:
  (4) No import deposit shall he payable in respect of goods or materials imported exclusively for the purpose of incorporation as components in manufactured articles which would themselves require to be wholly imported in the event of non-availability of the imported components.
  The Chairman: With this Amendment we may also discuss Amendment No. 79, page 3, line 24, at end insert:
  (4) No import deposit shall be payable in respect of goods or materials imported exclusively for the purpose of incorporation as components in articles manufactured under a licensing agreement entered into before 22nd November 1968 and containing a guaranteed minimum royalty payment clause which will operate during the period of operation of this Act, in any case where manufacture cannot take place without the import of the said goods or materials.
  Amendment No. 114, in page 3, line 24, at end insert:
  (4) No import deposit shall be payable in respect of goods or materials which are imported wholly and exclusively for the manufacture in the United Kingdom of other goods or materials of a type, kind or description currently imported into the United Kingdom.
  and Amendment No. 115, in page 3, line 24, at end insert:
  (4) No import deposit shall be payable in respect of goods or materials being goods or
  1444
  materials controlled by patents which prohibit their manufacture in the United Kingdom, and also being goods or materials which are imported wholly and exclusively for the manufacture in the United Kingdom of other goods or materials of a type, kind or description currently imported into the United Kingdom.
  Mr. Bruce-Gardyne: The four Amendments have one point in common, that they are all concerned with exemptions designed to provide the possibility of import substitution. The distinction between them is that Amendment No. 78 has the effect of giving exemption for the import of components not available in the United Kingdom to be incorporated into finished articles which would in turn have to be imported if the components were not available.
  Amendment No. 79 is effectively the same as No. 78, but it is confined to cases where, if the importer of the components were unable to import the components, he would he penalised under a royalty agreement applying to the finished goods for his inability to manufacture the finished goods.
  Amendment No. 114, in the name of my hon. Friend the Member for Barkston Ash (Mr. Alison) and myself, is the widest of the four and would give exemption for machines imported for the purpose of manufacturing goods in substitution for goods currently imported.
  Amendment No. 115 is a narrower version of No. 114 in that it is confined to machines imported for the purpose of import substitution, machines which cannot be manufactured in this country because their manufacture is protected by patents.
  It is arguable that this sort of legislation should be left severely alone on the grounds that so much unconsidered, ill-prepared, half-baked and entirely deleterious legislation comes from the hands of this Government that the best thing to do is to leave it to wreak the full damage so as to expose the idiocy of the Government who are responsible for it. On the other hand, we have to consider the interests of our constituents, and it is with the interests of one firm in mind that I have drafted the first two of these Amendments.
  I can explain the case simply by describing the circumstances of the firm. It is a small engineering firm in my constituency manufacturing, among other

  1445
  items, machinery for the jute industry. It has just started this year to manufacture a high-speed cock winder for the jute industry under licence from the Belgian patent holders.
  The firm is making arrangements to have all the bought-in components manufactured in the United Kingdom, but, meantime, it is faced with the necessity to import electric motors and switchgear from Belgium. There are no motors and switchgear of this type currently available in this country for incorporation in these high-speed cock winders.
  The cost of the imports of the electric motors and switchgear runs at £1,500 a month.. In other words, unless they are exempted from the provisions of the Bill, it would be obliged to find a deposit of £750 a month. It happens that the firm is right up against its overdraft limits, and I understand that it has no way of finding the £750 a month for this purpose.
  Unless it is granted an exemption, it will have to cease to manufacture these high-speed cock winders. Already it has sold two machines to Turkey and one to Mexico, and it estimates that there is a marker for some £100,000 to £150,000 worth of exports available for the machines in Pakistan alone.
  No doubt I shall be told that, in a later Amendment in the Chancellor's name, in so far as these machines are exported, the components might be exempted from the import deposit, anyway. But this would not help the firm, because it could not find the residual deposit which would still be required for components required for machines intended for home delivery. The truth is that, if it is prevented by the import deposit scheme from importing these components, it is possible that it may lose these extremely valuable export markets. In addition, it will also lose the markets for this revolutionary machine at home. Some Dundee manufacturers have ordered these machines. I am assured that, if they cannot obtain them from a local manufacturer, they will purchase them from Belgium. The effect of that will be that, instead of our facing a bill of £100 a time for imported components for the machines, each machine will cost £1,040 to our balance of payments to import from Belgium.
  1446
  We are told that the object of the Bill is to reduce the total cost of our imports. If that is so, it is hard to imagine anything which could be less sensibly designed for the purpose.
  I come, then, to Amendment 79, because, under the terms of the firm's agreement with the Belgian patentees of the finished machine, it has an obligation to pay £5,000 on 1st April of next year as its minimum guaranteed payment for machines which, if it is not allowed to import components, it will not be able to produce. The effect of having to pay this £5,000 guarantee will be that because the company is running on a very tight financial margin it will have to cut down its investment and modernisation programmes and will be forced to abandon, perhaps for some years and perhaps for ever, the prospect of manufacturing these high-speed cock winders in future.
  I do not wish to say very much about the other two Amendments which are much broader, as I think their intention is very clear. As I say, it is a matter of enabling firms to import machinery which is not available in this country and which can then be used for the manufacture of goods which are currently imported into the United Kingdom.
  But, as to Amendment No. 115, I suggest that it is a little absurd that manufacturers who wish to develop the production of goods which are currently imported into this country but who are dependent upon machinery or machine tools imported from abroad in order to produce those goods, who cannot obtain the machines in this country because they are covered by patent arrangements which make it impossible for the machines to be manufactured in this country, should be debarred or discouraged from importing those machines by this grotesque and absurd measure.
  I hope I have said enough to explain the purpose of the Amendments. I do not regard their wording as in any sense sacrosanct, and if the Minister of State were able to say that he accepts their sense but rejects the wording I should be delighted; I hope that he would then consider the wording and suggest wording which the Government could accept, so long as the sense is retained.
  Mr. John Hall: I am grateful to my hon. Friend for having

  1447
  tabled these Amendments. Curiously enough, I have a case very similar to the case which my hon. Friend recounted to the Committee, which is met by at least three of the four Amendments. I have to declare a personal interest because I am chairman of the company I have in mind. For this reason, perhaps I know in considerable detail the problems affecting the company.
  It is a company which imports partly finished goods which are its raw materials. It cannot get these partly finished goods in this country; they have to be imported. The company will face a deposit charge of something like £250,000 over six months from the date on which the Bill comes into force. Although, under the guidance given by the Chancellor, it can have facilities to meet the deposit charge for the first few weeks, this will be useless for meeting a deposit charge amounting to £250,000 over six months. It will have considerable difficulty in obtaining finance from other sources. If it is unable to pay the deposit, it will have to cease importing and cease manufacturing. There is no alternative.
  The tragedy is that it is an expanding company. It is building up an export business from the fully manufactured goods that it finishes in this country, exporting to those parts of the Commonwealth which were the old Colonial Empire. It can build up a business which it is estimated might be worth anything from £500,000 to £1 million in the next few years. Because of the pressure on the banks to restrict their lending, the company will be in a position of having drastically to reduce its scale of operations and perhaps close down altogether. As the factory is in a development area, giving employment where it is needed, it would be a tragic matter and not one which was intended by the Government in bringing forward the Bill.
  1.45 a.m.
  I am sure that this is only one of many cases. It comes about by the fact that the Government have selected in their list of exclusions in Schedule I basic raw materials which must have been culled in the days of the 19th century. Many companies today import a number of semi-processed goods which are the raw materials that they finish. A great
  1448
  part of our export trade is made up of companies importing semi-processed goods which are re-exported in a finished state, having had used on them the particular skills for which this country is notable throughout the world. I hope that whoever is to reply will give special consideration to the cases mentioned by my hon. Friend and myself, cases which no doubt can be duplicated by hon. Members in all parts of the Committee.
  Mr. Drayson: I am grateful to my hon. Friend for having moved these four Amendments.
  Amendment No. 114 covers an aspect of one of the problems of a firm in my constituency which I had hoped to raise on the Schedules to the Bill. That Amendment deals with the import of goods or materials which are imported wholly and exclusively for manufacture in the United Kingdom. I will give the Minister details about the case that I have in mind in the hope that he might be able to consider such cases, and, when we come to the Schedules, it might be possible for the Government to put forward Amendments that would cover them.
  The mill to which 1 refer imports its yarn from Austria. That yarn consists of about 50 per cent. Australian wool and about 50 per cent. I.C.I. Terylene which has been exported from the United Kingdom to Austria. The Australian wool makes its way to the United Kingdom via Austria where it meets the I.C.I. Terylene which has been exported from the United Kingdom. The Australian wool and the Terylene are spun together and the resulting yarn arrives in the United Kingdom where it is woven into tropical suitings, of which about 98 per cent. is exported.
  This firm has been weaving cloth for over 100 years, it employs over 100 people, and its turnover, on the export side, amounts, after finishing processes, to £1 million a year. It is faced with immediate difficulties. It has a consignment of this yarn at Hull docks and it is called upon to pay a deposit at the moment of £40,000 for £80,000 worth of yarn. This seems wholly unfair to a company that is exporting material which consists of 50 per cent. Terylene which has been sent from the United Kingdom to Austria to be spun with the

  1449
  Australian wool, simply because the yarn is not produced here at the present time. The firm tells me that it will be only too pleased to get its requirements of yarn in the United Kingdom and then make 100 per cent. export of its tropical suitings, for which there is no market in this country.
  Some years ago the company made the decision, when it was supplying 95 per cent. of the home trade with its products, to switch to exports, and in a period of 12 months it switched over to 95 per cent. for export. It is to be congratulated on its remarkable achievement. However, it is now faced with considerable difficulties.
  I hope that I have sufficiently outlined the problem so that the Minister will have an opportunity of giving sympathetic consideration to the case. I shall raise it again when we get to the Schedule. but it may well be covered by the Amendment.
  Sir Harry Legge-Bourke: One has to relate the Clause to the Schedule—and we discussed the principle underlying the Schedule on the Order the other day—but there are two examples in the Schedule of semifinished products which are exempt. The first is woven fabrics of jute, and the second is pearls, synthetic and natural, precious and semi-precious stones and precious metals not fully manufactured. I cannot see the logic of upholding those exemptions and turning down the Amendments.
  The partially manufactured products which would be covered are those which are essential to the companies concerned. Very often they cannot be obtained in this country, and the object of the Amendments is to make sure that those materials which are essential to complete a manufacture in this country, but which cannot be obtained here, are exempt. If it is possible in the Schedule as it stands for the Government to put in semi-finished products anyway, why cannot they accept the Amendments, which do not infringe the principle embodied in the Schedule?
  Mr. David Mitchell: I wish to draw attention to a problem which arises in my constituency, and which is not covered by the Schedule. A
  1450
  firm in my constituency exports diamond drills for drilling through rock in various parts of the world. The drills become battered beyond imagination in use, and have to be re-imported here when that happens. The diamonds are then picked out of the battered piece of metal, put on to a new metal base, and re-exported. So far as I can see this will not be covered, and I ask the Minister to ensure that it is, by putting forward an Amendment to the Schedule when we reach it.
  Mr. Biffen: The jute industry and those activities ancillary to it can count themselves lucky to have so fluent and cogent an advocate as my hon. Friend the Member for South Angus (Mr. Bruce- Gardyne).
  The point which occurs to me relates to the machine tool industry, and a development which we have seen in the British machine tool industry over recent years. It is one which is welcomed by both sides of industry. I am referring to the development of certain lines of machine tool manufacture and certain sophisticated designs as a result of American investment and partnerships in association with British machine tool companies. The obvious case is Herbert-Ingersoll, which has a very sophisticated line of machine tools now being installed at Daventry. That is one example of the trend which is in wide evidence.
  These are imports of parts, very often from the American partner, which are essential to the build up in this country of machine tool designs which hitherto have not been manufactured here. Once the designs are manufactured in this country, it will mean that we shall no longer need to import them from North America or from our Western European competitors. Developments of this kind are put in some jeopardy by the Bill, and I am sure that the Minister will be anxious to assure the House that that kind of importation will be allowed to continue, and will not be harassed in any way.
  Mr. Taverne: Many points have been made forcefully about encouraging import substitution and avoiding dislocation. Reference was made to this by the hon. Members for Oswestry (Mr. Biffen), South Angus (Mr. Bruce-Gardyne), and others. To some extent the question that arises here, and in particular the kind of problem raised by the hon. Member for

  1451
  Skipton (Mr. Drayson), can be fully discussed when we come to the Government Amendments to the Second Schedule. The other questions on the Schedule will be discussed at a later stage. My objections to the Amendments are not ones which relate to the Schedule; they are inherent in this kind of Amendment.
  The question posed by the Amendments is: how do we verify the facts on which the exemption from import deposits would be based? It is very important that the test for the customs as to whether or not a deposit is payable should be a clear one. If it is not clear—if there is elaborate argument about whether or not the goods fall within the exempted case, and elaborate inquiries have to be made to see whether these are the kind of goods which get an exemption, the result would be that time was taken on inquiries, there was congestion at the docks, and all sorts of difficulties arising which interfered with the importation of these and other goods.
  If we look at the kind of matters raised in Amendment 114, which is the widest one, we see that the difficulty is not a matter of drafting; it is inherent in this kind of Amendment. The facts which would have to be established are not necessarily self-evident at the time when the application for exemption is made. Are these goods of a type currently being imported into the United Kingdom? In some cases it would be clear, but in many cases it would not necessarily be clear straight away. Are these goods of a type which are wholly and exclusively imported for the manufacture of goods of that type? These questions cannot be clearly determined, and if they have to be examined by the customs authorities many delays will occur.
  On the point raised by the hon. Member for Oswestry (Mr. Biffen) it may be difficult to establish the kind of facts which he outlined. This difficulty is inherent, to a lesser extent, in the other Amendments. The acceptance of the first Amendment would make a major inroad into one of the central purposes of the whole scheme—the restriction of credit. Being drafted in such wide terms it would mean that the amount of credit being affected by the scheme would be much less than it would if this exemption were excluded.
  1452
  Amendment No. 115 is not quite as wide, but the same sorts of question arise as to whether these are materials of the type currently imported into the United Kingdom and whether they are imported wholly and exclusively for the manufacture in the United Kingdom of these types of goods.
  With Amendment No. 78 one is in greater difficulty, because it does not refer to similar finished goods currently being imported; it refers to manufactured articles which would require to be wholly imported in the event of the non-availability of the imported components. Are they necessary? Who will decide whether they are? These are clearly the kind of questions which would lead to endless arguments, confusion and congestion at the docks.
  On Amendment No. 79, many of the matters are more easily verifiable. This would not apply to all, because we should have to decide, again, whether manufacture could not take place without the import of the said goods or materials. On the other hand, it would be possible to establish whether a licensing agreement had been entered into before 22nd November.
  2.0 a.m.
  But there is a further difficulty here, which also arises over the next group of Amendments, namely, what to do about prior contracts. I do not want to go into that argument, but either one exempts all prior contracts and goods in transit or one does not exempt them at all. But there is no case for taking one form of prior contract alone, that of a licence agreement. I do not want to anticipate our next debate, but the general difficulty which exists in its strongest form in Amendment 114 also applies to all the other Amendments.
  Mr. Bruce-Gardyne: The Government are knowingly and consciously encouraging the import of goods costing £1,040 each to the balance of payments in place of goods costing £100 each, but in the circumstances of this fatuous legislation, this is a consequence which we must probably face, since additional complications would arise under the Amendments. It proves once and for all that, when we are trying to handle the legislative programme of this Government, the best thing to do is let it alone and allow it

  1453
  to do the maximum possible damage to the economy.
  Amendment negatived.
  Amendment made: No. 31, in page 3, line 25, at end insert—
  'subject to annulment in pursuance of a resolution of the Commons House of Parliament'.—[Mr. Taverne.]
  The Chairman: We come now to Amendment No. 28, in page 3, line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods which it is shown to the satisfaction of the Commissioners were already in transit on 22nd November 1968 or were the subject of a contract dated prior to 22nd November 1968.
  with which we may also discuss Amendment No 96, in page 3, line 17, at end insert—
  "(2) No import deposit shall be payable on any goods delivered as part of a contract entered into before 22nd November 1968."
  Mr. Emery: It would probably be convenient for the Committee if I move the second Amendment at this stage. I beg to move in page 3, line 17, at end insert—
  "(2) No import deposit shall be payable on any goods delivered as part of a contract entered into before 22nd November 1968."
  This covers the same point as Amendment No. 28. Both, as the Minister said earlier, deal with prior contracts and goods in transit. We have had arguments on these lines before. I moved similar Amendments in our debate on the 15 per cent. surcharge. There is a difference of approach between both sides of the House in how we would deal with these matters in this type of legislation.
  I do not want to be railroaded into a debate on how prior contracts may be affected by taxation, because these are not the same as or even slightly similar to those affected by this type of legislation. We believe that any contract given by any person purchasing in industry is of major importance. We ought to do all we can to ensure that sanctity of contract is preserved, because on that rests the confidence of people in industry and commerce.
  An importer may be under a contractual obligation to supply goods at a given price. He is acting independently, although in some aspects he is acting as an agent for industry. I have already
  1454
  referred to A.E.C., which farms out to specialists certain of its contractual imports. Those are usually obtained for the company on fixed term contract. This Bill means that the importer will not be able to hand on any of the 2½ per cent. increase which the Financial Secretary glibly suggested could easily be absorbed by the importer. The strength of the hon. Gentleman's argument was that all importers will be in exactly the same position, but if the importer already has a firm contract, he has to meet that 2½ per cent., and that seems to me to be entirely wrong. If it is suggested that the major company should make allowances for this legislation, that is a possibility, but again it means that industry is being asked to up its prices generally, because its estimates are carefully and closely worked out.
  Goods in transit are normally covered by a purchase order or a contract. The Amendment covering contract is fair enough and definite enough to cover them, and should be considered by the Government. Again, we see an aspect of retrospection in this legislation. People who have made commercial judgments about the pricing of components for industry and have acted as the law allowed—and this is not a matter of tax we have been nearly told by a Law Officer earlier today that it is not a duty—and suddenly we have retrospective action which must increase the price of the product, process or component. This type of legislation ought to be discouraged.
  The strange thing is that in this House, whichever party is in Opposition, we always have loud and long—and I hope my speech will not be of the latter type—speeches about retrospective legislation. It is right that those speeches should be made, but what worries me that that more and more the aspect of retrospection has been creeping into the type of legislation that we have been getting from the Government. We have had it even in the recent mines and quarries Measure, and here we have it once again. The Financial Secretary can shake his head, but in the present case it means that retrospective legislation will increase the prices of goods contracted for some times months before, or even last year.
  At this late hour there are a number of other problems one could argue about. I should perhaps declare an interest in

  1455
  the Institute of Purchasing and Supply. It has made only one major objection to this Bill. It has always felt that free trade is the best method of obtaining efficiency, but it feels strongly about this aspect of sanctity of contract. On this more than on anything else it would urge the Government to give way.
  How much do the Government believe they would lose if they gave way? Have they any idea? I have attempted to make some estimates. I urge the Government to consider this matter because I do not believe that the amount lost would be significant. If it is not large or significant, for goodness sake instead of having this type of objectionable legislation let us back up the general approach on the sanctity of contract and allow those which are already in existence for the transit of goods to stand.
  [Mr. HARRY GOURLAY in the Chair]
  Mr. Burden: I add my voice to that of my hon. Friend the Member for Honiton (Mr. Emery). In the Second Reading debate I raised this point about contracts which have been entered into. Already many firms have entered into contracts which will not mature until some months ahead. This raises a very important problem for firms which as a result of this legislation will not be able to take delivery of goods which they have ordered because of the 50 per cent. deposit. Not only will that do the firms concerned considerable harm but they may find themselves liable to prosecution for not carrying out contracts they have entered and subject to heavy damages, and also because they are unable to honour the contracts for sales in this country of the merchandise they intend to import they may be faced with claims for damages because of non-delivery to customers here. This would place them in a serious position.
  At one moment the Government say that these people will have no difficulty in getting the money for the deposit and at another moment they say that the whole operation is intended to make it impossible for people to get credit and it is to mop up liquidity. If there are only some who cannot honour contracts because of Government action the Government should consider insulating those who cannot meet their obligations and who might be subjected to legal penalties
  1456
  against the hazard which the Government have created.
  If these circumstances arise, there will be representations by companies overseas which have been let down by British firms which have been unable to meet their obligations because of Government action. Other countries may take retaliatory action against us. British exporters to countries where we have fallen down on our obligations will suffer, as will the Government.
  2.15 a.m.
  Mr. Blaker: In rejecting an earlier Amendment the Minister of State said that one of his grounds for doing so was that no clear test would be available of whether the goods should be exempted. That argument is not available to him in this case, because there will be clear documentary evidence in any imaginable cases the Commissioners will have to consider. What is more, the Amendment contains the words
  "to the satisfaction of the Commissioners".
  If the Commissioners are not satisfied with the documentary evidence available to them, there will be no exemption. The hon. and learned Gentleman may argue that the acceptance of Amendment No. 28 would create more work. This argument is not valid either, in view of what he said when rejecting the suggestion that the minimum exemption limit should be raised above £50.
  Hon. Members have received particulars of many cases, from constituents and elsewhere, illustrating contracts which cannot be cancelled and which were finalised before the relevant date. I have received details of three, all of which indicate the stupidity of the Bill as framed. One is the case of an importer of machinery to manufacture macaroni which would compete with macaroni which will be imported free of deposit. Another case concerns machinery specially made in Germany to produce glass fibre which is intended to increase the sales of the importing country by between 300 and 400 per cent. The cases of which I have received details concern goods not available here and where importers foresee difficulties arising in the availability of credit.
  In the cases we are considering ex hypothesi no purpose will be served by reducing imports, because the goods have

  1457
  already been ordered. The only purpose that can be served is to reduce credit. That purpose will be served only at the cost of injustice. If the matter of reducing the availability of credit is so much in the Government's mind, can they not find another method of doing it without causing injustice and without once again, as they have so often done in the last four years, badly affecting business morale by subjecting business to shocks which no reasonable businessman could be expected to foresee? It is becoming such a hazardous business to be in commerce that it must have an adverse effect on our economy.
  I have one example here which shows how lunatic the proposed arrangement is. A wine shipper has in Bordeaux, Burgundy and Germany stocks of wine which he wholly paid for seven or eight years ago. He is now informed that, if he imports this wine during the currency of the Bill, the import deposit will have to be paid. No purpose in restriction of imports will be served by subjecting these imports to the deposit. They have already been paid for 100 per cent. In this case the Bill will work contrary to the Government's intention, since this gentleman will not import his wine. He will leave it there, even if this means some deterioration in quality, and that wine, which would have been imported without cost to the balance of payments will be replaced by other wine for which we shall have to pay.
  Mr. John Hall: We are now at the hour of the morning when it is reputed that human vitality is at its lowest. Certainly, my vitality is pretty low. I only hope that the Minister's vitality is even lower and that he may be driven to accepting his first Amendment today.
  The Amendment is particularly relevant to a case which has been brought to my attention. All who have spoken so far have given examples of the way in which the Bill adversely affects many British companies. The case to which I refer is that of a large printing company which, some time ago, became concerned at the lack of printing facilities in England, especially for coloured brochures, most of which work is now being done on the Continent. More and more companies are now having their printing crone abroad, especially the print-
  1458
  ing of travel brochures, which come in duty-free and are, moreover, exempted under Schedule 1 and come in without payment of the deposit.
  Because of its concern and its wish to play a part in saving some of the import cost which must be met in the printing of brochures abroad, this company looked about for a suitable photogravure machine which would do the job. Naturally, it looked for a British machine first but could not find one of the right size and quality or offered at the delivery date it wanted. Eighteen months ago, therefore, it bought a machine from a Continental country, and that machine is now coming up for delivery.
  The machine costs £200,000. The company will have to pay £100,000 for the privilege of bringing in a machine intended to save the strain on our balance of payments through the cost of putting printing work overseas. When it placed the order, the company thought that it was playing a part in helping to produce a favourable balance of payments. It noted that the Economic Development Council which had made a survey of the printing industry, especially in relation to exports and imports of printing work, had pointed out that, whereas in 1958 imports of trade catalogues and advertising material totalled only £782,000, that figure had risen to £5·8 million in 1967, and it was running in the first six months of this year at nearly £3·7 million, so that it would be over £7 millions for the full year.
  Here is a company which is trying to meet an obvious need. It placed an order 18 months ago for a machine, but, because of this Bill, it faces the problem of finding £100,000 for the deposit. How will it manage? The banks have said that they are not allowed to provide facilities save for a very short time. If it is able to raise the money in other ways, its expansion and capital development programmes in other directions will have to be stopped.
  This kind of thing strikes the average businessman as sheer lunacy. It is a severe discouragement to businesses all over the country which, despite all the impediments and handicaps put in their way by the Government, have still been trying to play their part in developing our markets overseas and reducing our adverse balance of payments. Yet as

  1459
  soon as they set about it, they are clobbered by a stupid Measure of this kind.
  Sir D. Glover: I congratulate my hon. Friend the Member for Honiton (Mr. Emery), who, par excellence, has shown that he is not only a free enterpriser but a businessman who understands the implications of the Bill. Many of his Amendments, taken together, form a coherent whole of what he rightly thinks needs to be done to help the business and industry community if the Bill is not to be a disaster.
  In a television programme when the latest crisis occurred, Mr. Hyman of Viyella, who is not looked upon as one of the most backward members of the industrial community, said that it is completely impossible for industrialists in this country to plan an efficient system of production, because every time they work out their programme for an efficient system they wake up the next morning to find that the Government have introduced a Measure that destroys the whole of their plan.
  The Amendment tries to remove that disturbance in industrialists' plans, which they have made months ahead, before the Bill was introduced. If it is accepted, a good deal of that planning will continue in a normal, fruitful way. People will be able to honour their commitments and carry on increasing their efficiency. But, if it is not accepted, a great number of probably some of the most efficient industrialists in the country, who have entered into commitments for machinery and so on from abroad, will have the whole of their plans and forecasts of profitability and production thrown into the melting pot because of the Government's arbitrary action in doing things without any consultation and without considering its effect on the business community.
  My hon. Friend would probably lose some of his antagonism to the Government's action, and would perhaps not press the Amendment so far, if the Government had been much more forthcoming about the negotiability of the 50 per cent. deposit. Industrialists who have entered into commitments and arranged the whole of their finances for a long period, and now find that under the Bill everything is thrown into the discard,
  1460
  would probably be able to get out of a good deal of that difficulty if, possibly at a slight discount, they could get rid of their liability for the 50 per cent. deposit. The Government have been very lukewarm about accepting any idea of negotiability. Do not they realise that unless the Amendment is accepted they are throwing an enormous spanner not into the works of inefficient industrialists or inefficient companies but into some of the most efficient industries in the country, which, because they are efficient, have worked out their affairs on a financial knife edge.
  A totally different situation is created by the Government's arbitrary decision. As Mr. Hyman said, it is impossible to expect British industry to improve its productivity, efficiency or export performance unless it can feel that it can plan for a long period ahead knowing that the Government will not spoil all its planning.
  It is rather frightening that the party opposite, which is supposed to be the party of planning, acts like a bull in a china shop in most of our affairs. That is what they are doing here.
  My hon. Friend has tried in a very small way to remove some of the worst anomalies that the Bill will create. I hope that the Minister will say, perhaps not that he will accept the Amendment, but that between now and Report he will produce something that will have the same effect. If the Government do not do so they will create more disturbance than they have any idea of at present in the fabric of our industrial life.
  2.30 a.m.
  Mr. Drayson: These Amendments draw attention to an objectionable aspect of the Bill—the retrospective legislation. I want to return to the question of the importation of yarn from overseas. In every case, contracts for goods now arriving at the docks will have been placed many months if not years ago. As my hon. Friend the Member for Ormskirk (Sir D. Glover) has said, firms operating on close budgets will have made their financial arrangements for many months ahead and the 50 per cent. deposit can put all their plans out of action.
  I will quote from a letter I received from another firm in my constituency:
  "We import a certain amount of yarn from the Continent because it is impossible to get

  1461
  deliveries in the United Kingdom. The yarn is used for materials that we then export. This infamous deposit will probably mean that we cannot get this yarn and that we will therefore lose our export business in this type of cloth."
  I hope that by the time we get to the Schedule the Government will have had another look at the question of including yarns and more semi-processed materials in the Schedule, because I have given two examples tonight of export business built up against considerable competition from Japan and other countries which will be in jeopardy if firms operating on small budgets are unable to find 50 per cent. deposits and therefore have to stop this type of manufacture.
  The Board of Trade have all the relative figures of the amount of yarn imported, what types of yarn they are, whether they are available in this country. They will know that invariably they are not, and that firms importing these materials only do so because they cannot get them in the home market.
  I hope that by the time we get to a later stage, the Government will make these items free of deposit.
  Mr. Taverne: I intend to restrict my answer to points directly relevant to the prior deposit. Without disrespect to the points raised by the hon. Member for Wycombe (Mr. John Hall), much of what he said was against the whole principle of credit restriction and that if a firm manages to raise £100,000 for this it will not have it for other purposes.
  I am concerned with the case raised by the hon. Member for Honiton (Mr. Emery) about prior contract for goods in transit. He asked whether it would affect the scheme. Of course it would, because many contracts have been entered and many shipments may take something like three months to arrive. This is particularly true of goods from Australia, Hong-kong or Japan, sent by sea. In the course of the 12 months Scheme it would make a considerable difference if goods which take three months to arrive were exempt from the scope of the Scheme. It would seem to discriminate against our near neighbours if goods in transit from distant parts were exempt whereas the goods from our near neighbours were not.
  1462
  The important answer to the major point is that it has been the standard practice not only of this Government, but of previous Governments that where there has been a change in customs duties, they should apply from a fixed operative date without exception. This has not only been the practice of the present Government. It was also the custom of other Governments. This argument in relation to Customs duties applies equally to this deposit—
  Sir D. Glover: Is it now accepted that this is a Customs duty? The Attorney-General spent half an hour this afternoon convincing us that it was not.
  Mr. Taverne: Had the hon. Member waited to the end of my sentence, he would have seen that I said that this is a practice which relates to Customs duties and it is also something which should be applied in the case of the deposits. [An HON. MEMBER: "Why?"] Because exactly the same arguments apply. If hon. Members opposite do not see this, they do not understand the effect of what they are proposing.
  If Customs duties are raised in the middle of a contract being fulfilled, goods which have been paid for become more expensive and a worse deal results for the buyers of the goods. Exactly the same sort of principles apply. It has always been necessary to provide certainty, uniformity and a precise point in time from which the new measures would operate.
  Mr. James Allason: I understand the hon. and learned Gentleman to suggest that the duty should be passed on to the customers. Is he suggesting, therefore, that when goods which are imported are already invoiced to other customers, those other customers should find the deposit?
  Mr. Taverne: As we discussed earlier in the evening, the person who pays the deposit is not necessarily the importer, but in many cases he will be. The argument applies to the extent that every time a duty is raised, someone will have his bargain affected for the worse by the imposition of that duty in the course of the contract. No argument could ever then be raised that the increase in the tariff or whatever it might be, or the increase in interest rate, should not

  1463
  operate on goods in transit or a contract already concluded. Precisely the same arguments apply here.
  Mr. John Hall: I am sorry to interrupt the hon. and learned Gentleman; I know that it is troublesome to have to keep bobbing up and down. Would he not realise, however, that there is a difference between the deposits and the raising of a tariff? In the raising of a tariff, there is one additional sum to be met, generally not very high, on a particular transaction. In this case, there is an additional charge for the interest to be paid on the money raised, but, above all, in many cases it is necessary to find a very large sum of money, the difficulty thus caused being quite different from that produced by the raising of a tariff.
  Mr. Taverne: The raising of a tariff may be by much more than the interest payments which now have to be paid by those who find the deposit.
  Mr. Burden Mr. Burden rose—
  Mr. Taverne: I am sorry, I must finish the point. I cannot deal with several interruptions at the same time. If the tariff is raised, it may be raised by much more than the interest payments which have to be found in this case. As to the raising of the deposit, I find it hard to believe that firms which have fixed contracts will find it impossible to raise money for the deposits which they are required to find.
  The hon. Member said that in this case, the difficulties about uncertainty would not arise. I think that it was the hon. Member for Blackpool, South (Mr. Blaker) who said that the certainty argument which I deployed on the last batch of Amendments could not arise here. I think that he is wrong, because there may be many arguments about when, for example, the transit began. It might be difficult in certain cases, when goods do not come here by a direct route, to decide when they started to be goods in transit.
  There might be considerable difficulty in deciding on what date the contract was concluded. If the contract is concluded, as often happens in commercial transactions, by exchanges of letters, there are often many arguments at the Bar to decide which of two large con-
  1464
  corns has been the more unbusinesslike in its correspondence, the outcome turning on the precise date on which the contract took effect as a result of correspondence between the parties.
  The test of certainty which is so important to the whole smooth operation, and to importers, is one which again would suffer if arguments arose as to whether or not goods were actually in transit at the time when the scheme was launched, and whether or not the date of the contract was before or after the scheme.
  There is also the further point of fairness. A number of hon. Members have said that it was grossly unfair to put this burden on those who had already signed a contract, but fairness requires that importers should be treated alike. Importers will be competing against each other in the market, and hon. Members opposite are suggesting that if, owing to some chance, one lot of importers had signed their contracts earlier, or had got their goods in transit earlier, they should escape the deposit, whereas other importers should pay the deposit because a contract date fell on the wrong side of the line. Goods which arrive in this country after the operative date should compete with each other on an equal footing, and it would have an unfair and distorting effect on competition if this Amendment were carried. Hon. Members are proposing to apply an entirely different standard to import deposits from the standard imposed in the past where the same principles have applied. These are standards which they themselves have always found it necessary to impose, and they are standards which should be imposed here, so as to work fairly between importers, in order to provide the certainty and uniformity which would enable the scheme to work smoothly and also because this is the pattern which has been followed by successive Governments.
  Mr. Burden: The hon. and learned Gentleman has been subjected to a great deal of strain but he must not get testy; if he does all he will do is to prolong operations. He was on two very bad points when he made his speech. In endeavouring to explain the charges, he said that tariff rates were much higher than the interest payment on import deposits. This is complete and absolute

  1465
  nonsense. The importers have to pay not only the interest rates, they have to find 50 per cent. more than the cost of the goods. This is far greater than any normal tariff increase. Whereas firms can take a risk on a normal increase in tariffs, which moves between close lines, the import deposit imposes an increase of 50 per cent. on the cost of the goods to the importers, which must be laid out for six months, and many of them are in no position to do this.
  The hon. and learned Gentleman said that we must bring about equity between importers, and that it would be unfair if buyers who had placed their contracts considerably before the date were allowed to bring in goods without having to pay the import deposit. This again is an extraordinary argument. Anyone who places an order now does so fully aware of what the total cost will be. People who placed their orders before the Bill was introduced thought that the merchandise which they were buying would cost them, in effect, a third less.
  If it is a question of equity, the Minister of State has got himself into a muddle and cannot know what equity is. I suggest that the only reason why he has got himself into a muddle is that he has begun to lose his temper. If he can keep calm and discuss the matter rationally, he will not repeat such nonsensical statements.
  2.45 a.m.
  Sir K. Joseph: The Government face a really difficult dilemma here. Obviously they do not want to impose totally unpredictable costs on our businessmen. My hon. Friend the Member for Gillingham (Mr. Burden) spelt out precisely what damage this arbitrary Act will do to all sorts of businessmen, and clearly the Government do not desire that.
  I regret having to compare Her Majesty's Government to South American States, but I believe that when South American States have imposed protective measures of this sort, we have appealed to them, often successfully, to allow cargoes that were already on the way to be exempt. By the standards of some of those States, the Government are being very savage in the impact that they are making on our businessmen.
  The Government's excuse, which may be a very powerful one, is that they could
  1466
  not afford to do this because the volume of exemption would be too heavy. But the Minister gave us no details. He claimed that there would be a large amount of money involved that would escape. But when we recognise that we are dealing with only a third of our total import bill, and if we discount for a moment the proportion of that third which is on long sea voyage or on long order, there must be only a relatively small amount of the total import bill which would be affected if there were some sort of exemption as proposed in this set of Amendments. I hope that the hon. and learned Gentleman will give the Committee an idea of the volume of the loss to the Government if they were to meet the case being put to them.
  They say, secondly, that it would not be practicable to decide when the date of origin, either of the voyage, taking the transit test, or of the order, taking the goods contractually committed, was applied. Surely there must be administrative criteria which could be adopted here. I imagine that the date of the bill of lading could be taken as conclusive evidence, and I am sure there are other means by which the courts or the Customs can decide when an order or a voyage begins.
  The Government are shifting uneasily in their use of the key words "Customs duties". When it suits them to argue that these deposits are Custom duties, they so argue. When it suits them to deny that they are Customs duties, they so deny. The hon. and learned Gentleman is saying that, just because a Customs duty may be changed overnight and the importer has to bear the brunt, he should bear the brunt when the deposit is imposed. But, in substance, it is a quite different and new animal, by which an importer had no reason to expect any sort of change.
  The Minister must seize in his mind the scale of what is required here. As my hon. Friends have said, this is a 50 per cent. extra cash demand on the importer. It is true that it is repayable and that the ultimate cost is only the loss of interest. But, in terms of cash flow, it is a savage demand to be imposed unpredictably on the importer. We ask the Minister of State to look again at these Amendments which have been discussed so trenchantly by my hon. Friend the Member for Honiton (Mr. Emery) and to tell us in particular how

  1467
  much of the total import trade might escape if these Amendments were accepted.
  Mr. Taverne: I cannot tell the hon. Member exactly or even roughly what volume of trade is involved, because, as he realises, this involves knowledge which we do not possess of a number of uncertainties. One does not know what the contract date is. One would not know this about goods coming into this country. One does not know when the transit began. It is not good enough to say that one can simply make the bill of lading conclusive evidence. What about goods in transit which did not come by ship? What about the time that they were loaded on to a train? What about those which came overland? There are many difficulties about transit which are not soluble in such a way as to make it absolutely certain which goods are exempt and which are not.
  Mr. Patrick Jenkin: Why is it that we cannot apply in this case the test for goods in transit under the Sale of Goods Act, 1893, which I have always understood from my earliest legal days at the university, to be an absolutely clear and categorical test, and that different rules apply when the property passes? Why cannot those workable and well-established rules apply in a case like this?
  Mr. Taverne: Under the Sale of Goods Act a great deal of litigation has to take place to determine when the transit started. These issues frequently have to be decided by court of law. It would be fatal to turn the Customs into a judicial body which would have to spend a great deal of time resolving this kind of dispute.
  Mr. Patrick Jenkin Mr. Patrick Jenkin indicated assent.
  Mr. Taverne: The hon. Member nods. He realises that this is something which one must avoid. If inquiry has to be made elaborately into each individual case, exactly the same objections arise as arose in the case of the last Amendments.
  I used the analogy of Customs duty. It seems to me that this is a good analogy. If hon. Members do not like that analogy, there are all sorts of other eventualities which can arise in the course
  1468
  of a contract which can adversely affect the different parties to that contract. There could be an increase in the price of raw materials or an increase in transit rates. There are different ways in which parties to a contract can by subsequent events be prejudiced. This is merely one of the ways in which existing contracts can be affected.
  Mr. Emery: The inadequacy of the replies from the Treasury Bench shows that the Minister has no real understanding or experience of how industry works. It is not true that on a fixed price contract the factors which he has just referred to will alter the contract or the price. To say that it is difficult for a director of supplies or a purchasing officer to establish the date when a contract was made or an order was given is not true. The Minister is concocting arguments to shoot down our case. They are arguments which do not stand up to proper examination.
  It is exactly the same sort of commercial judgment which was applied when the Financial Secretary to the Treasury was speaking earlier. He gave us a lot of "guff", and we are getting exactly the same sort of "guff" now. I feel so strongly about this matter that I do not feel inclined to withdraw the Amendment.
  Amendment negatived.
  The Deputy Chairman (Mr. Gourlay): The next Amendment is No. 29 with which Amendment No. 25, in page 3, line 24, at end add—
  (4) No import deposit shall be payable in respect of goods or materials which, on or before 22nd November 1968, were the subject of temporary exemption from import duty by Treasury order, on the grounds that they were goods or materials not made in the United Kingdom or the Commonwealth or that the supply available from these sources was not substantial having regard to the existing United Kingdom demand.
  Amendment No. 30, in line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods which are already subject to Board of Trade import licensing control or quotas.
  and Amendment No. 104, in line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods covered by a temporary ex-emption order made under the Import Duties Act 1958.
  have also been selected.
  Mr. Patrick Jenkin: I beg to move Amendment No. 29, in page 3, line 30, at end insert—
  (6) No import deposit shall be payable in respect of goods referred to in section 6 of the Import Duties Act 1958.
  It is interesting to see how far our debates now are following almost exactly the chronology of the debates on the Finance Bill of autumn and winter, 1964. I find that on 1st December, at about 11 o'clock at night, we discussed goods in transit and we followed on to deal with goods subject to temporary duty exemptions. In one respect we are less fortunate. It is now three o'clock in the morning. In another respect I hope that we shall be as fortunate. I do not know whether the Financial Secretary will be replying. No doubt he will see that his predecessor, the hon. and learned Member for Derby, North (Mr. MacDermot) made some concessions to the Committee when the matter was dealt with four years ago. I confidently look forward, therefore, to hearing what further concessions the Financial Secretary is prepared to make on this occasion.
  These Amendments deal with particular categories of imported goods where, for one reason or another, special circumstances exist which warrant the exclusion of those goods from the import deposit scheme.
  The three Amendments refer to three different categories of goods, and I will briefly describe them.
  Amendment No. 29 deals with goods subject to the temporary exemption procedure under Section 6 of the Import Duties Act, 1958. The Committee will remember that this Section replaced the old Safeguarding of Industries Act, 1921, when key industry duty disappeared in 1958 and the Section 6 procedure took its place. This relates to special categories of goods which in 1921, and again in 1958, it was felt required on occasions special protection in order that the industries could become established here. The first group includes aircraft, machinery, optical and scientific instruments, measuring and checking instruments, a lot of organic chemicals, principally dyestuffs and organic intermediates, and so on.
  The second group, covered by Amendment No. 104, relates to a much more general category of exemptions under
  1470
  Section 3(6) and Section 13 of the Import Duties Act, 1958. This deals with cases where the Treasury can make orders, on the Board of Trade's recommendation, to exempt particular goods from import duty for a prescribed period. Applicants for duty exemption under this head are successful if the Board of Trade is satisfied that the United Kingdom or Commonwealth production is nil or negligible. The temporary exemption system applies mostly to chemicals, many of which require further processing. The goods temporarily exempt from duty are listed under tariff headings. I make this point to indicate that there is no question of uncertainty. It would be very easy for importers and the Customs to identify the tariff headings for the goods covered by a temporary exemption order which could, therefore, easily be made free from the import deposit.
  The third category, covered by Amendment No. 30, is a rather different one. These are goods already subject to Board of Trade import licensing control. The Minister of State to the Board of Trade—I am glad to see him here—will know that the categories principally covered are goods imported from Iron Curtain countries. These are countries with which we have bi-lateral trade agreements where maximum quantities are laid down. This, therefore, is closely linked with the volume of exports that we can make to those countries. It would seem, on that ground, that this category must be excluded from the import deposit. If goods covered by these agreements are kept out, the inevitable result will be that exports will fall as well.
  3.0 a.m.
  The other two, the Import Duties Act cases, are based on the proposition that manufactured goods which are for any reason temporarily exempt from import duty are by definition those goods which are not available in this country, or at any rate not available in sufficient quantities, and which therefore have to be imported. They are goods which, if the manufacture based on them is to continue, will have to continue to be imported. The only effect of the import deposit will be to add extra costs.
  Those two categories and the licensing category are all groups of goods in respect of which there will be two separate

  1471
  forms of Government control—either scrutiny by the Board of Trade and exemption plus the import deposit, in the other case, the bilateral trade agreements and the licensing system, plus the import deposit. A point which one might make in relation to the licensing one is that these goods come mostly from Iron Curtain countries. These are not goods for which the exporter will be able to provide any extra credit, and therefore this gateway will not be open to the importer.
  Those all seem to be cogent reasons why these categories of goods should be exempt, and in this context I was interested to read what the Permanent Secretary to the Board of Trade, Sir Antony Part, said to the Session of G.A.T.T. only last Friday when he had to make reference—unhappy man—to the fact that this import deposit scheme had been introduced. He assured those who were listening to him that the scheme was
  "designed to do as little damage as possible to international trade".
  Sir Antony is a highly respected civil servant, and if those words are to be taken at their face value the Government must meet the case of these goods which have to be imported, because, by definition, they are not available in this country.
  Here are categories which are easily and readily definable, where none of the problems of uncertainty exists, and where there seem to be the most cogent reasons why they should be exempted from this deposit scheme. If the pledge to G.A.T.T. is to be fulfilled, it is essential that the Amendments should be accepted.
  Mr. Alison: I should like to say a few words on Amendment No. 25, which I admit is an exploratory Amendment. Perhaps I could draw the Financial Secretary's attention to an announcement in the Board of Trade Journal, curiously enough on the very day that the Chancellor of the Exchequer announced the import deposit scheme. Under the heading,
  "Applications for temporary exemption from import duty",
  the announcement said:
  "The Board of Trade are considering applications for the temporary exemption from import duty of the materials listed below on the grounds that these materials are not made in this country or the Com-
  1472
  monwealth or the supply available from these sources is not substantial having regard to the existing United Kingdom demand."
  Further down the announcement there is appended a substantial list of almost unpronouncable commodities and articles.
  The significant point is that those materials do not appear in the Schedule to the Bill. Are we to understand that goods which enjoy a temporary exemption from the normal customs duty, on the grounds proposed by the Board of Trade advertisement, automatically qualify for exemption from import deposit charges? This may be one reason why the list is not included in the Bill. if that is not so, do we understand that the Government have in mind that before the announcement by the Chancellor goods which were being considered for temporary exemption from normal import duty are now being reconsidered for inclusion not only in the normal import duty but in import deposits as well?
  If the Government and the Board of Trade have decided that certain categories of goods which are not available in this country are to be imported free of duty it follows naturally that the Government should automatically include such goods in the list of exemptions. I hope that the Financial Secretary can reassure us that all goods which have hitherto been exempted from import duty will be included, in the form of words I have suggested, in the arrangements that he has made for certain categories of goods.
  Mr. Harold Lever: This group of Amendments recalls to me some of the semantic excitement that occurred at the beginning of our debate about the difference between the duty of Customs and Customs duty. There was some scepticism among hon. Members opposite when we explained that duty of Customs was not necessarily the same thing as a protective duty in relation to our E.F.T.A. and Irish obligations.
  This emerges clearly from this group of Amendments. I will deal first with Amendment No. 29, which would exempt from import deposits goods which may be exempted from import duty under Section 6 of the Import Duties Act, 1958. The list covers aircraft, machinery, optical and scientific instruments, various organic products, articles for testing or

  1473
  examination, and certain non-commercial importations for scientific research.
  I should mention that the issue of Treasury directions giving this exemption for machinery has been suspended since the autumn of 1967. The Bill already propose to exempt certain non-commercial importations for scientific research, and substantially to exempt aircraft and parts and spares for overseas services, following the precedent of the previous Measure, so we have already met part of this demand. It was thought that the balance of national advantage lay in exempting these items.
  An exemption of all the goods covered by Section 6 of the 1958 Act would be much too wide. The criterion for exemption under that Section is protective, and this is the point that I intended to make about the semantic aspects of a duty of Customs. This is not a protective Measure; it is a Measure calculated to produce a marginal reduction in imports and a selective pressure upon liquidity. It is not a protective Measure, in that we do not set as a criterion the requirement that the goods must be such as can be made in this country.
  The intention of the Measure is concerned with credit and a marginal pressure on imports, but irrespective of the availability of British-made goods comparable to the goods affected. If we were to give this protective flavour—and this is what the Opposition are inviting us to do—the Opposition must see that this would be in direct conflict with their earnest representations earlier not to offend the spirit of G.A.T.T. and the E.F.T.A. Convention. We have taken their representations very much to heart in framing the proposal, and if we yielded to their argument in this case we would be offending the spirit of the E.F.T.A. Convention and G.A.T.T. We should be vulnerable to the criticisms which the Opposition were then wrongly making, in accusing us of breaking the principle of these agreements.
  Mr. Patrick Jenkin: I find this argument very abstruse. The Amendment would remove the goods in question from the import deposit, and would therefore, to that extent, reduce the protection which the scheme will, to the extent that it keeps out imports, have for British industry. The fact that these goods are
  1474
  already, by definition, exempt from import duty, and that the protective element of the duty is non-existent, does not seem to make the extension of that exemption to cover the import deposit as well as the import duty give the Bill a protective effect. I do not understand the argument, perhaps because it is ten past three in the morning.
  Mr. Lever: When there is an exemption from duty under this power, that exemption is based upon the non-availability domestically of these goods, so it is not a protective duty which is removed, because there is nothing to protect. If, for example, there were a duty on Zanzibar spice not producible in this country, even with a 100 per cent. tariff, then if there is a tariff on its importation, that is not a protective duty. It is rather like the Customs duty on whisky, even though in the form of a tariff.
  There is no point in keeping that on, and the Clause enables us to take it off, if we are satisfied that the goods are not available domestically, but if, in selecting our list of exemptions, we take that into account and establish it as a criterion, this becomes not a general pressure on imports but a selective pressure of a protective kind—that is to say, we are showing that we are not applying this pressure to goods except where we can make the goods ourselves in competition with the foreigner.
  I can assure the hon. Gentleman that it would be very ill-regarded by E.F.T.A. and G.A.T.T. if we were to apply what are in effect protectionist criteria, that is to say, exempting goods where there is no domestic production challenging foreign importation and not exempting those which we can make at home, and the import deposit would act as a protective duty. I hope that this point goes over, even at this hour.
  For this reason, we cannot accept the criteria of the Amendments. But I offer this consolation: the Government have taken power in the Bill—this might be an inducement to hon. Members to enact it speedily—to make further exemptions, though not to remove any. We shall certainly look at the whole area of exemptions—this will have to be my answer on the Schedule, later—and what is the best package we can get up for using the exempting power by Order. I

  1475
  cannot promise any particular exemptions under the Clause, but I can promise that they will be candidates for early and urgent consideration. I hope that, with that crumb of comfort, and my argument for not giving this flavour which would be ill-regarded by our E.F.T.A., G.A.T.T. and Irish friends, the hon. Member will feel able to dispose of these Amendments.
  Mr. Jenkin: The hon. Member piles such layers of jam on the crumbs which he offers us that they become irresistible. I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Question proposed, That the Clause, as amended, stand part of the Bill.
  3.15 a.m.
  Mr. Alison: We have in the Financial Secretary in these few declining moments of debate, a self-admitted friend of the small company, and of the large company and, I have no doubt, of the medium company as well—
  Mr. Harold Lever: Where appropriate.
  Mr. Alison: Yes, where appropriate. He exudes a certain avuncular—indeed, paternal—regard for companies of all kinds. I now invite him to look at a problem which will face the small company, and the small close company in particular.
  This difficulty will arise because of the problem, which I know the hon. Gentleman appreciates, of the small company getting its share of such bank credit as may be available after the invitation of his right hon. Friend the Chancellor of the Exchequer to the banks to restrict finances really begins to bite. He will know that small companies—and I have in mind the example of a small wine company, in which I have no interest at all to declare—will have to begin generating internal funds in anticipation of having to pay deposits.
  If the small company is a small close company, the Financial Secretary will appreciate that its necessity to generate and retain within itself more funds for the possible payment of deposits will present it with an embarrassment, in that the notorious and extremely disagreeable Section 77 of the Finance Act,
  1476
  1965, makes it necessary for small close companies—or, indeed, any close companies—to distribute a certain proportion of their income, the undistributed portion incurring Corporation Tax, Income Tax and Surtax.
  I know that the hon. Gentleman can give no more than a general undertaking now, but may we take it that, when the next Finance Bill comes round, he will bear in mind the fact that something will have to be done for small companies which are, as a result of the Bill, forced to retain more money and so will not be able to distribute it because they have to save up for the necessity to meet import deposits? Perhaps he could give some assurance that an extra undistributed with that object in mind would not be treated in that way in terms of the Finance Act, 1965. I know that the Financial Secretary looks forward with eager anticipation to the Finance Bill, 1969, but I can say that with such an assurance a lot of close companies would regard the Bill with a great deal more equanimity.
  Mr. Blaker: I have two questions to ask, and the first relates to the machinery available for the settlement of disputes. The Clause provides for exemptions and reliefs, and as soon as one does that one opens the way to differences of opinion between companies and individuals and the Customs about whether, for example, a particular article is entitled to relief.
  Section 260 of the Customs and Excise Act, 1952, provides machinery for the settlement of disputes which involves approval of the settlement by a referee in certain cases or by the High Court in other cases. The Bill declares that it is to be construed as one with the 1952 Act so, on the face of it, one might suppose that the dispute procedure laid down in that Act is available for all tax disputes which could arise under the Bill, but there is room to doubt whether that disputes procedure will be available, at any rate in a satisfactory way, in connection with goods entered for warehousing.
  Clause 1(8) alters the date on which the incidence of duty operates in respect of that class of goods, and the ordinary rule in previous Acts in relation to ordinary Customs duties is that it is

  1477
  ascertained at the date of removal from the warehouse. Clause 1(8) alters that rule, and says that the incidence of duty shall be ascertained at the time when the goods are entered for warehousing. It therefore creates a new position in respect of that category of goods.
  I suppose it might be argued that since the incidence of duty is now to be decided at the time the goods entered the warehouse, it will mean that the matter has been settled at that time, which usually will be when the goods enter the country, and that the possibility of making an appeal after entry to the warehouse is before the date described in Section 260 of the Act of 1952, that is to say the date of delivery of the imported goods from the Customs charge. I should like to have an assurance that the disputes machinery of the 1952 Act will he available in all cases from now on in relation to imports deposits in relation to goods in the warehouse.
  Clause 2(2) says:
  "No import deposit shall be payable, in the case of a person entering the United Kingdom, in respect of any of his personal effects."
  I should like to know whether the expression "personal effects" includes household effects. In my recollection of the law—which is rather dim now—there used to be a distinction between the two categories of personal, on one hand, and household, on the other. I can visualise cases arising of people arriving in this country with household effects—for example, members of the Armed Forces posted back to this country during the currency of this Bill—bringing with them their household effects and not merely their clothing, watches and that sort of thing. As I read the Bill, unless "personal effects" can safely be taken to include household goods, those people and categories such as the numerous people who will be attracted to this country by the high rates of tax under this Government, will be caught for import deposit on household effects. I cannot think that that is the intention of the Government.
  Mr. Harold Lever: Although one tries to keep the debate as light-hearted as possible, I hope that the hon. Member for Barkston Ash (Mr. Alison) will believe that my remarks about small com-
  1478
  panies were made in all sincerity. I certainly take the point he made, that a company ought to be allowed if it needs it for import deposits, to retain profits in the business and not be forced to distribute them. I venture the opinion that the clear requirements of the business of an importer would include the necessity to finance to some extent his import deposits. If he so used his cash, I should have thought he would have the clearest case for resisting distribution of those profits if he wished to use them for import deposit purposes.
  I cannot help mischievously adding that it would be a case where he could avoid paying Income Tax and Surtax on them for a year and have the money in cash form afterwards exempt. So, far from being a loser tax-wise, he would have a modest advantage which I would not begrudge him.
  Mr. Michael Shaw: If this is in fact a deposit, is it therefore a charge against income?
  Mr. Lever: I think that the hon. Gentleman could not have followed the argument advanced by the hon. Member for Barkston Ash as closely as I have. The hon. Member for Barkston Ash asked: if a close company has to find money for these deposits, will that be taken into account in assessing what percentage of the profits it is reasonable to retain in the business? I have said that it is obvious that if an importing company finds the deposits from profits nobody could reasonably demand that it should pay those deposits away in dividends. What could be more essential for the business of an importer than to find the deposits? I have also said that, far from losing this, they even gain a rather unusual advantage.
  On the disputes procedure, I think that there has to be difference from the normal practice, because with dutiable goods the practice is to allow the goods to go into bonded warehouses and not to fall liable to duty until they are taken out, but it would seriously affect the deposit scheme if we allowed the same procedure here. So the deposit becomes payable, not when the goods are taken out of the warehouse, but when they are entered into the warehouse. I think that otherwise the machinery is adequate to deal with

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  disputes in the same way as in any other part of the Customs area.
  As to household effects, subsection (2) wholly exempts from the deposit personal effects of people arriving in the United Kingdom. Passengers' baggage is not required to be entered with Customs. Section 28 of the Customs and Excise Act, 1952, arranges this convenience. However valuable it may be, it would be impracticable to cover it in the import deposit scheme, under which repayment is to be made to a person named on a Customs entry. Household effects which are conveyed as freight, however, have to be entered and it is not impracticable to apply the deposit scheme to them.
  Mr. Patrick Jenkin: Oh, no.
  Mr. Lever: There is an existing duty exemption for used household effects under the Customs Duty (Personal Reliefs) No. 3 Order, 1968, which was made under Section 7 of the Finance Act, 1968. Household effects which qualify for that exemption will ipso facto qualify for the exemption from import deposit. So any existing second-hand household effects which are relievable from duty will be relievable from this Customs duty. This is what the hon. Member for Blackpool, South (Mr. Blaker) wanted, I think. The cry of pain from the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) was premature. There is no reason why the deposit should not apply to new household effects which bear ordinary duty in the ordinary way. I gather that the hon. Member for Blackpool, South is satisfied.
  Dr. M. P. Winstanley: Will the Financial Secretary clarify his explanation of subsection (2), which says:
  "No import deposit shall be payable, in the case of a person entering the United Kingdom, in respect of any of his personal effects, whether or not carried with him or contained in his accompanied baggage."
  What about goods
  "whether or not carried with him or contained in his accompanied baggage"
  which are not personal effects? It is a double definition. What are personal effects, and what are household goods?
  Mr. Lever: I shall not attempt at this late hour, without notice, to give an exhaustive legal definition of a very interesting area of Customs law. I shall be happy to write to the hon. Gentleman. What a man carries in his bag with him would be regarded as his personal effects. A man may have personal effects apart from any travelling with him. They are already dealt with by existing duty law and are exempt from duty in the case I have mentioned. The hon. Gentleman is engaged in an unnecessary, niggling anxiety. I am not complaining about that. I think he is troubling himself unnecessarily. I shall be very happy to write to him setting out more comprehensively the technical legal definitions which he seeks.
  Question put and agreed to.
  Clause, as amended, ordered to stand part of the Bill.

Clause 3

  SHORT TITLE, INTERPRETATION, EXTENT AND DURATION
  3.30 a.m.
  Mr. Nott: I beg to move Amendment No. 37, in page 3, line 40, leave out 'one year' and insert 'six months'.
  On 28th November, referring to the import deposits, the Financial Secretary said:
  "They are temporary in impact and in intention, the idea being to make a sharp immediate assistance to our export-import ratio, to give time for the major strategy, which is to bring our exports and imports into balance—and, indeed, in surplus—to take effect."—OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 751.]
  I put down this Amendment because I thought it surprising that the Government were not expecting the balance of payments to break even, or, to use the hon. Gentleman's words, to break into surplus, within six months from the time the Bill comes into effect. If the Government wish the Bill to be temporary, if they see that it could have certain disadvantages in international trade, and if they favour the liberalisation of trade, they should provide that Clause 1 shall cease to have force after six months, not a year.

  1481
  The Treasury may, under subsection (4), reduce the period by Order, but that is not satisfactory. It would be far better to provide for a duration of six months on a proper statutory basis.
  Mr. Harold Lever: I repeat that this is temporary in intention and in impact. One of the Amendments proposed by the hon. Gentleman would be too temporary even for as good a liberal trade man as I am, since it would give us only one day after the Royal Assent. One might wonder whether our labours were worthwhile if that were to happen. However, we are now discussing his more modest proposal that the period should be six months.
  I hope that we shall exercise our power to shorten the period. I hope that the situation will warrant it, but I should not like to commit the Government. If we were to err and find that we wanted it for another two months, we should be troubling hon. Members at these rather unusual hours of the night to examine the whole question again. I think it reasonable to make it 12 months, with power to shorten the period if circumstances warrant.
  I hope that the hon. Gentleman feels that that is not too dusty an answer and will ask leave to withdraw his Amendment.
  Mr. Emery: Let the Financial Secretary cast his mind back to the understandings we were given on the temporary nature of the 15 per cent. surcharge. It was "temporary" at 15 per cent. for one year and then "temporary" again for another year at 10 per cent. That is a long time to be temporary.
  The Amendment is an attempt to tie the Government's hands. They may not like it, but it is no bad thing to do in this legislation. I only hope that industry realises that, when the Government speak of something as temporary, its duration is all too often very ill-defined. It is a pity that we cannot be more specific.
  Mr. Harold Lever: I am not entirely clear what the hon. Gentleman's argument is about. We have undertaken that it shall be temporary in the most practical way open to Parliament by making it available for 12 months. If the hon.
  1482
  Gentleman wants to tie our hands so that we shall not renew it after 12 months, there is no means of so doing. If there were, it would not be accomplished by making the period six months. I cannot see that making it six months ties our hands to doing it for 12 months.
  Mr. Emery: It will be within the powers of the Government to prolong it if they wish. We all know that. There is no reason why that should not be said, although it is perhaps an unfriendly thing to say. It seems to me that there is a benefit in reducing it. It is certainly much nearer my concept of "temporary" to have six months instead of 12.—[An HON. MEMBER: They will renew it again.]—That may be so, but I am for having as short a time as possible, and the Amendment seems to me much nearer to "temporary" than any other we have seen.
  Mr. Nott: My pleasure at having the Amendment selected was only increased by my surprise at its selection.
  I think that the Financial Secretary did not quite take my point, which was that as it is temporary and the Government have predicted that they will be in surplus within six months anyway—
  Mr. Harold Lever: Good surplus.
  Mr. Nott: It would be evidence of their confidence in their balance of payments surplus if they brought in the Bill for six months instead of a year.
  But I do not wish to pursue the matter, and I beg to ask leave to withdraw the Amendment.
  Amendment, by leave, withdrawn.
  Amendment made: No. 32, in page 3, line 42, leave out from 'may' to end of line and insert:
  'appoint by order in a statutory instrument laid before the Commons House of Parliament'—[Mr. Harold Lever.]
  Question proposed, That the Clause, as amended, stand part of the Bill.
  Mr. Tom Boardman: I should like clarification of subsection (4), which says:
  "Duty under section 1 of this Act shall cease to be in force at the expiration of a period of one year …".
  This is a point that I raised on an earlier Amendment, when the Chief Secretary

  1483
  said that it would be dealt with when we reached this stage.
  It is my contention that the only power the Commissioners have to retain the money is the authority under Section 1. Once the duty ceases to be in force, it must follow that the right to retain the deposit must also cease. It is the retention of the deposit—the use of the money—that is the burden placed on the importer, and it is that which must automatically terminate.
  I have tried to find a source for the words
  "Duty … shall cease to be in force"
  because they are somewhat unusual, quite apart from hardly being grammatical. I could find no authority, but noticed in several Customs Acts such words as
  "the provisions shall cease to have effect"
  on a certain date, and they meant that all duties automatically ceased on that date. They are hardly a precedent for the wording here. I stress the point as being of considerable importance, because importers place their contracts a long way ahead, as the Financial Secretary knows, and they wish to know whether or not contracts they are placing for after next November will have the burden of the 50 per cent. deposit.
  There has been warning that this point would be raised, and I hope that we can be informed about the view expressed, perhaps with some lack of assurance, by the Chief Secretary as to interpretation.
  Mr. Percival: This point needs to be cleared up. For quite a long time, the courts which have had to interpret the laws we pass, have started from the premise that Parliament means what it says, but this is fast becoming a legal fiction. This is evident from the opinion expressed by the Attorney-General that, although we say this is a duty, it will not be one, and that it is a legal fiction.
  It would be a good thing to go back to saying once again what we mean. The Chief Secretary says that what this means is that no duty will be chargeable after the expiry of one year, but that apart from that, everything else remains in force. I suggest that we should say that, either by saying:
  "The duty under section 1 of this Act shall cease to be chargeable …",
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  thus adopting the words of Clause 1, or by saying that the provision of Clause 1(1) shall cease to be in force, adopting the terminology of the Statute of which this is part. But what have we said?—
  "The duty under section 1 of this Act shall cease to be in force"
  I cannot get hold of the concept of a duty being enforced. A duty is something chargeable and payable; and, once it has been charged and paid, that is that. That is a closely reasoned and short point. If the Attorney-General is right in saying that, although we call this a duty, it is not really a duty but a power to extract a deposit and hold it until the Bill says it is repayable, we should read subsection (4) by substituting for the word "duty" the words:
  "The power given in section 1 of the Act to collect a deposit and hold it until the time for repayment comes shall cease to be in force …".
  That will have a different effect from that which the Attorney-General says is intended. If we mean what the Government and the Chief Secretary say, let us take the opportunity to say in simple terms what we mean, instead of using an ungrammatical and unintelligible phrase.
  Mr. Harold Lever: I find this subsection crystal clear. It says that the duty
  "… shall cease to be in force at the expiration of a period of one year beginning with the date on which this Act is passed, or at such earlier time as the Treasury may by order in a statutory instrument appoint".
  Let us remove from our minds any arguments about what is or is not a duty. For the purposes of interpreting this Clause, this is a duty.
  Mr. Percival Mr. Percival indicated dissent.
  Mr. Lever: The hon. and learned Member shakes his head, but the Bill says that it is a duty.
  Mr. Percival: I do not think we can have it both ways. If the Attorney-General's argument is right, and we must accept that it is, we cannot for one purpose call it a duty and for another purpose say that it is not.
  Mr. Lever: I took the hon. and learned Gentleman's point the first time. The Attorney-General did not say that this duty was not a duty for the purposes of the Bill, since the Bill specifically

  1485
  refers to the deposits as duty. If the Bill calls a duty a dog's tail, it would have been for the purposes of statutory interpretation, a dog's tail. [An HON. MEMBER: "Or a dog's dinner."] Or a dog's dinner, but no such irreverent description was applied to this deposit scheme.
  3.45 a.m.
  In English law, therefore, this is a duty for the purpose of applying the Customs Collection Acts, and so on. It is not a duty within the meaning of a trade convention with G.A.T.T. or E.F.T.A.—it is quite another matter—because the definition of a duty for those purposes is quite different from the requirements of a statute. All that a Statute requires is that something should be defined as a duty for it to become a duty. In order for it be a duty within the meaning of E.F.T.A. and G.A.T.T., it must be of a special kind. That is what this duty or deposit is not. It is not a duty within the meaning of G.A.T.T. and E.F.T.A.
  Mr. Percival: Fantastic.
  Mr. Lever: The hon. and learned Gentleman finds it fantastic. Something can be a duty for the purpose of English revenue law which is not a duty for the purpose of trade conventions, which have totally different purposes in mind in defining their duties.
  For example, we were dealing with a point concerning non-protective duties, which are duties for the purpose of our revenue law but are not duties for the purpose of G.A.T.T. and E.F.T.A. In other words, duties on goods which are applied impartially to home and over-sea products are not duties for G.A.T.T. and E.F.T.A. when there is no home production. Therefore, the duty is remittable under Section 6, which we were discussing earlier. However, that is a matter of no concern to the courts, because when they construe this they will construe duty as being the duty imposed by the Bill.
  It is plain that what happens is that the right to impose this duty ends 12 months from the date, but any duty which has been collected—i.e., any deposit which has been collected—will be collected in accordance with the terms of the Act, which will have been in force
  1486
  at the date of collection, and effluxion of 180 days will make it returnable. Any other interpretation would be preposterous, because it would set the Customs the obligation to collect the duty on the three-hundred and sixty-third, three-hundred and sixty-fourth or three-hundred and sixty-fifth day to hold it for 24 hours, which is preposterous.
  What my right hon. Friend said was, as is usual with him, crystal clear and common sense in that it provides for the appropriate operation of the Act and the appropriate termination of the Act in 12 months from its receiving Royal Assent. I hope that although the hon. and learned Member for Southport (Mr. Percival) is not entirely satisfied, he is sufficiently satisfied to dispose of this matter.
  Mr. Percival: As the hon. Gentleman has said, I am not entirely satisfied with something which is silly. If what he has said is right and is what is intended, why not change one word to say what is intended—
  "Duty … shall cease to be chargeable"?
  We will have said in simple terminology what we mean. Here is a chance to do it. For goodness sake, why not do it?
  Mr. Lever: Would not the hon. and learned Gentleman equally be able to argue that it was ambiguous if we changed
  "cease to be in force"
  to
  "cease to be chargeable"?
  I cannot see that one is clearer than the other.
  Mr. Percival Mr. Percival indicated dissent.
  Mr. Lever: The hon. and learned Gentleman does not agree, but we have authority for saying that
  "cease to be in force"
  will have the meaning explained by my right hon. Friend. I do not know why the Committee wants more than that.
  Sir K. Joseph: The Financial Secretary is justified in his self-confidence in nearly every case, because he is very quick and adept, but would he contemplate that perhaps my hon. and learned Friends have a point of substance here? Would he not undertake, at this late hour, to have another look at this? We have

  1487
  Report stage ahead. Surely, nothing would be lost by the Government having another look at this.
  Mr. Lever: I will certainly do that. In order to save further debate that does not seem unreasonable. I am asked to embody the purport of what my right hon. Friend said in unambiguous words. If these words are in the slightest degree ambiguous I will look at them and, if they need to be changed, changed they will be. I do not at the moment see any need for change, but I will do what the right hon. Gentleman has suggested.
  Mr. Tom Boardman: Would the Financial Secretary have in mind that further Amendments provide circumstances in which duty can become payable, and I think great confusion in interpretation would be caused by the Clause as it stands. Perhaps the Financial Secretary will bear this in mind when looking again at the Clause.
  Question put and agreed to.
  Clause ordered to stand part of the Bill.
  To report Progress and ask leave to sit again.—[Mr. Harold Lever.]
  Committee report Progress; to sit again this day.

  AGRICULTURE (SPRING TRAPS) (SCOTLAND) BILL
  Order for Second Reading read.
  Motion made, and Question put (pursuant to Standing Order No. 62 (Public Bills relating exclusively to Scotland)), That the Bill be committed to a Scottish Standing Committee.—[Mr. McBride.]
  Question agreed to.
  Bill (deemed to have been read a Second time) committed to a Scottish Standing Committee.

  FACTORIES (FIRE PREVENTION SERVICES)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. McBride.]
  3.52 a.m.
  Mr. John Horner: I would wish my words to have been heard by a Minister from the Home Department, but I understand that my hon. Friends from the Department of Employment and Productivity is to reply. I wish to stress the importance of the better employment of operational members of local authority fire brigades. I am delighted to see the Joint Under-Secretary of State for Scotland in his place; it is relevant that he should hear what I have to say. I shall be referring to the work of the Factory Inspectorate, and it is thought appropriate that the Department of Employment and Productivity should handle this matter.
  I suggest that the 25,000 or so operational firemen in the local authority fire brigades of England and Wales could be more usefully employed. Nothing I say is to be regarded as detracting one iota from my great respect, after many years of personal knowledge, for the work of the Factory Inspectors for which my hon. Friend is responsible. Their devotion to duty, and the enormous amount and high quality of the work done by factory inspectors in the course of a year is worthy of the highest praise.
  The work of factory inspectors could be supplemented and supported to their benefit. In the legislation which has been put through the House in recent years dealing with safety at work and from fire in workplaces, shops and offices, we have witnessed what is known in the fire service as stable-door legislation.
  The 1961 Factory Act was passed after a number of disastrous fires in special circumstances affecting factory workers where lives were lost. One was the notorious Keighley fire, where women workers in a woollen mill were obliged, due to the absence of proper means of escape, to jump from windows into a canal. Then we had the Shops and Offices Act, which followed some disastrous fires involving loss of life in large multiple stores. These pieces of legislation placed additional duties on the

  1489
  operational fire service in respect of inspection and ensuring that proper means of escape and alarm in case of fire were maintained. Although, in the precise terms of the legislation, it was the then Ministry of Labour which had primary responsibility, if the fire authorities so wished, it could devolve upon the operational fire service. Therefore, nothing that I say tonight will detract from the admiration that I have for the fully trained and very efficient fire prevention services, which are branches of the local authority fire brigades.
  I am proposing that the work of the fire prevention officers, of which there are some 2,000, should be supplemented and much improved, and that the coordination which has grown up over recent years between the factory inspectors and fire prevention officers of the local authority fire brigades should be extended by making greater use of the operational firemen. When I say that, I am not referring to firemen in rank, but those men whose job it is to put out fires when the fire prevention provisions have broken down.
  It might be argued that we have all the inspectors that we want, and that there is no need for what I am proposing. However, I am in no two minds about it. Fire losses run at something like £100 million a year, and that sum represents only the compensation paid by insurance companies in respect of losses directly involved in fires. The indirect fire losses are not capable of precise calculation, involving as they do the loss of trade, of export markets, and of employment, and the restoration of equipment, machinery and factories destroyed, as well as the sad loss of life.
  The responsibility for fire prevention is spread over a number of Government Departments, including the Home Office and the Department of Employment and Productivity. In the local authorities, it is spread over a proliferation of local authority departments, involving city engineers, architects, public health officers, building inspectors, weights and measures inspectors, and sanitary departments. In the recent fire in Glasgow which cost the lives of about 20 people, the responsibility for fire prevention fell upon the department under the aegis of the Master of Works of Glasgow.
  1490
  My proposal is simply that the 25,000 operational ranks—the men who wait to go to fires—should be employed to supplement the very good work which is being done by the two Departments represented by my hon. Friends on the Front Bench.
  The Under-Secretary of State for Scotland (Mr. Norman Buchan): It might be of value to my hon. Friend to know that I have asked the Scottish Central Fire Brigades Advisory Council at its next meeting, which is a week on Friday, to look at this very question—the possibility of the use of operational personnel on fire prevention duties. I thought my hon. Friend would be glad to know this.
  Mr. Horner: I am delighted to hear this news. It supports my opening remarks that if we had a Minister from the Home Department here I might have truncated my speech even further. I am delighted to hear what the Under-Secretary has said. I know that he will not mind, therefore, if I draw my remarks to a close. Perhaps he will be kind enough to convey to the Central Fire Brigades Advisory Council in Scotland the points that I am going to make.
  First, is my suggestion practicable? Can we bring men out of fire stations to do this work? I say that it is wholly practicable. Every fire appliance is equipped with short-wave radio. It will be possible to equip firemen with personal radio sets, if that should be necessary, as with the police. It is easy to evolve a system whereby firemen and their appliances can be on ready call, as quickly available as though they were in their fire stations, with the advanced means of communication that are in existence, and doing this sort of good housekeeping work, seeing that after the factory inspector has been through the building and the fire prevention officer has made his report there is a constant follow-up inspection and that the regulations are carried out, instead of waiting the inevitable long period until there is a further visit from the fire prevention officer or the factory inspector.
  I could give many examples of where, after a fire has been put out, the operational firemen have discovered in the ruins much of the evidence which has confirmed their misgivings and suspicions while fighting the fire that the

  1491
  recommendations of the fire prevention officer or the factory inspector had fallen into disuse, although they may have been adhered to for a time. We cannot legislate for carelessness or stupidity. We can only do our best to see that the recommendations are adhered to as closely as possible. That means careful and constant surveillance. It means having available on the spot a number of properly trained people, and my suggestion is that those men are available.
  This is not my idea. It is the idea of the firemen themselves. It is wholly praiseworthy that these suggestions come from the firemen's own organisation, from the Fire Brigades Union. At a time when trade unions are under attack from many quarters, it ought to be noted that here is a trade union which wants its members to be more fully employed, which believes that at a time when fire losses are running at such astronomical figures, with a grave drain on our economic resources, they are employed on tasks which are not the most socially useful. They think that it is a criminal misuse of manpower that they should be required to do work in fire stations which is nothing to do with the operational job or fire prevention work; I refer to the menial chores which are commonplace in many fire stations today.
  We have 25,000 men, many of them young, intelligent, keen and disciplined. I believe that it is not beyond the limit of the joint intelligence of the two Departments which are represented on the Government Front Bench to see that the willingness and anxiety expressed by these men to be used for these purposes should be fully exploited, especially at a time when we are all concerned at the growing loss of property and life from fire. Government Departments should understand this urgent demand which is being expressed in so many ways. The Under-Secretary of State to the Scottish Office has referred to the Scottish Central Fire Brigades Advisory Council. I hope that the House will give support to the expression which has come from the Fire Service.
  4.5 a.m.
  The Under-Secretary of State for Employment and Productivity (Mr. E. Fernyhough): I am grateful to my hon.
  1492
  Friend for drawing attention tonight to a matter which I know has troubled many people recently. It is natural that the calamitous fire in Glasgow should have aroused strong Parliamentary and public feelings of horror and anxiety. I have, of course, long been aware of my hon. Friend's personal interest in this subject and of his very great experience of it. I appreciate the tribute which he paid to the factory inspectors, and I will see that his compliments are passed on to them.
  Perhaps I can begin by outlining briefly the present responsibilities of my right hon. Friend, the Secretary of State for Employment and Productivity, for fire precautions. These are limited to premises which are subject to the Factories Act, 1961, and the Offices, Shops and Railway Premises Act, 1963.
  The fire provisions of the Factories Act deal with the following subjects:
  First, means of escape in case of fire; secondly, instruction of workers as to the means of escape; thirdly, means for fighting fire; fourthly, fire alarms; and fifthly, safety provisions mainly of a structural kind.
  As regards means of escape, certain factories, chiefly those in which more than 20 people are employed, are required by the Act to have a certificate of the fire authority that they are
  "provided with such means of escape in case of fire for the persons employed in the factory as may reasonably be required in the circumstances of the case."
  Except as regards means of escape, fire authorities have no statutory responsibilities in relation to the fire provisions of the Act. Inspection in relation to the other matters fall solely to the factory inspectorate, but the Act does allow the factory inspector to authorise a fire brigade officer—with the consent of the authority maintaining the brigade—to enter factories for the purpose of reporting to him on any matter falling within his duties relating to fire.
  Although certification falls to the fire authority, the enforcement of the means of escape provisions remains a matter for the factory inspector. If, for example, the means of escape are not properly maintained or are obstructed, it is for the factory inspector to see that the necessary corrective action is taken and to prosecute where appropriate.

  1493
  The fire provisions of the Offices, Shops and Railway Premises Act are modelled upon, and follow closely, those of the Factories Act. Since the Glasgow fire there has been some criticism—not all of it very well informed—about the position with regard to means of escape certification. By the end of 1967 about 84 per cent. of the factories concerned had been dealt with. It is doubtful whether the percentage figure is likely to increase much beyond the present level. It will certainly never be possible to achieve a 100 per cent. certification, because there will always be new factories coming along and factories where changes in processes and premises invalidate the existing certificates, which, in consequence, require amendment.
  On the Offices, Shops and Railway Premises side, the position is that at the end of December, 1967 fire certificates were in force for about 40,000—just under 29 per cent.—of the 140,000 office and shop premises, and for 231–9·8 per cent.—of the 2,377 railway premises known to be subject to the certification requirements.
  Mr. Horner: I do not want to argue about statistics, but the Chief Inspector of Fire Services issues an annual report, and his report for 1967 gives figures which do not by any means marry up with those given by my hon. Friend. He ends his report by saying that the fire authorities still have a large and continuing task, and he refers to a figure of 670,000 registered shops and office premises, of which 112,000 have been inspected.
  Mr. Fernyhough: I shall not try to convince my hon. Friend that the figures I have given are correct. I promise that tomorrow I shall have them checked and write to my hon. Friend. If I am wrong, I shall apologise.
  I was saying that it would be wrong to countenance suggestions that the existing arrangements for the enforcement of the statutory fire provisions and the giving of advice on precautions in factories are inadequate though, no doubt, they are capable of improvement.
  It is certainly not the case, as appears to be suggested in some quarters, that the Factory Inspectorate is unable to find time to take its fire duties seriously enough. It is true that the Inspectorate
  1494
  is under great pressure and its resources are very stretched. But its members do, in fact, give the most meticulous attention to fire matters in the course of their inspections. Any serious deficiencies revealed at a general inspection are noted for follow-up action to ensure that corrective action has been taken. They do not wait until the next general inspection. The blocking of means of escape, or the absence of a fire alarm, would certainly fall within the category of defects calling for a check visit.
  Ever since the Factories Act came into force the inspection of factory premises prior to the issue of means of escape certificates has been a major preoccupation for the fire authorities. Before a certificate is issued a thorough survey of premises is needed from the point of view of conditions of use, structure, and the number of employees.
  This can be a time-consuming task, and it is, therefore, to the credit of fire authorities generally that, as I have already explained, at the end of 1967, the latest date for which figures are available, about 84 per cent. of factories liable to certification had, in fact, received certificates. It is true, however, that a certificate can easily be invalidated if, subsequently, there are significant changes of use, new building, or bad maintenance. It is, therefore, important to maintain an adequate rate of follow-up inspections to check on the current state of fire precautions in particular buildings.
  The full-time fire prevention staffs of fire authorities are frequently too busy to undertake a comprehensive programme of re-inspections themselves, but they usually make a point of doing so in the case of premises offering the largest and most hazardous risks, at least once a year. For the rest, fire authorities are increasingly coming to rely on the operational fire-fighting personnel of the brigades for work of this kind.
  I know that this is a matter which arouses strong feelings; some feel that station personnel should be employed not on what they would regard as menial tasks, cleaning fire stations, polishing, and so on, but, when not engaged on fire-fighting duties, on more appropriate work such as fire prevention inspection. My right hon. Friend the Secretary of State for the Home Department feels

  1495
  that this is a worthwhile use of manpower so long as it is geared to the level of expertise attained by the personnel concerned and provided the standard of operational fire cover is not adversely affected.
  Her Majesty's inspectors of fire services, therefore, when asked for their views on this matter, usually advise fire authorities, subject to these safeguards, to make the maximum possible use of operational personnel in this field, and the practice may therefore be expected to increase. It does, incidentally, fulfil a secondary purpose of enabling fire authorities to secure information to help them in fire fighting. I must emphasise, however, that this is a matter entirely for the fire authorities concerned, and the central Government have no power to intervene.
  The powers conferred on fire authorities under the Factories Act to enable them to carry out the duties of certification are generally regarded as adequate. In particular, an officer of the fire authority may enter a factory where people are employed at all reasonable times to ascertain whether the requirements relating to means of escape are being complied with.
  Co-operation between officers of fire authorities and the appropriate factory inspectors is usually very close, and it is common practice for useful information to be freely exchanged. Thus, it is entirely open for a fire prevention officer to draw to the attention of the factory inspector anything which seems to him to constitute a fire or explosion hazard arising out of the particular use of a building, and this form of co-operation is widespread.
  Factory inspectors may authorise fire brigade officers to inspect factories as to the observance of the fire provisions of the Factories Act and to report their findings to the inspector for his further action. We leave it to our local inspectorate to decide the extent to which this power should be used. The power is widely used particularly in Scotland and in London. At the present time no less than 2,288 fire brigade officers are authorised to visit factories and to report to district inspectors of factories on fire matters.
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  I am aware that some fire brigades are concerned because their local fire authorities have delegated their duties as to means of escape certification under the Factories Act (as well as duties under the Offices, Shops and Railway Premises Act) to local authority departments other than the brigade—for example, the Architects' Department in Inner London and the Master of Works in Glasgow. This again is not a matter in which my right hon. Friend can intervene.
  I would not pretend for one moment that the statistics I have detailed do not leave room for improvement. My hon. Friend will know that any differences between us are ones of means and not ends. I want to see the total number of accidents and fatalities brought down as much as he does. He will know, however, that at the present moment we are considering comments on our First Consultative Document for new safety, health and welfare legislation to replace both the Factories Act and the Offices, Shops and Railway Premises Act, and clearly it would be impossible for me to comment at this stage on the likely form of legislation which we shall ultimately adopt. Moreover, the future organisation of the fire service is under consideration by a committee set up by my right hon. Friends the Home Secretary and the Secretary of State for Scotland under the chairmanship of Sir Ronald Holroyd.
  My hon. Friend will also appreciate that I cannot comment on the Glasgow incident as this is to be a subject of a formal inquiry under the Fatal Accidents Inquiries (Scotland) Act, 1895.
  I appreciate that it is not possible for me to reply to all the issues that my hon. Friend has raised. Some of them are outside the scope of the Ministry that I represent an dare more matters for the attention of my right hon. Friend the Home Secretary. I will, however, gladly give my hon. Friend the assurance that I will see that the Home Secretary's attention is drawn to the many points that he has raised. I am sure that in giving consideration to them the Home Secretary will, where he thinks it will be helpful, act upon them.
  Question put and agreed to.
  Adjourned accordingly at twenty minutes past Four o'clock a.m.