HC Deb 04 December 1968 vol 774 cc1541-710

4.0 p.m.

Mr. John Pardoe (Cornwall, North)

I beg to move Amendment No. 44, in page 5, line 13, at end insert:

Chapter 6 (all headings). Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage.
The Deputy Chairman (Mr. Harry Gourlay)

With this Amendment we will take also, Amendment No. 45, in page 5, line 13, at end insert:

06.02(A) Buds, eyes and stems for grafting and budding; cuttings and slips; mushroom spawn.
06.02(B)(1) Rose stocks neither budded nor grafted, the following:
Rosina canina rooted single stems, not less than 4 feet in lengh
Rosa canina seedlings
Rosa laxa seedlings
Rosa rugosa rooted single stems, not less than 4 feet in length.
06.02(D)(1) Azalea indica, not in flower.
06.02(F)(1)(a) Other trees, shrubs and bushes, not in flower.
Mr. Pardoe

The first question that arises out of Amendment No. 44, which deals with Chapter 6 in the tariff list, is why the chapter was omitted in the first place. Will the Government give their reasons for omitting the chapter from the exemption list? It may be that the products dealt with in Chapter 6 could be categorised as unnecessary imports. We have heard a great deal about unnecessary imports, and I imagine that the reactions to the Amendment of many hon. protectionist Members will be, why should the Government want to flood decent British drawingrooms with nasty foreign cut flowers and foliage? The Amendment is concerned with live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage. I have already given to the Committee my definition of unnecessary imports, which does not square with the more protectionist views of some hon. Members. I regard unnecessary imports as imports which no one in this country wants to buy, and since some quantities of these products are at present being imported, I do not accept the argument that they are unnecessary.

Taking the 1967 figures, the total imports amounted to about £10,845,000 worth of goods, and, since this is a comparatively small product in the import range, would it not be administratively better to exempt it? By exempting the product group the administration of the scheme would be tightened. It is not likely that the Government will have to deal with large quantities at any one time. I suspect that the quantities of this product group coming in at any one time are quite small, and I therefore hope that the Government will consider the matter of administration.

I turn now to the problem faced by Holland. The great bulk of imports of this product group come from the Netherlands. The total figure for the import of bulbs, tubers, tuberous roots, corms, crowns, rhizomes, dormant, in growth or in flower, is £4,846,000 in 1966, of which £4,344,000 came from the Netherlands.

To take the 1966 figure for this product group—and I take the 1966 figure because the 1967 figures are not yet broken down, out of a total of £9,693,000 worth of goods—£6,821,000 worth came from the Netherlands. It is, therefore, a vital matter for this one country and, since we have very close and extensive trading relations with the Netherlands, it might well be that the Government should consider their interests in this matter.

These products are mostly perishable, and I want to raise on this product group the question of what happens with perishable goods. An importer importing a piece of machinery, or something that is likely to be as good in six months time as it is now, who cannot find the deposit, may presumably leave the goods with the Customs and Excise and collect them six months later, or whenever the Government deems. Cut flowers would be of little use six months later, and I therefore wonder what the Government intend to do in the situation which I have envisaged.

This might well happen in quite a number of cases. Will the Government say what they intend to do with perishable goods if the deposit cannot be found and the goods have to be left with Customs and Excise? I hope that the Financial Secretary has noted the questions I have raised and will give answers to them in the course of the debate.

Mr. John Wells (Maidstone)

Amendment No. 45, in my name, is slightly narrower than Amendment No. 44, which has been moved by the hon. Member for Cornwall, North (Mr. Pardoe). I believe that we should look at these product groups rather more strictly.

The advantage of taking the smaller range is that the total value is very much less, and these are the vital products for the British nursery industry. The hon. Member for Cornwall, North has just said words to the effect that it is strange for a Liberal to suggest that cut flowers of foreign origins should be put in British drawing rooms. If we were to accept the narrower Amendment we would be dealing only with the raw material of the nursery trade. The Financial Secretary was at pains, when the Ways and Means Resolution was debated, to say that raw materials would be exempt. He was also at pains to remind us that seeds are exempt. The headings set out are basically the raw materials, the equivalent of seeds.

I would mention heading 06.02(A), buds, eyes and stems for grafting and budding; cuttings and slips; mushroom spawn. All these are the equivalent of seeds although they are not physically such. Heading 06.02(B)(1) refers to rose stocks neither budded nor grafted. These common rose stocks cannot satisfactorily be grown in this country and they are traditionally imported. The entire nursery trade is based on importing them, and this is of great importance. Taking the last five years averaged together the cash value of these products amounts to just over £½ million a year. The quantity in numbers, again taking an average, is over 55 million units a year, that is to say, 55 units of work.

With one or two exceptions, the nursery stock trade is based on small, one, two or three man businesses. The present season of the year is the time when they are planting, moving, lifting, transplanting and so on. It is their busy season, but it is also the time of the year when their cash liquidity is at its lowest. They have to buy in their new stocks from abroad, but they are not, generally speaking, paid until the spring. These small firms are at a low ebb financially, and if this extra imposition, which seems most irrational, should fall upon them they will be in a particularly bad way financially.

This extra impost seems to be most irrational. If it should come upon them, they will be in a bad way financially. I am assured by the Horticultural Trades Association, which speaks for these people, that there will be unemployment and bankruptcy among small firms. We were told by the Financial Secretary that raw materials would be exempt. For that reason, I hope that he will look at these two categories favourably.

My third category, subheading (D)(1), is azalea indica, not in flower. This could be said to be a luxury product, but, again, the general experience is that azalea indica is not grown afresh here. It is always imported, and there is a comparatively large trade in it. In terms of cash value, the figure is about £⅓ million a year, and that will not break the Treasury, though it might break many small firms.

My final category is 06.02(F)(1)(a), which takes in other trees, shrubs and bushes, not in flower. This might sound to be a rather exotic import which we could well do without, but, again, this category of shrubs and trees is the raw material. The bulk of importers do not buy them for resale but for lining out in their own nurseries. The approximate ratio is that, in terms of value, about £ 1 in £18 is resold immediately. These are not items for resale and, in the view of the Horticultural Trades Association, they, too, are a raw material.

I ask the Financial Secretary to look again at these four categories. Acceptance of my Amendment will not cost a lot, and the items involved have the special quality of being the raw material of a small man industry. I hope that he will be sympathetic towards it.

Mr. Brian Harrison (Maldon)

I want to support Amendment No. 45. My reason for doing so is very logical, and perhaps I should declare my interest in that I am a nurseryman importing root stocks, buds, eye slips and some graft-wood. The reason such items are imported at present is that nurserymen are striving to substitute them for finished products which would have to be imported at a very much higher price. Taking, for example, a given category of roses, there are about 4 million coming in from Holland. One or two nurseries here have now discovered that, by importing raw material from Holland, and paying 3d. or 4d. each, they can substitute them for finished products which would have to be imported at about 1s. 6d. each.

At this time of the year, root stocks have to be imported because grafting begins on 1st December or 1st January, and then work has to be done for selling at the end of the season, which is further than six months ahead of the present day. We understand that this levy will be taken off in six months' time. Instead of bringing in an object costing about 3d. or 3½d., which then has an amount of work put into it with British labour and is sold at the end of the period for 1s. 6d., nurserymen are to be hindered in bringing in the raw materials, which is what they are.

In about six or nine months' time, to satisfy the demand of the home market, they will have to be imported at a cost of about 1s. 6d. each. It seems only logical that root stocks should be allowed to be brought in now, so preventing a very much more expensive import in six to nine months' time after this levy has gone.

Furthermore, rose buds are a convenient and economical way of bringing in new varieties. If such new varieties have to be brought in as finished roses or finished viburnums, they will be about eight or nine times more expensive, and they will have to be paid for in foreign currency. In the following season, too, they will be much more expensive on the market than if the raw material could come in now.

4.15 p.m.

It must be emphasised that it is quite impossible to postpone this. It is no more possible than the story of the wartime agricultural executive officer who said that lambing had to be put off for six weeks. It is impossible to put off the grafting or budding of roses.

Other plants, like azalea indica, come in, not for direct sale and, if they are not in bud now they are normally potted up here and allowed to flower, again with an amount of indigenous labour put in, and they are ready for the market in three or four months. If this is not done, they have to be brought in as finished products at greater expense from Holland, Belgium or France.

I would draw the Financial Secretary's attention to a Report on Import Substitution in Agriculture, published a few months ago, which draws attention to the fact that we in this country should try to produce a lot of finished products which normally come finished from other countries. A number of nurseries are concentrating on this and trying to bring in raw materials. Later, it is hoped that it will be possible to grow and produce our own stocks, but rose stocks cannot be produced in six months at this time of the year, and there is nothing which can be done to fill in the gap. If this additional burden is placed on those who are trying to follow the recommendations of the Report and substitute finished products for finished imports, it will create tremendous problems for nurserymen.

I hope that the very limited series of categories set out in Amendment No. 45 will be looked at again. The Treasury should realise that, by rejecting the Amendment, it will cut off its nose to spite its face.

Mr. John Nott (St. Ives)

I have never seen the benches opposite so naked and unashamed as they have been since the beginning of this debate. It is only during the last two or three minutes that a P.P.S. has joined the payroll vote on the Front Bench. Since we are discussing foliage, an appropriate comment might be that not even a fig leaf hides the Government's shame. We are meant to be discussing a key feature of their economic strategy, but not a single hon. Member opposite appears to be sufficiently interested to be present.

I oppose the Amendment moved by the hon. Member for Cornwall, North (Mr. Pardoe). Not for political reasons, but for other reasons, I find the Amendment of my hon. Friend the Member for Maidstone (Mr. John Wells) more acceptable than that of the hon. Member for Cornwall, North.

I am against the Bill in toto, because it is administratively inept and will damage this country, particularly our exports. When the Ways and Means Resolution was first proposed I suggested that it would also be subject to a huge amount of special pleading from every kind of interest and from all directions. Indeed, in the debates on the Schedule which follow we merely see the tip of the iceberg, as it were, of the special pleading now going on.

The reason I do not oppose my hon. Friend's Amendment is that it is reasonable to exclude seeds and the raw materials of the horticultural industry. because these raw materials may not be available here. Although I believe in the maximum liberalisation of trade on industrial products, it is consistent to favour some kind of levy system on imports of agricultural and horticultural products. We have to look at the agricultural and horticultural industries differently from other industries.

This is certainly accepted throughout the Western world. Being a supporter of a new system of agricultural support, namely, a system of minimum import prices and variable levies on imports, it is reasonable for me to oppose the Amendment moved by the hon. Member for Cornwall, North. I do so without any shame, although I am against the Bill as such. That is because it includes —and this is where it differs from my hon. Friend's Amendment—cut flowers. ornamental foliage and bulbs.

My constituency has a growing and important part to play in the cut flower and bulb industry. In the same way that we wish to protect agriculture from dumping by overseas countries, so it is reasonable to protect our horticultural industry from dumping.

I should not like to see Amendment No. 44 go through, because it embodies a move in the direction of a minimum import price protection for the horticultural industry. The bulb industry, which has been growing substantially in this country at the expense of the Dutch bulb industry, should be encouraged more than in the past. Likewise, the cut flower industry, which is vitally important in the Isles of Scilly and West Cornwall, should be encouraged and should receive the same kind of protection that the agricultural industry ought also to receive from minimum import prices and variable levies.

That is why I oppose Amendment No. 44. But I am happy with Amendment No. 45 which seems to raise an entirely different principle, namely, the importation of the necessary raw materials which cannot sometimes be produced within the United Kingdom.

The Financial Secretary to the Treasury (Mr. Harold Lever)

I am grateful even for the modest kind of support that I am likely to receive from the hon Member for St. Ives (Mr. Nott) in view of his attitude to the Bill generally. I notice that he upholds very firmly the principles of free trade, except in relation to agricultural and horticultural products, for which we know that his constituency is famous. I can only congratulate him on the happy coincidence whereby interest and conviction dovetail so agreeably in a way which all too often many of us do not find possible.

However, I have noted what the hon. Gentleman said in support. But protectionism is no part of the Bill's intent or thinking, so I cannot even accept this momentarily proffered hand of support from the hon. Member for St. Ives. I emphasise that this is not a protectionist Bill.

I should again emphasise that our attitude to imports is not hostile as such. We are anxious to be able to afford the maximum amount of imports that the people select by bringing the ratio of those imports in relation to our exports into a satisfactory state at the earliest possible time.

I am sorry to be tediously repetitive about it, but so many speeches are made in which it is suggested that we have not exempted certain articles because we dislike them. Far from it. I find for a brief and agreeable moment that we are wafted into the air of azalea scent, roses, live trees and ornamental flowers. I fear that we shall be engaged at some length on less agreeable articles as we move through the Schedule.

Mr. Patrick Jenkin (Wanstead and Woodford)

"An existence à la Watteau", as W. S. Gilbert would have said.

Mr. Lever

As the hon. Gentleman says, a Watteau-like appearance comes to the Committee for a brief moment.

If hon. Gentlemen opposite regret the absence of some hon. Members on our side, I take this to be an indication of confidence in my hon. Friend and myself. I am sure that it is not any lack of interest in the many speeches which will be made by hon. Gentlemen opposite for whom, in this sort of situation, they normally provide a silent audience. I hope that hon. Gentlemen opposite will not feel depressed by the lack of numbers on this side at the moment, because it is certain that my hon. Friends will study earnestly what has been said in HANSARD.

I hope that I have made our position clear. When articles are not on the exempted list it does not imply any kind of hostile disposition towards them. On Amendment No. 45, hon. Gentlemen must not, like the hon. Member for Malden (Mr. Brian Harrison), speak as if, when we do not exempt an article, it means that it is embargoed from entering. How otherwise can the hon. Gentleman speak of the Government biting off their nose to spite their face by refusing to give exemption to certain articles? I hope that the hon. Gentleman will not pessismistically assume that the articles in question will not come in in reasonable quantities. The most we are seeking, concerning those articles, is to make a marginal moderation in the flow or, to the extent that does not occur, some impact on our liquidity situation.

Mr. Brian Harrison

Can the hon. Gentleman guarantee that nursery-men's bank managers will be prepared and permitted to advance the necessary money to cover the import levy?

Mr. Lever

I have dealt with this point several times. I hope that the Committee will realise that courtsey to the hon. Gentleman again requires that I should, even to the point of tedium, repeat it.

Any nurseryman who requires the import deposit, but has not the cash, will be able to offer any source of finance—an unimpeachable Government security of six months' duration—to secure it. If he has to pay interest, it will be on half the cost of the non-exempted article for six months. I do not want to repeat what I said. I refer the hon. Gentleman to what I said about it yesterday and on other occasions.

This is an impediment. But I want the lion. Gentleman to know that, far from being resentful or hostile to the import, the Bill is founded on the assumption that most importers will remove most of the impediment to an extent which will not be ruinous to any importer. The hon. Gentleman must realise that this is done with great regret. I am sorry to impose even this impediment, but it is done for the ultimate advantage of all importers, because this is the lightest scheme that we could adopt. It is hard for people like the hon. Gentleman to be inconvenienced like this, and I am sympathetic. However, he might console himself with the thought that timely and moderate action of this kind might be the means of ensuring, for a long time to come, that the country can enjoy the most liberal trading conditions and the least interference with imports.

In a sense this Measure, because of its moderation and timeliness, and its relation to our general strategy, will be an ultimate benefactor, not a victimiser, of the importer. I cannot resist doing what I did on television, when I quoted the words of Nye Bevan, who said, "When you kick a man in the teeth, even for his own ultimate and enduring benefit, you must not expect him to be immediately grateful". Although this Measure will inure to the ultimate benefit of all the people in this country, including the importers, I do not expect them to be immediately grateful. I appreciate that they have difficulties, and I sympathise with them. We are not hostile to them, but we have to maintain a certain discipline on the import side, in the manner consistent with the purposes of the Bill.

4.30 p.m.

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

Does the Financial Secretary agree that the general principle of the Bill is that raw materials should be exempt? Does not he accept that my hon. Friend has made the case that these are raw materials? Why is he against the importation of raw materials for the horticulture industry?

Mr. Lever

They are not raw materials in the sense indicated by the Chancellor of the Exchequer, nor are they foodstuffs in the sense indicated by him. These are raw materials which, in most cases, have been the subject of work, and what in industrial areas would be called processing. They do not qualify under the Chancellor's definition.

I know that only £10 million to £11 million are involved, but that involves an import deposit of about £5 million to £6 million, or 1 per cent. of the entire scheme. We need only 100 minor and attractive Amendments of this kind to make it a work of supererogation to have given the Bill a Second Reading, and to have passed the three Clauses, because we would eliminate the whole purpose of the scheme. We must preserve a sufficiently wide range of non-exempted articles to maintain the immediate impact of the scheme.

Mr. John Wells

The hon. Gentleman says that the whole sector involves only £10 million to £11 million. Perhaps I might direct his attention to my Amendment—not the Liberal one—and, in particular, to the first part of it. I can only repeat the figures which I gave earlier. The amount involved is under £500,000. Surely, less than £500,000 for the first category, which is undoubtedly a raw material within the Chancellor's meaning, can be accepted? The hon. Gentleman must look again at his right hon. Friend's words.

Mr. Lever

I heard what my right hon. Friend said, and I came to the conclusion that this was not within those words. Also, it would not be possible to use so selective an attitude at this stage of the scheme.

I ought to point out, as I shall on other Amendments, at the risk of tedium, that the Government have taken powers to bring the scheme to an end at any time they think right, or to add to the exemptions particular classes in the light of the working of the scheme, or to lower the rate in relation to particular categories of goods. We cannot increase the rate, nor do we want to. We cannot remove an exemption, nor do we want to. But we have taken power to add to the exemptions and reduce the rate as we watch the working of the scheme.

I know the interests taken by the hon. Member for Maidstone (Mr. John Wells) in all these fruits and horticultural products, and I shall study his arguments again. All these matters will be kept closely under review by the Government after the Bill has continued its operation for some while. At any time that we are able to take action under this power, we shall do so. At this stage, however, I have to urge the Committee to reject the Amendment. It would make an inroad prematurely into the list of goods not exempted and subject to the deposit.

Mr. Peter Emery (Honiton)

I did not intend to intervene on this Amendment, but that the Financial Secretary's reply raises a matter of principle. It appears that we are likely to hear a similar reply to many of the Amendments. The answer we are to be given is that the Government will look at all the arguments, consider the matters fully, and, if they are suddenly impressed by the position, they can take action.

Mr. Lever

The hon. Gentleman must realise that that is not what I said. I said that we would keep the arguments in mind, and we would watch the operation of the scheme in respect of particular items. We shall do so bearing in mind the arguments which have been advanced by hon. Gentlemen opposite. It is this watching of the operation of the scheme which is crucial to the operation of the powers which we have taken.

Mr. Emery

I thank the hon. Gentleman for making absolutely plain what I thought was plain before.

The hon. Gentleman is trying to suggest that he will watch the scheme, but he can watch it for only one purpose, and that is to make certain that it is operating properly, or in such a manner that he can take action to do what my hon. Friend has suggested, and that is to allow certain produce to be exempted. If that is not the case, the hon. Gentleman's argument is of no avail. In other words, he will be watching the scheme for no purpose, because watching it does not mean that one intends to do something about it. It seems a false argument to be put forward by the Government.

I am particularly concerned about this, because this is the sort of argument that we had four years ago when we were discussing exemptions from the 15 per cent. surcharge. Over and over again Ministers suggested that they would watch the operation of the scheme, that they would listen to our arguments with great interest, and then, as time went on, if it was thought necessary to take action, they would do so. As I recollect the situation, the Government took no action at all while that surcharge was in operation.

In other words, despite all the assurances given to us, the number of items excluded from the surcharge after the Bill became law could be counted on one hand. I should not go so far as to say that there were no subsequent exemptions, but there were certainly very few. I hope that the Minister will bear that in mind when he gives us the kind of answer we have just had.

We do not have to look at the crystal ball. All we have to do is to read the book, and on doing that we find that, despite all the assurances, the Government took no action to increase the number of exemptions. Hon. Members who are trying to get items exempted should realise that the assurances we were given four years ago meant nothing at all. It is extending our credulity a little to think that those arguments can be hashed up again, and I hope that the Government will not repeat their performance of four years ago.

Mr. Costain

I intervened in the Financial Secretary's speech to inquire whether he would accept these items as raw material. I understand he said that the Chancellor had decided they were not. We now have a farcical situation. Do hon. Members appreciate that a Socialist Government are introducing legislation to allow caviare to come in because it is a foodstuff, but are prohibiting the import of mushroom spawn, because it is not?

Mr. Lever

The hon. Gentleman must not say that we are not allowing mushroom spawn to be imported. He is entitled to make an interesting debating point—it will not be for the first time—that caviare as a foodstuff is exempt, but he must not talk of any other article which is not exempt as being forbidden. It is not; it is subject to a minor impediment.

Mr. Costain

I keep off the forbidden fruit. It is admitted that caviare is for a privileged class and mushroom spawn is not. The Financial Secretary said that these imports are not forbidden and all that an importer has to do is to find a finance house to lend him money so that he can lend it to the Government. I have been under the impression that the Government have sent instructions to the banks to put restrictions on lending. Is it suggested that another money lender will come in to lend at lower rates of interest? Mushrooms are a food which is grown in this country and the spawn coming here would help.

Mr. Peter Blaker (Blackpool, South)

I reinforce the point made by my hon. Friend the Member for Honiton (Mr. Emery). The Committee should look very suspiciously at the plea made by the Financial Secretary that the Government will see how things go, with the implication that they will take action to rectify anything which needs rectification.

I ask the Committee to imagine what is likely to happen. For the first three months after the Bill has become an Act the Government will say, "We have not enough evidence yet to see whether there is something wrong here. Let us consider a little longer and see what evidence comes in." For the next three months they will say, "We are considering the evidence". At the end of the six months they will say, "This scheme will expire in six months' time, so what is the point of doing anything about it now?" If we are to get the thing right, let us get it right now.

Amendment negatived.

Mr. Pardoe

I beg to move Amendment No. 47, in page 5, to leave out line 46 and to insert:

Chapter 22 (all headings) … Beverages, spirits and vinegar.
The Deputy Chairman

With this Amendment we may discuss Amendment No. 48, in page 5, leave out line 49 and insert:

Chapter 24 (all headings) … Tobacco.
Mr. Pardoe

Amendment No. 47 seeks to fill in Chapter 22 by which the Government propose to exempt only two items, vinegar and substitutes for vinegar. I propose to include in the exemption all the items in Chapter 22 beverages, spirits and vinegar. I am not frightfully enamoured of the idea of flooding the country with imports of alcohol and smokes, but, of course, I am in favour of as free a trade as possible. I am extremely concerned about the effect that this Measure might have on the competitive situation, particularly in relation to tobacco.

For some time some of us have followed events with anxiety. The situation might be slightly better now than it was a year ago largely because of the advent of Americans to this field, but to a large extent there is a monopoly situation. I have always believed that any form of protection in a monopoly situation can only exacerbate that situation. That is why I have tabled Amendment No. 48. It seeks to include all forms of tobacco in the exemption list, not only unmanufactured tobacco.

I should like to know why vinegar is to be included in the exemption and not any other item in the group. Perhaps the Government are unaware that it is perfectly possible to make a quite tolerable form of vinegar from cider from the West Country. I hoped that I would get the support of apple-eating members of the Conservative Party in this matter. I do not see why it is necessary to exempt this one item while excluding all the others.

4.45 p.m.

I turn to a particular problem which I should like the Government to clear up. It is in relation to Guinness brewing in the Republic of Ireland. It was reported in the Sunday Times on 24th November that Guinness was preparing to change its distribution pattern as a result of the Bill. I wonder whether the Government have made investigations into this. It was suggested that the firm would ensure that its export markets were supplied from its Dublin brewery and its home markets exclusively from the Park Royal Brewery, in London. If that is the case the Bill would have an adverse effect on our exports, but increase exports from the Republic of Ireland. I imagine that the Government have had discussions with the Prime Minister and other Ministers of the Irish Government and probably with the Guinness brewing firm. I hope that they will be able to give us a satisfactory answer on this matter.

Wines and spirits have been subjected to 12 different adverse duty changes since July, 1961. This latest Measure merely adds insult to injury for the industry. In this field probably more than in others many importing merchants are working large turnovers on very small capital. This Measure will make it extremely difficult for them. The scheme is scheduled to last for a year, but people in this trade tend to stock up in August, September and October for the Christmas period. It will be very difficult for them to build up heavy stocks next year at that time and the Christmas trade will be seriously affected as a result.

The Minister of State, Treasury (Mr. Dick Taverne)

In dealing with the various Amendments proposed to this Schedule, the Financial Secretary and I inevitably face a somewhat distasteful task. That is not because we do not believe in the Bill, but for two reasons. In the first place, as an hon. Member said in the last debate, these will be occasions for special pleading, by which I do not mean that the cases are undeserving, but that special cases are put forward which at first sight will appear deserving.

Secondly, in dealing with the Schedule we have to face the fact that it is quite impossible to make a wholly logical division of what is exempt and what is not or one which altogether avoids anomalies. In formulating the Schedule, we have tried to avoid undue interference with commerce and industry and to secure the maximum coverage so that there will be the maximum effect on the volume of imports and on the credit restriction scheme. Because of that we have exempted food, fuel, unmanufactured raw materials and certain crudely processed materials. There will still be anomalies because of the balance in keeping the cover as wide as possible and yet preserving the categories.

While one has sympathy with the trades which are affected by these Amendments and the fact that the importers concerned see other importers who do not have to find the deposit, I do not see that any special anomaly arises. The major Amendment deals with beverages and spirits and all the headings under Chapter 22. These are obviously not foodstuffs, although I understand that for some reason which I cannot explain vinegar is and always has been regarded as a foodstuff.

Obviously, wines, beer and spirits, which are the main categories affected, are not foodstuffs. If they were to be exempted, a very wide category of goods would be exempted. In fact, despite the injuries, to which the hon. Member referred, which are supposed to have been caused to the wine trade since 1961, the fact remains that the consumption of wines has been rising sharply. In 1965, we consumed just under £30 million worth, in 1966, nearly £31 million, and this went up considerably to over £35 million in 1967.

On the basis of the first nine months of the present year, consumption is nearly one-third up on 1967. So it is not as it the trade has suffered because of these impositions. Considerable totals are involved. During the first nine months of this year alone, over £32 million-worth of wines was imported. For beer, the total is £9 million and for spirits, over £14 million. So this would be a wide category of exemption.

The hon. Member asked what the effect would he on distribution, for example, of Guinness. I cannot tell him the exact effect in every individual category, but the Financial Secretary and I have explained the likely overall effect of the scheme. But it would be rash to give forecasts about particular quantities for the actual import saving achieved.

The second Amendment refers to manufactured tobacco. There is comparatively little manufactured tobacco imported. Imports last year were over £86 million-worth of unmanufactured tobacco, while, for manufactured tobacco, the figure was just over £3¼ million. But this is not an anomaly. Manufactured tobacco is clearly outside the basic categories to which the exemptions apply. I can see no particularly good reason for giving a special exemption to manufactured tobacco.

As to the monopoly argument, as my hon. Friend said, this is not, in purpose, a protectionist Bill, and the hon. Member, to some extent, answered this himself when he said that there is no longer a monopoly situation in this country.

Amendment negatived.

[Mr. JOHN BREWIS in the Chair]

Mr. Dudley Smith (Warwick and Leamington)

I beg to move Amendment No. 91, in page 6, line 6, at end insert:

Chapter 28 … Inorganic chemicals.
Any item at present exempt from duty under the Import Duties Act 1958.

The Temporary Chairman (Mr. John Brewis)

It would be convenient to discuss, at the same time, Amendments Nos. 49, in page 6, leave out lines 7 to 13 and insert:

Chapter 28 (all headings) Inorganic chemicals; organic and inorganic compounds of precious metals, of rare earth metals, of radioactive elements, of isotopes.

No. 119, in page 6, line 8, at end insert:

28.03 … Carbon, including carbon black anthracene black, acetylene black and lampblack

No. 108, in page 6, line 9, after 'selenium', insert 'helium'.

No. 50 in page 6, line 9, after 'tellurium', insert 'and phosphorus'.

No. 51, in page 6, line 13, at end insert:

Chapter 29 … Organic chemicals.

No. 52, in page 6, line 13, at end insert:

Chapter 30 … Pharmaceutical products.

No. 54, in page 6, line 13, at end insert:

Benzene, Cumene, Cyclohexane, and mixed Xylenes within 29.01.

No. 74, in page 6, line 13, at end, insert:

29.35 Furfuraldehyde Heterocyclic compounds; nucleic acids.

No. 92, in page 6, line 13, at end insert:

Chapter 29 … Organic chemicals.

Any item at present exempt from duty under the Import Duties Act 1958.

Chapter 30 … Pharmaceutical products.

Any item at present exempt from duty under the Import Duties Act 1958.

No. 100, in page 6. line 13, at end insert:

9.201 … … Ethyl benzene.

No. 103, in page 6, line 13, at end insert:

28.52 … … Rare earth chlorides within 28.52.

No. 105, in page 6, line 13, at end insert:

28.12 … … Boric oxide and boric acid.

No. 109, in page 6, line 13, at end insert:

Calcium carbide, within 28.56.

Dicyandiamide, within 29.27.

No. 110, in page 6, line 13, at end insert:

Calcium hydrogen orthophosphate, within 28.40.

No. 112, in page 6, line 13, at end insert:

28.27 … … Lead oxides; red lead and orange lead.

No. 117, in page 6, line 13, at end insert:

Magnesium chloride within chapter 28.30.
Magnesium sulphate, calcined. anhydrous within chapter 28.38.
Crude thorium and yttrium salts within chapter 28.52.
Propylene tetramer within chapter 38.19.

No. 133, in page 6, line 13, at end insert:

28.12 … … Boric acid.
28.46 … … Sodium borate.

No. 56, in page 6, leave out lines 14 to 25 and insert:

Chapter 31 … … Fertilisers.

No. 57, in page 6, leave out lines 26 to 28 and insert:

Chapter 32 (all headings) Tanning and dyeing extracts; tannins and their derivatives: dyes, colours, print, varnishes, putty, silks, stoppings, inks.

No. 138, in page 6, line 34. at end insert:

35.05 … … Dextrins and dextrin glues; soluble or roasted starches; starch glues.

No. 120, in page 6, line 46, at end insert:

38.09 … … Wood tar; wood tar oils (other than the composite solvents and thinners falling within heading 38.18) wood cresote; wood naptha; acetone oil.

No. 122, in page 6, leave out lines 47 and 48 and insert:

38.19 … … Chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products) not elsewhere specified or included; residue products of the chemical or allied industries not elsewhere specified or included.
and No. 121, in page 6, line 48, at end insert:
38.15 … … Prepared rubber accelerators.

Mr. Smith

Amendment No. 91 has been tabled by my hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) and myself and together with it is Amendment No. 92, dealing with organic chemicals. The idea is that we should seek to get the Government to exempt those items at present exempt from duty under the Import Duties Act, 1958—both inorganic and organic chemicals—which are vital to the British pharmaceutical industry. We wish to call attention to the effect which the Bill will have on the National Health Service.

I must declare an interest, because I am associated with a British pharmaceutical company, but this is not a case of personal special pleading, because my own company, although it would be affected marginally and irritatingly, will not be so severely penalised as many others. On the other hand, I hope that other aspects of the subject will be dealt with by my hon. Friends.

Mostly, imported inorganic chemicals are used in proprietary or "over-the-counter" medicines, which are very important for general practice and self-medication, but they are, perhaps, not so important as organic chemicals, which are the raw materials for prescription medicines and are used in life-saving drugs. So far as the purpose of the deposit scheme is to reduce the level of imports, essential medicines should be exempt. I should have thought that lifesaving drugs are in a special category. Food is exempted, so surely these drugs should be.

It is necessary to establish at the outset that an important category of prescription drugs, of ingredients which are used in those drugs, and of things which are called intermediates, which are raw and semi-processed materials, are not manufactured in this country and cannot be at short notice. Many of these are outlined in Chapter 29 of the 1958 Act. These are not irrelevant drugs. We all know that certain drugs can be used for a number of conditions, but the drugs which we seek to exempt are not those which are used for neurotics or hypochondriacs. They are front-line medicines in the war against disease, fighting pneumonia, bronchitis, heart disease, diabetes, all killers in their own right, which have been overcome by the advances made by medical science over the last decade or so.

These drugs must be available on prescription. They are needed in hospitals and in any home where illness strikes suddenly. Nothing can be gained by placing obstacles in the way of imported goods and materials needed for the maintenance of public health.

As to the sheer economics, it could be argued that there will not be severe hardship to the substantial large companies and that they will learn to live with this, but creating difficulties in the confident expectation that they will be surmounted surely makes their task all the harder. In the long term, this can only raise the price of drugs, of which the Government are, allegedly, so conscious. Any move in that direction is to be deprecated, when firms can have no real control over the issue. Vital drugs must be available if they are prescribed and it is dangerous and irresponsible to put obstacles in the way of an essential service like this.

It has been said many times in these debates that industry will face additional expense, yet other burdens are being imposed by this Government. The pharmaceutical industry is about to learn to live and co-operate with the Medicines Act, a very complex Measure which will require a great deal of time and trouble on their part. The industry has, I think, probably more rules and regulations to cope with than most others, yet it has to combat also this legislation.

It is not as if the industry does not contribute to our balance of payments position. It is generally admitted that it has an excellent export record. A recent published analysis of British-based companies shows a 97 per cent. rise in their favourable balance of payments. In fact, export values rose from £18 million in 1963 to £35 million five years later. Many of these exports were achieved with material which had to be imported before being re-exported. This is material either not easily available in this country or not available at all.

An example which comes to mind—and the only example which I shall give from my own company—is that of camphor, which is an essential ingredient of semi-synthetic penicillin and vital to the side-chain effect of semi-synthetic penicillin. This material has to be imported, whether we like it or not. In view of the export performance of the industry, it is entitled to special consideration in determining whether these charges should be imposed.

5.0 p.m.

The principle that certain drugs or their ingredients must be imported because they are not manufactured or otherwise available here has been recognised for a long time, for example, by the grant of exemption from duty under the Import Duties Act, 1958. Many items are listed in Chapters 28, 29 and 30 of that Act.

May I give one example of how two companies in this country will be affected by this new proposal—and I emphasise that I am not connected with either of those companies. These two substantial firms are concerned in imports of raw materials and partly processed substances for use in the manufacture of drugs in excess of £200,000 per annum. These are materials used exclusively in the very latest and most modern drugs to fight tuberculosis. It is essential that these materials be imported.

The Financial Secretary said last night that one of the principles behind the Bill was to make people think again about importing. If he or I were unfortunate enough to be striken down with tuberculosis, the last thing that we should want would be for the firms concerned to have second thoughts about the importation of these materials.

Mr. Harold Lever

When I spoke about thinking again, I meant thinking again about the extent of the importation so as to economise as far as possible and keep the imports to a minimum necessary for the reasonable and efficient conduct of the business. I did not say that they should think again whether they should import at all in relation to vital chemicals of this kind.

Mr. Smith

I assure the hon. Member that both these companies are reasonable and efficient already and do not import more material than they need. But as the demand rises in the fight against illness, surely these imports will rise. But they do not waste these materials on profligate exercises. These materials are essential and are required urgently.

The cost of drugs is constantly under discussion, although the pharmaceutical industry has proved conclusively that the cost of drugs made under the National Health Service is not unreasonable. Despite the fact that it has a captive customer in the Health Service and that from time to time there is a good deal of political controversy about it, by and large it has learned to live with the Health Service, and we hope that it will continue to do so.

If the Bill is passed, it will be a deliberate act by the Government to put up the cost of drugs—a subject about which they allege they are concerned. Do the Government want to reduce the imports of the pharmaceutical industry? If so, this is a potential danger to the Health Service and an even greater danger to those who are seriously ill. Surely, in the name of common sense, prescription medicines and the materials associated with them ought to be exempt. I ask the Financial Secretary to give the Amendment serious consideration and to see whether he can accept it.

Mr. Tim Fortescue (Liverpool, Garston)

I rise to support my hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith) and, in particular, his remarks about the effect which these import deposits will have on the cost of drugs.

It was only the day before yesterday that I pressed the Secretary of State for Social Services, at Question Time, about the basis on which calculations were made for dispensers' reimbursement fees, and he assured me firmly that what had to be taken into account was the cost of the National Health Service as well as the balance-of-payments situation.

Under this Bill, this is not being done. My hon. Friend made that point eloquently enough, and I wish, therefore, to examine how the Schedule of exemptions has been compiled and the principles which have been put into practice in compiling it.

On Second Reading, on 28th November, the Financial Secretary said that the import deposits would be charged on all goods other than basic food, feeding stuffs, fuel and raw materials."—[OFFICIAL REPORT, 28th November, 1968; Vol. 774, c. 749.] Basic food and fuel are easy to define, and by and large on these items the Schedule has carried out what the Financial Secretary said, but to try to work out the principle on which the draftsman of the Schedule worked when deciding what is and what is not a raw material is very difficult indeed, until final enlightenment finally comes.

I should like to ask the Committee to look at the Schedule of exempted goods for a moment, to make the point a little better. Page 5 is more or less in line with what the Financial Secretary said with respect to basic food and fuel. But on page 6 we begin the anomalies. In line 14 we have an exemption for guano. I accept that there was not much difficulty in deciding whether guano was a basic raw material, but it is not exactly what the Financial Secretary gave us to believe on Second Reading would be the kind of material exempted. Lower down the page we have exemptions for casein, caseinates and other casein derivatives". Casein is by no means a raw material. It is a derivative of milk. But not only is casein to be exempted; derivatives of casein are to be exempted, too. None of these can be called raw materials in the true sense of the word.

The next item is Albumins, albuminates and other albumin derivatives". Next we have a complete anomaly, "exposed film and plates". Later, we have "natural rubber", which one accepts is a basic raw material, but the next item is "reclaimed rubber", and that moves right away from the principle which the Financial Secretary announced on Second Reading. I will not continue through the Schedule, because I have made the point sufficiently.

Where is the demarcation line, to quote a term from another discipline, which the draftsman has used? Clearly, the exemption has not been limited to basic raw materials in the literal sense, such as ores, or materials in the natural state, or unwrought metals. Who has decided, and how has he decided, which other products can be included in the list of exemptions? Who did it and how?

Suddenly enlightenment comes, because in the Schedule to the Finance Act 1964, which the Government introduced almost immediately they came into power, we find provisions identical with the Schedule to this Bill, being carried in the Bill only by the Amendments made to that Schedule in the debate in December, 1964 and later. All that has happened is that the provisions for import deposits—which, we must remember are not customs duties, as was made clear to us by the right hon. and learned Gentleman the Attorney-General, carry, by a strange coincidence, exactly t le same list of exemptions as the 1964 import surcharge, which was a Customs duty. This is the principle, if it can be called a principle, which the Government have followed.

To make the point perhaps even more exact, I will refer to Amendment 74, which stands in my name and is being discussed with this group of Amendments. It proposes exemption for a product known as furfuraldehyde under the heading "heterocyclic compounds and nucleic acids". As is well known, furfuraldehyde is a product made from distilling cereal bran or corn cob waste with sulphuric acid. It can be made economically and in quantity only where there are large amounts of these waste materials or cereals fairly near a major seaport, otherwise it would be impossibly expensive. It is not made in this country. Some time ago, it was not even imported, except in a stage of processing known as furfuryl alcohol.

About six years ago, however, a large firm in this country, with which I am connected—and here I declare an interest—at the expense of about £350,000 built a plant so that this bulky and basic raw material could be imported in the form of furfuraldehyde and furfuryl alcohol manufactured here from it.

Furfuraldehyde is an essential element in the preparation of castings for the steel and motor industries, among others. Without furfuryl alcohol, from which furin binders are made, these industries could not use their present advanced and highly efficient techniques. It is a basic raw material for them and also as a solvent in oil refining. Indeed, the oil refining industry would soon grind to a halt if it were not available.

During the Committee stage of the Finance Act, 1964, the then Financial Secretary stated, on 2nd December 1964, that furfuraldehyde is not a basic raw material. He said: Furfural is prepared by distilling cereal bran with sulphuric acid. It is, therefore, itself a processed product and we come up against the difficulty about the heading under which it falls."—[OFFICIAL REPORT, 2nd December 1964, Vol. 703; c. 531.] It was said then and is presumably still said, because furfural has not been included on the exemption list, that, because the product has been through one process in its country of origin, because cereal bran has been distilled with sulphuric acid to make furfural for further processing after it gets here—

Mr. F. A. Burden (Gillingham)

On a point of order. While we have become accustomed to the fact that the benches opposite are empty, would it not be a good thing if the Financial Secretary were to recover from his apparent sleep so that he could listen?

Mr. Lever

Further to that point of order. Is it not quite ridiculous for the hon. Gentleman to make any such allegation that I am not listening intently? I was up until a late hour last night and there is no reason why I should not close my eyelids even at the cost of temporarily depriving myself of the spectacle of hon. Members opposite.

Mr. Burden

I apologise.

Mr. Fortescue

I am sorry that my eloquence has made the Financial Secretary sleepy. I accept his explanation fully. I, too, was up until a late hour and feel much as he does.

As I was saying, furfural is an important raw material for major industries and yet it is not quite a basic raw material under a recent definition, and it is not exempted under the Schedule. But many other derivatives from basic raw materials have specifically been so exempted. I have quoted some of them.

The Financial Secretary should look again at this substance, furfuraldehyde. There are hundreds of other cases. This is but one example, of such raw materials which are not made in this country, which cannot be made here and which have temporary exemption under the Customs Tariff, 1959, but which are not specifically exempted in the Schedule. I am sure that he will see that this is an anomaly. He would not wish to have anomalies in the Schedule which would be of direct disadvantage to our export trade.

5.15 p.m.

Mr. Burden

I am glad to know that, when the Financial Secretary closes his eyes, it is merely that he is listening with them closed, and is not asleep. We all had a very late night and sympathise with him. But I hope that he will be more forthcoming on this Amendment than the Government have been on others so far. They have not given way on a single Amendment yet. I am not surprised that the benches opposite have been so empty, because there is no great enthusiasm for the Bill among hon. Members opposite.

In asking for pharmaceutical products to be exempted, it might be pointed out that, inevitably, the import deposit will increase the prices and the difficulties of some smaller firms, although, as has been said, this will not he nearly as much the case in the pharmaceutical industry as in some other cases.

It seems extraordinary that the Government should wish to increase prices of pharmaceutical products, but they will do so by the Bill. They will increase the prices and mop up liquidity in the industry. The National Health Service is our biggest user of pharmaceutical products and it is extraordinary that the Government should intentionally impose a restriction through import deposits which will make it more difficult to import them.

In any event, it is unlikely that there would, to any great extent, be importation of these products unless they can be made better abroad and probably more cheaply. Perhaps they have a feature about them that companies in this country cannot produce.

If that is the case, perhaps the hon. Gentleman can tell us to what extent imported pharmaceutical products are used in the Health Service. This is a relevant point. If he cannot go all the way and agree that pharmaceutical products should be excluded, perhaps he can at least agree to considering exempting those which are necessary for the Health Service and which are used widely by doctors and hospitals.

Knowing the hon. Gentleman, I am sure that he will give consideration to this, because he is the last person who would wish to put any premium on human life or well-being. When dealing with pharmaceutical products we are dealing in many instances with products vital to the maintenance of human life and health. I hope that he will look at this from that point of view.

Mr. Blaker

I wish to mention only one case, which is the subject of Amendment No. 103, which stands in my name. That case illustrates the arbitrary way in which the Schedule as it stands will work. I have a letter from a firm of electro-metallurgists in the constituency of my hon. Friend the Member for Ton-bridge (Mr. Hornby), which, among other things, is a contractor to the Government. It makes cerium mischmetall alloys. It has to import several hundred tons a year of raw material known as rare earth chlorides. I find it difficult to imagine a raw material which is more raw than that. Yet, as the Schedule now stands, the import deposit will be payable on that raw material.

I therefore hope the Government will look again at this case. The firm believes that the substance is wrongly classified and should be under 25. 32(c)—other mineral substances. Had it been there, it would have been exempt under the Order. It may be possible to reclassify the substance, but assuming that that cannot be done, as I must for the purpose of my argument, I hope that the Government will be able to examine the case.

Mr. James Scott-Hopkins (Derbyshire, West)

My hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) put his finger on our difficulty with regard to partly-processed materials which are used by certain industries as raw materials. My Amendment No. 100 refers to ethyl benzene, a partly-processed product which is used as a basic raw material in the manufacture of synthetic rubbers, polystyrenes, and so on. As it is not available in quantity in this country it has to be imported. I understand that a plant will be coming on stream at the end of the coming year but, in the interim, the material has to be imported. It is vital to the synthetic rubber industry, and here I must declare an interest.

The Financial Secretary said that the problem with this type of raw material was one of stockpiling, and that that was why he did not want to have any wide loopholes in the Schedule, but I urge him to give further consideration to exempting a material used to such a large extent as this is. When the plant now being constructed comes on stream, the industry will not need to import ethyl benzene, and will be able to get it more cheaply than the imported article. I therefore ask the hon. Gentleman to look with sympathy at my Amendment.

Mr. Emery

Amendments Nos. 119 to 122, in my name and that of my hon. Friend the Member for Harrow, West (Mr. John Page), are concerned with basic raw materials. I ask the Committee to consider for a moment the whole Government concept of exceptions from the list of basic raw materials. During the Second Reading debate on the second Finance Bill of 1964, the Labour Chancellor of the Exchequer said: The phrase 'basic raw materials' has been used in a generally descriptive sense. We have not attempted to apply it with precision because, obviously, there are many opinions about what is a raw material. The right hon. Gentleman went on: … we have adopted as a guide the general principle that materials which have undergone only elementary processing should be exempted."—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1096.] It was not just one process, but elementary processing. The materials we name are necessary raw materials of production, and this is particularly so with 38.19—chemical products. Here, we are attempting to exempt raw materials which are basic to a hundred and one industries—if I were to give all the relevant examples, the Committee would be sitting all night. The imported chemicals range from synthetic detergents right through to the whole carbon system of chemistry which is an integral part of our chemical industry running into many tens of millions of pounds.

The import deposit on these chemicals will increase the raw material price by 2½ per cent. I cannot believe that that is what the Government want to do, as it is contrary to the whole policy enunciated by the Financial Secretary's right hon. Friend the "Minister of Production and Efficiency", or whatever it is—the old Ministry of Labour: though there is not so much efficiency.

We are faced here with the Government purposely changing their mind for no apparent reason other than liquidity. Basing themselves on that argument, the Government have set their minds against allowing the exemption of what to a very large section of British industry must be considered raw materials and which fall within the definition used by the former Socialist Chancellor of the Exchequer in that debate in 1964.

What concerns me is that in 1964 the late Mr. Edward Redhead, who was then Minister of State, Board of Trade, gave us an assurance when dealing with similar Amendments relating to Chapter 39. He referred to his right hon. Friend the Chancellor of the Exchequer as having said: I shall, of course, always be ready to consider any similar glaring anomalies which hon. Members may alight upon. Then he went on: … we will give most earnest consideration to any further representations that are made. We will examine them. I am not to be construed as committing myself on any specific instance, but I want it to be clear that this is not the last word until such time as there will be a general review … ".—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 553.] I do not know what happened about that general review, but it is only too clear that nothing ever came out of it. Amendments we tabled obtained no alleviation at all during two years of the surcharge. The Government must now rectify a position which continues their former errors in connection with such chemical products as carbon, carbon blacks and rubber accelerators—all essential as raw materials in tyre production.

If the Government do not accept these Amendments, they are not looking either clearly or sensibly at the situation. I do not in any way wish to detract from the most excellent speech of my hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith), but his is a natural appeal because it affects health. My Amendments have nothing emotional about them—they only concern ordinary raw materials needed by a section of industry.

5.30 p.m.

Mr. Geoffrey Hirst (Shipley)

As one who, like the hon. Gentleman, took a considerable part in those debates, I may say that, not only did nothing come out of that review but, although I made dozens and dozens of representations about chemicals, not one concession was granted afterwards, which is why exactly the same chemicals are now mentioned.

Mr. Emery

I am delighted to have been reinforced by the hon. Gentleman. I remember his powerful speeches in 1964; in fact, I have just been reading one of them.

What purpose can the Government have in trying to push up the costs of the raw materials of this section of industry? To do so does not in any way assist to keep down industrial costs. The Government would do well to show that they have had second thoughts and will not continue the anomalies of 1964 into the Bill.

Mr. Derek Page (King's Lynn)

In general, I should like to support what has been said by the hon. Member for Honiton (Mr. Emery) about Amendment No. 92. These chemicals are unquestionably raw materials to the industry, particularly those chemicals which are not made in this country and which are, therefore, in general, exempt from duty. They cannot be considered as anything but raw materials. I understand that about £180 million' worth of these duty-exempt chemicals are imported, and we simply cannot do without them. If they are available in this country, they are not available in anything like sufficient quantities.

A number of examples have been mentioned. I could add to the list ad infinitum—vinyl toluene, which is a tremendously important raw material for the paint industry and without which modern paints cannot be made, ethylene diamine, cyanuric acid, which are duty-exempt and not produced in this country, and many others. During recent months, there have been considerable imports of sulphuric acid and styrene monomer. No one could regard these as consumer goods on which there ought to be a clamping-down. They are raw materials for one of our giant exporting industries to the costs of which, as has been said, about 2½ per cent. will be added by the Bill.

When a company is placing orders for these imports, it is impossible for it to know what proportion of these chemicals will be used in producing other chemicals for export, but what is certain is that a very high proportion will be used in the production of exports. The production of bulk chemicals is a highly price-sensitive industry. I have one example produced by a company in my own constituency which uses 1.4 tons of imported material to produce every ton of final product. This provision will mean a considerable increase in the cost of the exported product.

What should be kept out are the imports of products with high profit margins, to which an increase of 2 or 2½ per cent. will not mean anything. Price competition in the sale of bulk chemicals is extremely keen and an increase of 2, 2½ or 3 per cent. in the cost of vital raw materials could lose us tens of millions of pounds of exports. It is a catastrophic mistake not to exempt chemicals which are duty-free, which implies that they are not produced in this country.

The import surcharge of 1964 has already been mentioned. On that occasion, there was finally a concession which resulted in duty being rebated on that proportion of the imports used to produce chemicals for export. However, that is not sufficient in this case, because the damage will have been done by the extra charges.

Sir Gerald Nabarro (Worcestershire, South)

With the import surcharge between 1964 and 1966 drawback was granted, which means that when an imported material found its way eventually into an export, the amount paid in respect of the import surcharge was refunded to the exporter. But that, I understand, is not possible with all the chemicals which we are now discussing.

Mr. Page

That is what I was trying to point out. The concession which was made with the import surcharge is simply not possible on this occasion. However, as the concession was made for chemical exports on that occasion, we have every right to expect the Government to make an adequate concession in this case, and the only concession possible is exempting those chemicals now free from import duty.

A number of chemical companies have already pointed out to me that foreign suppliers in general are offering to extend credit for up to six months, but this, of course, means that they are adding to their cons and, therefore, pushing up their prices a little. The net result will be not to cut down on imports, but to inflate our own costs and that will adversely affect the balance of payments. There is a rock-solid case for exempting these genuine raw materials.

Mr. Nigel Fisher (Surbiton)

I must apologise for coming into the Chamber late. I had not realised that the debate had started and I therefore missed the speech of my hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith). I should also declare an interest as a director of a group of pharmaceutical companies. I want briefly to return to the argument which my hon. Friend must have deployed and, I am sure, powerfully deployed.

I am concerned not so much with the financial as with the medical aspect. Because of the Bill, my own group of companies will have to lock up at least £250,000, and perhaps, more which could otherwise be productively used. I do not claim that we cannot make that money available; of course, we can, although some smaller firms may not be in that position. This may be a serious matter for smaller firms who may not be able to find the cash and, if they cannot bring in their imports, a drug which they are manufacturing may not be made or may not be made in the same quantity. That might mean that patients in need of the drug would suffer in health as a result of the Bill.

Inevitably, the price of some pharmaceutical products will be increased, which is bad enough. The prices of our exports may well have to go up, which will not help to sell them, and that may have a bad effect on our balance of payments and export position. My own group exports about 62 per cent. of everything we produce and holds the Queen's Award for Industry for so doing. However, it is the medical case which is much more important and more serious than the financial case or the export case or the balance of payments case.

If they are unobtainable in this country, ingredients for important and essential medicines should be exempt from the Bill. We have all known the Financial Secretary very well for many years as a man of heart and imagination. Whether he was asleep earlier in the debate I neither know nor care, because I have a great respect for him. I make a direct personal appeal to him on medical, not financial, grounds seriously to consider whether he cannot exempt the whole pharmaceutical industry from the Bill; but, if he cannot do that, at least to think seriously about the exemption of important and essential medicines, the inclusion of which may be prejudicial to the health of some patients.

Sir Arthur Vere Harvey (Macclesfield)

Perhaps I should say that I am interested in the fine chemicals industry, but I shall speak on this occasion on behalf of two large pharmaceutical companies in Macclesfield, one British-controlled and the other foreign-controlled.

As my hon. Friend the Member for Surbiton (Mr. Fisher) said, it cannot be the Government's intention to affect the health of people, but there will inevitably be serious consequences for the pharmaceutical industry if the Bill remains unamended. I have never spoken about this industry during the last 12 years, but I must do so now on behalf of my constituents. The industry, which is about 60 per cent. foreign-controlled, exports 56 per cent. of its output. No one wants to impair that performance. It is essential that the industry should maintain its export effort.

My concern is principally directed to the special ethical drugs which are of such value nowadays. One thinks, for example, of the drugs which relieve high blood pressure, bringing the blood pressure of a man of 60 down to that of a boy of 18 in a matter of days. The medical authorities running our mental hospitals would tell the Financial Secretary that beds are being emptied as a result of the proper use of drugs nowadays. The patients who once suffered for years are now able to do a useful job in the community.

Many firms, no doubt, will be able to raise the money to cover the 50 per cent. deposit for 180 days. But that is not the point. What matters is that costs will go up for the consumer and for exporters, too. If foodstuffs are to be imported free of the charge, there is a strong case for exempting these special drugs, also. I agree with my hon. Friend when he says that the Financial Secretary is a warm-hearted man. We are sure that he will give these Amendments favourable consideration.

Mr. John Page (Harrow, West)

My great anxiety is to improve the credibility of Government policies and to help hon. Members opposite—

Mr. Patrick Jenkin

I admire my hon. Friend's fortitude in taking on such a Herculean task, especially at a time when the Evening Standard poll shows the Tories leading the Government by 27 per cent.

Mr. Page

My hon. Friend's intervention reinforces the need for all of us who wish to see co-operation between the Government and industry to do all we can to help them in their public relations.

Anyone engaged in the rubber industry who was told that carbon black—one of the subjects covered by Amendment No. 119—was not a raw material would need one of the drugs to which my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) referred. Carbon black is an absolutely basic raw material for the main manufacturers of the rubber industry, and to pretend that it is not is absurd.

The Financial Secretary may tell us that, if a large proportion of goods incorporating raw materials not included in the list are re-exported, drawback will be possible. It will be easy to compute such drawback in rubber tyre manufacture, but what about the rest of the industry, which has an export record of £47 million a year? I am speaking of that section of the industry in which the content of car- bon black in the finished product is comparatively small, the section the products of which are incorporated as components two or three stages away.

It is impossible for an importer to be able to compute the amount of drawback which he should receive, or the amount of import deposit which he would be allowed to underpay. No manufacturer could give evidence of how much of what he makes will be exported, although it is probable that about half the articles made will be exported. Drawback, therefore, does not have a chance in this context.

Let the Financial Secretary say in plain terms, "We have made a mistake this time. Obviously, carbon black is a basic raw material, and it shall go on the exemption list".

5.45 p.m.

Mr. Pardoe

I have put my name to five of the Amendments which are linked to the main Amendment now being discussed, and those Amendments would affect chemicals, both organic and inorganic, pharmaceutical products, fertilisers, tanning and dyeing. Most of the points have been covered, but one or two still remain to be raised.

First, fertilisers. Certain groups in the fertiliser chapter are exempted. It all seems very complicated, and I should like the Financial Secretary to tell us, if he can, what is the value of imported fertilisers left out of the exemption list. On the face of it, it appears that virtually all fertilisers have been exempted, and I see no point in making the few distinctions which have been made. What is the value of the distinction?

Second, phosphorus. I cannot tell whether phosphorus has been exempted or not.

Mr. Harold Lever indicated dissent.

Mr. Pardoe

In that case, I appeal that it should be.

I hasten to say that I have no financial connection whatever with any company interested in any of the five Amendments to which I have put my name, which makes me almost a pauper in the House, I suppose. But I cannot see how any business can be expected to conduct its long-term investment planning if it is to be subjected to this kind of change.

Albright and Wilson, a company in my constituency, finding that production costs of phosphorus were much lower in Newfoundland, primarily because of the sources of cheap power there, invested heavily in phosphorus production in Newfoundland. Now, however, the company will have to find about £1 million in this respect alone. The Government ought to give way on phosphorus. It is a basic raw material, and a large proportion of what we use here has to be imported. It is a special case, and I hope that we shall be told that the Government are prepared to reconsider their decision.

Sir G. Nabarro

In the case of dutiable imports of partially manufactured chemicals—the point I raised in an intervention during the speech of the hon. Member for King's Lynn (Mr. Derek Page)—will the duty be refundable to the exporter when the goods imported are embodied in the export together with any element of cost arising from the imports deposit scheme, or will the refundable part be only in respect of the import duty and no part of the cost in respect of the import deposit scheme? Will the Financial Secretary answer that question when he replies?

Mr. G. B. Drayson (Skipton)

The first item covered in Amendment No. 119 is carbon. There could not be a more basic element than carbon. My chemistry is a little rusty now, but I suggest to the Government that, if all elements, as opposed to compounds, were put in the exemption list—including, no doubt, the precious metals—the whole thing would be made much simpler.

Mr. Patrick Jenkin

It would be right if I were to make a few comments to draw together the threads of the powerful case made by my hon. and right hon. Friends on this first major group of Amendments.

It is perhaps right to point out—I am not sure whether this has been referred to in the debates—that the Schedule as it stands is identical with the Schedule relating to the temporary surcharge when that surcharge came to an end. A number of additions were made while the temporary surcharge was in force, but what we have in the First Schedule to the Bill is what was left at the end of 1966 when the surcharge ended.

We are indebted to my hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith) for the manner in which he opened this debate and for the way in which a number of my hon. Friends have widened its scope and brought out the very critical and difficult problems which this group of Amendments poses in relation to a Bill of this sort. When one comes to chemicals and the various materials related to them, one comes to a sector which, on the basis proposed by the Government, poses problems which are totally insoluble according to any coherent or rational body of principle. The basic feature of the scheme is that raw materials should be exempted, and this sector raises in an acute form the question: what is a raw material?

The Government's answer as embodied in the Bill is this. They take the whole of Chapter 27 of the tariff classification—mineral oils, fuels, waxes, and so on—a very few elements in Chapter 28, a number of compounds in Chapter 28, a few basic chemicals and mixtures of such chemicals in Chapter 31 and a few isolated materials in Chapters 32 to 38, mostly but by no means all natural pro ducts. In many cases, they have included—and this is the point at which the questions begin to arise—derivatives of these products—solvents, acids, spirits oils and so on.

Having said that the test was the same as was applicable for the temporary surcharge, I think that it is helpful to look at what was said by the Government spokesman when comparable Amendments were discussed in December. 1964. The right hon. Member for Islington, East (Sir Eric Fletcher), who was then the Minister without Portfolio, said: In so far as some of these chemicals are manufactured chemicals, they are not eligible for exemption. In so far as they are chemicals in their natural state or only slightly processed, they are eligible for exemption."—[OFFICIAL REPORT, 2nd December, 1964; Vol. 703, c. 516.] I am bound to add that that gets us absolutely nowhere. It is a totally arbitrary line derived, as we have seen from the list in the Schedule, from a totally arbitrary system of classification, and the results are entirely arbitrary.

I should like to illustrate this point with a number of examples which have not been mentioned in the debate. Taking the test mentioned by the right hon. Member for Islington, East, he described the system and said that it included basic materials and some derivatives but that his task was to draw a line. The Bill mentions, for instance, mineral or chemical fertilisers, potassic. We propose by Amendment No. 110 to add dicalcium phosphate to the list of exemptions. Put in its tariff form, it is calcium hydrogen orthophosphate.

This is an essential raw material used in the production of animal feeding stuffs. As far as can be seen, it is the only such raw material of any significance which has not been exempted. Furthermore, it is impossible to see any use for this material other than in the production of animal feeding stuffs. Why is it right to include in the list mineral or chemical fertilisers, potassic, and exclude dicalcium phosphate?

The Bill exempts mercury. There is an Amendment to exempt helium. Helium is just as much an element as mercury. It is found in certain mineral formations only in the Western Hemisphere. Every ounce of it has to be imported, and it is an essential import. Helium is an element and so is mercury. Why is helium not to be exempt when mercury is?

Take silicon, which is a non-metal but is used in the production of metallic alloys. Compare this with one of the products mentioned in Amendment No. 109, calcium carbide. That is a basic raw material for the chemical industry. It is so basic that, although it is a carbon compound, it is listed, not under Chapter 29, which deals with organics, but under Chapter 28, which deals with inorganics. It is produced by a reaction of coke and lime and, to the lay eye, is indistinguishable from coke, which would be exempt under Chapter 27.

Calcium carbide is permanently free from duty and is imported from Norway and Yugoslavia. Imports are running at about £1¾ million per annum. It is a basic raw material for the whole of the acetylene-based chemicals. Why is that not exempt when silicon is exempt? One could make the same remarks about dicyandiamide, which is used in the manufacture of certain plastics. The Bill excludes bromine and iodine, which are materials produced by a simple processing of naturally occurring materials.

In Amendment 117 we mention crude thorium and yttrium salts within Chapter 28.52. These are produced by a simple processing of naturally occurring materials. The same can be said for magnesium chloride and magnesium sulphate. I echo the remarks of my hon. Friend the Member for Blackpool, South (Mr. Blaker). How could anything be more of a raw material than those which he mentioned?

Chapter 28 requires special scrutiny. Unlike all the other chapters, it is cast in a special form in that it includes basic raw materials and a great many often highly complex derivatives of those raw materials. It is not sufficient to regard it as a chapter full of chemicals which are manufactured products. It includes a large number of basic raw materials, all of which should be included in the Schedule to the Bill.

I turn to Chapter 29 dealing with the organic chemicals. It is a pure accident of classification that certain of the chemicals in that Chapter are to be found there rather than, for instance, in Chapter 27. Many of them are the first derivatives by relatively simple processing of basic materials which are exempt. Amendment 54 deals with four basic chemical raw materials: benzene, cumene, cyclohexane and mixed xylenes. If they are in a crude state they are classified under Chapter 27, the whole of which is exempt from the import deposit. The fact that they are refined results in the accident that they are to be classified under Chapter 29 and, therefore, come within the import deposit charge. They could just as easily come within Chapter 27.

These are the basic building bricks of the chemical industry and they are used to make such things as nylon, exports of which are running at about £11 million a year, and terylene, with exports running at about £16 million a year. Similar remarks could be made about a number of other chemicals such as propylene tetramer.

I hope that I have said enough to show that even by the Government's own test by which they wish to exempt raw materials they have drawn the line in the wrong place. Our case, however, goes further than that. The application of this sort of import restriction to the whole field of chemicals demonstrates the folly of trying to run industry in this way.

6.0 p.m.

It has been said over and over again during the debate by many hon. Members that in the chemical industry, one man's product is the next man's raw material. It is equally true, as my hon. Friend the Member for Honiton (Mr. Emery) said, that the chemical industry is. perhaps more than any other, an international industry in which many basic chemicals have acquired the characteristics of being commodities which are widely traded in all over the world.

There are two consequences of this international trade in chemicals. One is what might be described as the tidal flow. At some periods, it will be country A which has the products and is exporting to other countries. A few years later, country B will have put in the next lump of capacity and will then be making the flow go the other way. The flow follows the pattern of investment. For this reason, it is ridiculous to regard a flow of imports into Britain at any particular time as something which it should be sought to restrict by an import deposit of this sort.

A second characteristic of this international trade is the growing practice of specialisation. As the hon. Member for King's Lynn (Mr. Derek Page) rightly said, it is crazy to believe that this country could make everything. Of course we could not. We import what other countries make more easily and more efficiently than ourselves and we export hundreds of millions of £s of chemical products which we make more efficiently than, or as efficiently as, anyone else. The Kennedy Round has recently given a tremendous fillip to this international trade in chemicals and it is growing rapidly. A Measure such as this, applied with the sort of discrimination which is necessary to make it tolerable, merely cuts it back.

In a telling speech, the hon. Member for King's Lynn asked the vital question, on which my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) took him up and which, I hope, the Financial Secretary will be able to answer: what about exports? Here is an industry which is essentially producing intermediate raw materials for dozens of other industries, many of which have substantial imports. As the scheme stands, if these goods are transferred from an importer to a manufacturer who then manufactures and exports the finished product, there is no way in which the duty can be remitted. Indeed, the extent to which there can be a drawback is doubtful.

Therefore, one is bound to conclude that by putting the import deposit on many of the industrial materials listed in Chapters 28 and 29 and subsequently, one is hitting at exports in a way which is manifestly not the Government's intention. Indeed, it can be summed up by saying that the Government have put forward the scheme on the footing that it is tolerable and acceptable only if exports are exempted from it and if raw materials are exempted.

The debate this afternoon has shown that the Government have succeeded in exempting neither exports nor raw materials. I have no doubt whatever that the Committee will be justified in demanding that there should be the widest revisions and a substantial increase in the scope of the Schedule to take account of the many Amendments which have to be tabled and which have been ably spoken to by hon. Members, on both sides.

We shall listen with interest to what the Financial Secretary says. I know that he wants to make the scheme as workable as possible and to do as little damage to British industry as possible. I hope that he will recognise the force of the argument advanced from both sides on this matter.

[Mr. SYDNEY IRVING in the Chair]

Mr. Harold Lever

I hope that the Committee will permit me to begin my answer to this long and closely argued debate by expanding a little on some general matter before going into some of the details of the argument.

The first point that we must bear in mind is that it was necessary for the scheme to make a broad division between those raw materials which have undergone only a relative processing and all other materials. This is why it is not simply basic materials or whatever one calls a basic material. For the purpose of our selection, a basic material became, as far as we could make it, those raw materials which have undergone only elementary processing.

I ought to say at once that it is impossible to draw the line in a way which will not produce an argument of anomaly wherever it is drawn. We know this all too well. Whether it be in relation to Purchase Tax—and the hon. Member for Worcestershire, South (Sir G. Nabarro) made a great reputation simply from examining the anomalies which resulted from the lines that were drawn in the Purchase Tax regulations—

Sir G. Nabarro

I hope that the hon. Gentleman does not suggest that my reputation rests on Purchase Tax alone.

Mr. Lever

I would certainly not be guilty of any such rash implication. I thought that the hon. Member was first in the field in exposing anomalies in relation to Purchase Tax which interested and amused the House, because, as it turns out, wherever the line is drawn there will be difficulty in reconciling in strict logic the articles that are excluded from or included in the benefit or disfavour, as the case may be.

For example, a very good case has been made for helium. Helium is found in natural gas, from which it is separated by liquefaction. If it were to be separated, there are other elements of gases—oxygen, hydrogen, nitrogen, argon, and so on. I shall not turn this into a chemistry lesson, an area in which I have no special competence, but it can be seen easily that if we were to exempt helium, somebody would say how absurd it was to exempt helium and not hydrogen. if I exempted hydrogen, would be referred to the idiocy of failing to exempt oxygen, argon and a number of other gases. [An HON. MEMBER: "Why not?"]

Hon. Members must remember that the House, in its wisdom, gave a Second Reading to the Bill in the form in which it was made clear that we were looking to an import effect and a liquidity effect by reason of deposits applied to a range of materials to the extent of £3,000 million a year at the commencement.

Mr. Derek Page

Helium, for instance, simply cannot be produced in this country. The other things like oxygen and hydrogen can.

Mr. Lever

If my hon. Friend will wait patiently, I will deal with the point, because he is not the first to raise it. I will certainly not fail to deal with it.

The first point which I wish to get over to the Committee is that I shall not offer an exposition in chemistry, although I warn the Committee that I am very well equipped by my brief so to do, because what I have done in connection with hydrogen, argon, and so on, I am quite prepared to repeat concerning lanthanum, cerium, precordium, europium, terbium and quite a number of Latin-sounding metals, the point being that if I let in one of these ums or iums there are—

Mr. Blaker rose—

Mr. Lever

I will give way in a moment—a whole series of urns and iums which would have an equal claim.

I am in the difficulty that I have to preserve a sufficiency of impact in the Bill to make it worthwhile and to produce the effect that my right hon. Friend the Chancellor intended in introducing it. Does the hon. Member wish to intervene?

Mr. Blaker

The moment for my brilliant intervention has passed.

Mr. Lever

I beg the hon. Member's pardon. Had I known, I would have stopped even in mid-sentence.

That is the first point I have to make, and I accept, from the very able argument addressed to the Committee, that we could make cases in particular areas where logic would seem to suggest possible anomalies as between the treatment of one of these chemicals and some other article which is exempt, but I urge upon the Committee that the approach will have to be practical and not theoretical for the reason which I have indicated. that we must preserve the scheme with sufficient impact and then rely on the power we have, in the light of the working of the scheme, to favour, for example—this is not a hint—helium against hydogen or hydrogen against helium, according to the way the scheme is working in practice and where disruption or excessive interference occurs. So I shall urge the practical as against the theoretical drawing of lines, conscious that I shall be open to logical challenge and conscious that there will be possible argument.

The next point is that it was essential to make it clear that the scheme is not of a protectionist character; that is to say, that the scheme is not designed to protect home producers against their foreign competitors. Non-availability, therefore, cannot of itself guarantee exemption. If it were clear from the scheme that non-availability were to be the test—in other words, if, wherever we have an article which cannot be manufactured in this country, we did not impose the discipline or intent of this deposit, that we freed it from that discipline—it would be quite clear that the scheme would have a protectionist character seeking to favour home manufactures against domestic imports. If we had done that, it would certainly have been against the spirit of E.F.T.A.—and we know the Opposition, at any rate, would have been very passionately against that—it would have been against the spirit of the Anglo-Irish Treaty and against the spirit of G.A.T.T., and it would certainly have been very difficult to operate consistently with our international obligations. So, as far as materials are concerned, non-availability is not an argument.

I am sorry to have to keep on repeating it, but hon. Members must realise that non-availability would be a devastating argument if we were imposing an embargo of any kind. We are not. It is an impediment which is being placed, but which cannot be based on the criterion of non-availability.

The Government are aware that, when the scheme is in operation, additions to the exemptions may become necessary in the light of serious difficulty in important areas—I do not want to discount the anxieties which hon. Members have about possible difficulties which may emerge in particular areas—so serious that the Government would feel obliged to erode the range of impact of the scheme. That we have power to do, and that is why the Bill provides that we shall have power to add to the list of exemptions or to reduce the rate, but not to add to the rate of the deposit. We shall watch the impact of the scheme and we shall be giving attention to cases, such as the chemical industry, with a view to operating one or the other of these powers as the situation may require.

It is too early at this stage to take decisions about all these individual cases merely upon assumptions as to what the effect will be. Although I greatly respect the very rich range of experience which, in this area, we have seen manifested today, I prefer to act on actuality rather than on assumptions at this stage of the scheme.

Hon. Members have said that they have had disappointing experience in the past in relation to the tariff situation. There are two points I must make. One is that the tariff situation is not on all fours with this situation. The intent of the tariff was to do something rather different from the intent of this scheme. The kind of difficulties which arose in the case of the 15 per cent. or even the 10 per cent. surcharge were quite different in scale from the kind of difficulties which, I frankly admit, could arise in particular areas in relation to the 50 per cent. deposit scheme.

So I can only say—this assurance is given not in optimism but in good faith—that that power is not likely to erode the impact of this import deposit but, on the other hand, it is standing ready to do so, if the kind of serious difficulties which some hon. Members seem to fear may occur do, in fact, occur. I again repeat we are not dealing with a tariff or an embargo, but with an impediment, not by any means impossible to overcome, on the importation of goods, and this impediment, we hope, will be for as short a period of time as is necessary. I greatly regret—I repeat this on every occasion, so nobody shall mistake my attitude—the inconvenience which this causes to importers, but the sharper and more effective the impact of this scheme is, the sooner we shall be able to reduce the impediment and relieve the inconvenience.

6.15 p.m.

Mr. Dudley Smith

Would the hon. Gentleman say, therefore, why there should be an impediment on life-saving medicines?

Mr. Lever

This brings me to one of the points made very earnestly by many hon. Members. The hon. Member for Surbiton (Mr. Fisher) put it with great force. I was not quite sure—I know it was very kindly meant when he said he did not care whether I was asleep or not; I still retained his regard—whether that was to be taken as implying that, even asleep, I am sufficiently receptive to logic and argument to be useful for the purposes of the debate, but I can assure hon. Members that I have not been asleep throughout any part of the argument, but, as the result of a late night and a subsequent day's work, I have found it convenient to economise muscular effort by lowering my eyes, although I regretted the very obvious deprivation which must inevitably result when I do so, sitting where I do.

Mr. Blaker

The hon. Gentleman will realise that we on this side do not mind whether or not he keeps his eyes open, but that we want some indication that, at some time, he is going to keep his mind open.

Mr. Lever

It is not closed.

Mr. Hirst rose—

Sir G. Nabarro rose—

Mr. Lever

I was giving way to the hon. Member for Shipley (Mr. Hirst), but I will give way to both hon. Gentle-men.

Sir G. Nabarro

Would the hon. Gentleman, before he concludes, answer the point I put to him with regard to drawback? I am sorry—I thought the hon. Gentleman was finishing his speech.

Mr. Lever

Both suitors having withdrawn at this point, may I come to one or two of the detailed points I should like to make? It may be convenient if I deal with medicaments.

I can assure hon. Members that the Government could not possibly allow any shortage of pharmaceutical products to develop in the manner which has been causing so much anxiety. I give the assurance to hon. Members that any danger of any person requiring a health-giving drug and being deprived of it because adequate imports are not coming in to supply the needs of the sick is quite out of the question. We have this power. I do not for a moment believe that it will be widely necessary to use it, and it may not be necessary to use it with pharmaceuticals, but we would not allow to occur a shortage of drugs or a shortage of medicaments for health.

The whole point of the scheme, however, even with vital and necessary drugs, where we could not conceivably allow a shortage to develop, is that there is marginally an encouragement to ingenious stock management, so as to reduce at this point of time the level of imports in all of the fields which are not exempt. Hon. Members are experienced in this field. I am not going to allow a shortage, the Government will not allow a shortage, to develop at those crucial points such as a sufficiency of medicaments. It is out of the question. This does not mean that we cannot get some marginal economy in the import level of all the items affected, quite apart from the fact that we get this liquidity effect, the details of which I do not want to repeat again.

The next point which I should cover is—

Mr. Fisher

I am most anxious to listen to the arguments, but it has become difficult to do so because of the chatter of hon. and right hon. Gentlemen on the Front Bench.

Mr. Lever

My hon. Friends, when they were engaged in their duties in other parts of the House, were missed by hon. Members opposite. When they are here, the maximum encouragement should be given to them, and I would suppose them to be discussing earnestly the details of the argument.

I now turn to the problem that exercised many hon. Members and which exercises me, exports, and materials coming in which are components for somebody else's exports. I ask the Committee to notice that we shall later come to a Government Amendment to which I think I shall be speaking, the broad effect of which is to liberalise the possibility of exemption and of repayment in respect of export goods. I hope that the hon. Member for Worcester, South (Sir G. Nabarro), who is a zealous attender on these matters, may be fortunate enough to be present when that later Amendment is discussed. Should there be any imperfection in it in helping this export question I shall be glad to hear arguments. It is drawn in a much more liberal fashion than the original proposal, and I hope that it will be acceptable to the Committee, as making possible the widest avoidance of impediment to export by reason of import deposits.

Sir G. Nabarro

In anticipating the further Amendment, is the Financial Secretary now giving the Committee an assurance that, so long as an importer demonstrates that the goods he is bringing into the country are for subsequent export from this country, the import deposit will be waived absolutely by Customs and Excise, without demur, without argument, without aggravation and without all the generally cantankerous behaviour for which Customs and Excise are well known.

Mr. Lever

I am grateful to the hon. Member, but I know that he is a zealous champion of the rules of order and would not wish me to reply broadly to a question which is not the subject of the Amendment which we are discussing.

Sir G. Nabarro

I am asking only for yes or no.

Mr. Lever

Even a yes or a no is in order or out of order depending on the question to which it relates. I would not want the hon. Gentleman to have on his conscience that he had led me into a departure from a rule of order, particularly as nothing useful would be gained since we shall be discussing this Amendment, when it will be in order, somewhat later.

For these reasons I ask the Committee to accept the advice which I shall offer to reject the Amendment and to rely upon Government action, if necessary; and to bear in mind that this does not stand alone as Government action in relation to our export/import ratio. It is to produce an immediate impact to support what we are confident is the fundamentally correct strategy, which is to bring exports and imports into a permanently more satisfactory relation than has been the case.

Sir G. Nabarro

Mr. Irving, would you not on this occasion exonerate the Financial Secretary from any suspicion that he might be out of order in alluding to a forthcoming Amendment should it be selected, namely Amendment No. 73. It is difficult to know how to vote on the present Amendment, indeed, whether to divide the Committee in support of the Amendment or otherwise, without knowing the Government's attitude and without having this assurance.

Mr. Lever rose—

The Chairman (Mr. Sydney Irving)

Order. Both hon. Members have already alluded to the Amendment in question, and I do not think we can go further than that.

Mr. Lever

I was about to try to assist the hon. Member in determining how he shall vote. In all logic, his complaint must be not on the chemical question but on the inadequate arrangements for export rebate, which we will come to later. I know that the hon. Gentleman is susceptible to logic, and in logic he must vote with the Government, if that is the question. Should there be a Division, he must vote with the Government on chemicals and, if he has a complaint, it is of inadequate arrangements, if they are inadequate arrangements, for export rebate.

Mr. Hirst

The Committee will probably wish to come to a fairly quick decision, and I shall not detain it for more than a minute or two. I wish to say a word or two on this matter since I have spent 27 years in the chemical industry, although I am not now connected with it and therefore have no interest to declare. This led me to take strenous action in regard to the 1964 surcharge which has been referred to, when I spoke on a large number of Amendments relating to chemicals. I know that the three major associations of the chemical industry were not approached at that time. No reference was made to them on their reaction to the selection of certain items on the list. I am horrified to find that the list today is, in effect, the same list as before. In other words the same wretched fool who stuck a pin in the names in 1964 has stuck in the same pin in the same names this time. No progress has been made, and this is an entirely hit and miss business.

Reference has been made to-day to carbon items. This is an important basic material for the chemical industry. The chemistry of carbon is an enormous factor, yet carbon is left completely out of the list. It is not good enough for the Financial Secretary to say that the Government are in great economic difficulties, and that he must impose all the impediments that he can in order to get the Government out of their difficulty. The Financial Secretary must approach the matter in a more practical way. He says that non-availability has no meaning in this context, but non-available had a meaning in relation to the surcharge.

Mr. Lever

Non-availability alone cannot justify exemption.

Mr. Hirst

Non-availability had the same meaning when we discussed the previous surcharge; there is something in common. The hon. Gentleman has had to draw a distinction between the two, but in both instances the effect is an increase in cost not in the proper direction.

The situation is different if a material is not basically available. As the hon. Gentleman said, a moment ago, helium is not available. It is possible to get oxygen and nitrogen by fixation, as with ammonia, by getting oxygen out of the atmosphere; it is done every day; but it is not possible to get helium in that way.

No reference has been made to events which have taken place during the intervening years, and the same list has been produced, the list which has been picked by a well-meaning civil servant without consultation with the industry. That is what I am protesting about. It is not fair to the industry concerned. It is not enough for the Government to try to reduce imports if the result is detrimental to exports. The list should be reviewed. We were promised a review last year, but we have never had it; items were added. Representations were made by the dozen, and I must have sent in 30 or 40 myself. Although they were all based on the experience and the knowledge of the industry concerned they have been ignored. The Government should look at the list in a more scientific and technical way, and it has the means to do so. There is no excuse for the Treasury to cough up this old 1964 list, without consultation, when no consultation took place previously.

Mr. S. O. Davies (Merthyr Tydvil)

I know your patience is running low, but I must admit that it is an advantage on rare occasions to listen to the speeches made by hon. Gentlemen opposite.

6.30 p.m.

We have heard about the absolute necessity to import calcium. Then again. toluene was said to be incapable of manufacture in this country. We have heard references to carbon in speech after speech. The advantage which age has given me is that I have a vivid memory of conditions in the First World War, when we did not manufacture an ounce of calcium and it was all imported from Germany and Canada. However, we proved then that, in an emergency, we can manufacture it here.

Again and again we have been told, both directly and by implication, that these substances can only apparently be manufactured abroad. That is far from correct and, certainly in the case of calcium, our scientists proved more than 50 years ago that if we are forced to manufacture here we can do it. There was a cry for calcium and for toluene, which was one of the major ingredients in explosives. It was found that the compound trinitrotoluene could easily be split into its elements and toluene would result.

We have heard a lot about nylon and terylene and, during the First World War years, we saw a revolution in colours. All the conceivable colours were developed in this country from raw materials in those war years. A lot has been said about the defects and the lack of knowledge of our scientists and metallurgists to produce the substances which have been mentioned. As I say, taking calcium as one example, not an ounce was manufactured here before the First World War.

Again before the First World War, all our anaesthetics came from Germany. When war broke out, in no time at all our scientists were put to work and we were able to manufacture all the anaesthetics needed for the fighting front and for our hospitals at home.

I hope that the pathetic speeches in a minor key from right hon. and hon. Gentlemen opposite will not be accepted without question by my hon. Friends on the Treasury bench.

Sir Keith Joseph (Leeds, North-East)

We have been fobbed off by the Financial Secretary in his usual charming manner. I hope that my right hon. and hon. Friends will now see fit to divide the Committee in order to register our great disappointment with the Government's rig id attitude.

In this Bill, we are presented with the same list as the House left when we debated the surcharge nearly four years ago. A number of intermediates used in the pharmaceutical and chemical industries still have not been included, and clearly no systematic principle runs through the preparation of the Schedule.

We are asked to treat the list as perfectly drawn, and that is highly improbable. My hon. Friend the Member for Shipley (Mr. Hirst) has told us of the lack of contact with the trade associations involved, and the result is that we have

to rely upon the Government to intervene if the users of pharmaceutical or chemical intermediates suffer damage from this Bill in their trade and service to the public. My hon. Friend the Member for Blackpool, South (Mr. Blaker) demonstrated how hopeless is any dependence on the Government, who probably will plead for the first half of the year that the scheme has not been tried yet and for the later half, that the scheme is drawing to an end.

I hope that my hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith) will press his Amendment to a Division.

Question put, That the Amendment be made:—

The Committee divided: Ayes 164, Noes 233.

Division No. 22.] AYES [6.35 p.m.
Alison, Michael (Barkston Ash) Gower, Raymond Mawby, Ray
Allason, James (Hemel Hempstead) Grant, Anthony Maxwell-Hyslop, R. J.
Atkins, Humphrey (M't'n & M'd'n) Gresham Cooke, R. Mills, Peter (Torrington)
Awdry, Daniel Gurden, Harold Mills, Stratton (Belfast, N.)
Baker, W. H. K. (Banff) Hall, John (Wycombe) Morgan, Geraint (Denbigh)
Beamish, Col. Sir Tufton Hall-Davis, A. G. F. Munro-Lucas-Tooth, Sir Hugh
Bell, Ronald Hamilton, Lord (Fermanagh) Murton, Oscar
Bennett, Sir Frederic (Torquay) Hamilton, Michael (Salisbury) Nabarro, Sir Gerald
Biffen, John Harrison, Brian (Malden) Noble, Rt. Hn. Michael
Biggs-Davison, John Harrison, Col. Sir Harwood (Eye) Nott, John
Birch, Rt. Hn. Nigel Harvey, Sir Arthur Vere Onslow, Cranley
Blaker, Peter Hastings, Stephen Orr-Ewing, Sir Ian
Body, Richard Heald, Rt. Hn. Sir Lionel Osborn, John (Hallam)
Boyle, Rt. Hn. Sir Edward Heseltine, Michael Osborne, Sir Cyril (Louth)
Braine, Bernard Hiley, Joseph Page, Graham (Crosby)
Brinton, Sir Tatton Hill, J. E. B. Page, John (Harrow, W.)
Bruce-Gardyne, J. Hirst, Geoffrey Pardoe, John
Buchanan-Smith, Alick (Angus, N & M) Holland, Philip Pearson, Sir Frank (Clitheroe)
Buck, Antony (Colchester) Hordern, Peter Peel, John
Bullus, Sir Eric Hunt, John Percival, Ian
Burden, F. A. Hutchison, Michael Clark Pike, Miss Mervyn
Campbell, B. (Oldham, W.) Iremonger, T. L. Pink, R. Bonner
Carlisle, Mark Irvine, Bryant Godman (Rye) Powell, Rt. Hn. J. Enoch
Channon, H. P. G. Jenkin, Patrick (Woodford) Price, David (Eastleigh)
Clark, Henry Jennings, J. C. (Burton) Pym, Francis
Clegg, Walter Johnson Smith G. (E. Grinstead) Quennell, Miss J. M.
Cooke, Robert Johnston, Russell (Inverness) Rawlinson, Rt. Hn. Sir Peter
Cooper-Key, Sir Neill Jopling, Michael Rees-Davies, W. R.
Costain, A. P. Joseph, Rt. Hn. Sir Keith Renton, Rt. Hn. Sir David
Crowder, F. P. Kerby, Capt. Henry Rhys Williams, Sir Brandon
Cunningham, Sir Knox Kimball, Marcus Rodgers, Sir John (Sevenoaks)
Currie, G. B. H. King, Evelyn (Dorset, S.) Rossi, Hugh (Hornsey)
Dalkeith, Earl of Kirk, Peter Russell, Sir Ronald
Davidson, James (Aberdeenshire, W.) Kitson, Timothy Sharples, Richard
Dean, Paul Knight, Mrs. Jill Shaw, Michael (Sc'h'gh & Whitby)
Deedes, Rt. Hn. W. F. (Ashford) Lancaster, Col. C. G. Silvester, Frederick
Dodds-Parker, Douglas Legge-Bourke, Sir Harry Smith, Dudley (W'wick & L'mington)
Eden, Sir John Lloyd, Ian (P'tsm'th, Langstone) Speed, Keith
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Loveys, W. H. Steel, David (Roxburgh)
Emery, Peter Lubbock, Eric Stodart, Anthony
Errington, Sir Eric MacArthur, Ian Stoddart-Scott, Col. Sir M.
Eyre, Reginald Mackenzie, Alasdair (Ross & Crom'ty) Summers, Sir Spencer
Farr, John Maclean, Sir Fitzroy Tapsell, Peter
Fletcher-Cooke, Charles McMaster, Stanley Taylor, Sir Charles (Eastbourne)
Fortescue, Tim McNair-Wilson, Patrick Taylor, Frank (Moss Side)
Fraser, Rt. Hn. Hugh (St'fford & Stone) Maginnis, John E. Temple, John M.
Giles, Rear-Adm. Morgan Marples, Rt. Hn. Ernest Thatcher, Mrs. Margaret
Gilmour, Ian (Norfolk, C.) Marten, Neil Tilney, John
Gilmour, Sir, John (Fife, E.) Maude, Angus Turton, Rt. Hn. R. H.
Glover, Sir Douglas Maudling, Rt. Hn. Reginald Vaughan-Morgan, Rt. Hn. Sir John
Vickers, Dame Joan Whitelaw, Rt. Hn. William Worsley, Marcus
Waddington, David Williams, Donald (Dudley) Wright, Esmond
Wall, Patrick Wills, Sir Gerald (Bridgwater)
Ward, Dame Irene Winstanley, Dr. M. P. TELLERS FOR THE AYES:
Webster, David Wolrige-Gordon, Patrick Mr. Jasper More and
Wells, John (Maidstone) Wood, Rt. Hn. Richard Mr. Bernard Weatherill.
NOES
Abse, Leo Finch, Harold Mapp, Charles
Albu, Austen Fletcher, Rt. Hn. Sir Eric (Islington, E.) Marks, Kenneth
Allaun, Frank (Salford, E.) Fletcher, Ted (Darlington) Mason, Rt. Hn. Roy
Alldritt, Walter Foley, Maurice Mellish, Rt. Hn. Robert
Allen, Scholefield Ford, Ben Mendelson, John
Anderson, Donald Forrester, John Millan, Bruce
Archer, Peter Fowler, Gerry Milne, Edward (Blyth)
Armstrong, Ernest Freeson, Reginald Moonman, Eric
Ashley, Jack Galpern, Sir Myer Morgan, Elystan (Cardiganshire)
Atkins, Ronald (Preston, N.) Gardner, Tony Morris, Alfred (Wythenshawe)
Atkinson, Norman (Tottenham) Garrett, W. E. Morris, Charles R. (Openshaw)
Ashton, Joe (Bassetlaw) Ginsburg, David Morris, John (Aberavon)
Bagier, Gordon A. T. Gray, Dr. Hugh (Yarmouth) Moyle, Roland
Barnes, Michael Greenwood, Rt. Hn. Anthony Mulley, Rt. Hn, Frederick
Barnett, Joel Gregory, Arnold Neal, Harold
Beaney, Alan Grey, Charles (Durham) Newens, Stan
Benn, Rt. Hn. Anthony Wedgwood Griffiths, David (Rother Valley) Noel-Baker, Rt. Hn. Philip (Derby, S.)
Bennett, James (G'gow, Bridgeton) Griffiths, Will (Exchange) O'Malley, Brian
Bidwell, Sydney Hamilton, James (Bothwell) Orme, Stanley
Binns, John Hamilton, William (Fife, W.) Oswald, Thomas
Bishop, E. S. Hamling, William Owen, Dr. David (Plymouth, S'tn)
Blackburn, F. Hannan, William Padley, Walter
Blenkinsop, Arthur Harper, Joseph Paget, R. T.
Boardman, H. (Leigh) Harrison, Walter (Wakefield) Palmer, Arthur
Booth, Albert Haseldine, Norman Pannell, Rt. Hn. Charles
Braddock, Mrs. E. M. Hazell, Bert Park, Trevor
Bray, Dr. Jeremy Henig, Stanley Parker, John (Dagenham)
Brooks, Edwin Herbison, Rt. Hn. Margaret Pavitt, Laurence
Broughton, Dr. A. D. D. Hilton, W. S. Pearson, Arthur (Pontypridd)
Brown, Hugh D. (G'gow, Provan) Horner, John Peart, Rt. Hn. Fred
Brown, R. W. (Shoreditch & F'bury) Houghton, Rt. Hn. Douglas Pentland, Norman
Buchan, Norman Howarth, Robert (Bolton, E.) Perry, George H. (Nottingham, S.)
Buchanan, Richard (G'gow, Sp'burn) Howell, Denis (Small Heath) Prentice, Rt. Hn. R. E.
Butler, Herbert (Hackney, C.) Huckfield, Leslie Price, William (Rugby)
Butler, Mrs. Joyce (Wood Green) Hughes, Rt. Hn. Cledwyn (Anglesey) Randall, Harry
Callaghan, Rt. Hn. James Hughes, Emrys (Ayrshire, S.) Roberts, Albert (Normanton)
Cant, R. B. Hughes, Hector (Aberdeen, N.) Roberts, Rt. Hn. Goronwy
Carmichael, Neil Hughes, Roy (Newport) Robertson, John (Paisley)
Carter-Jones, Lewis Hunter, Adam Roebuck, Roy
Castle, Rt. Hn. Barbara Hynd, John Rogers, George (Kensington, N.)
Chapman, Donald Jackson, Peter M. (High Peak) Rose, Paul
Coe, Denis Janner, Sir Barnett Ross, Rt. Hn. William
Coleman, Donald Jay, Rt. Hn. Douglas Rowlands, E.
Corbet, Mrs. Freda Jeger, Mrs. Lena (H'b'n & St. P'cras, S.) Shaw, Arnold (Ilford, S.)
Craddock, George (Bradford, S.) Jenkins, Hugh (Putney) Sheldon, Robert
Crawshaw, Richard Johnson, James (K'ston-on-Hull, W.) Shore, Rt. Hn. Peter (Stepney)
Cullen, Mrs. Alice Jones, Dan (Burnley) Short, Mrs. Renée (W'hampton, N. E.)
Dalyell, Tam Jones, T. Alec (Rhondda West) Silkin, Rt. Hn. John (Deptford)
Darling, Rt. Hn. George Kenyon, Clifford Silkin, Hn. S. C. (Dulwich)
Davies, Ednyfed Hudson (Conway) Kerr, Dr. David (W'worth, Central) Silverman, Julius
Davies, G. Elfed (Rhondda, E.) Lawson, George Skeffington, Arthur
Davies, Dr. Ernest (Stretford) Ledger, Ron Slater, Joseph
Davies, Harold (Leek) Lee, Rt. Hn. Frederick (Newton) Small, William
Davies, Ifor (Gower) Lee, Rt. Fin. Jennie (Cannock) Spriggs, Leslie
Davies, S. O. (Merthyr) Lee, John (Reading) Steele, Thomas (Dunbartonshire, W.)
Delargy, Hugh Lever, Harold (Cheetham) Strauss, Rt. Hn. G. R.
Dempsey, James Lewis, Arthur (W. Ham, N.) Summerskill, Hn, Dr, Shirley
Dewar, Donald Lewis, Ron (Carlisle) Swain, Thomas
Diamond, Rt. Hn. John Lomas, Kenneth Symonds, J. B.
Dickens, James Loughlin, Charles Taverne, Dick
Dobson, Ray Lyon, Alexander W. (York) Thornton, Ernest
Doig, Peter Lyons, Edward (Bradford, E.) Tinn, James
Dunnett, Jack McBride, Neil Tomney, Frank
Eadie, Alex McGuire, Michael Tuck, Raphael
Edelman, Maurice McKay, Mrs. Margaret Urwin, T. W.
Edwards, Robert (Bilston) Mackie, John Varley, Eric G.
Edwards, William (Merioneth) Mackintosh, John P. Wainwright, Edwin (Dearne Valley)
Ellis, John Maclennan, Robert Walker, Harold (Doncaster)
English, Michael MacMillan, Malcolm (Western Isles) Wallace, George
Evans, Fred (Caerphilly) McMillan, Tom (Glasgow, C.) Watkins, David (Cornett)
Evans, Gwynfor (C'marthen) MacPherson, Malcolm Watkins, Tudor (Brecon & Radnor)
Evans, Ioan L. (Birm'h'm, Yardley) Mahon, Peter (Preston, S.) Wellbeloved, James
Ewing, Mrs. Winifred Mahon, Simon (Bootle) Wells, William (Walsall, N.)
Fernyhough, E. Manuel, Archie Whitlock, William
Wilkins, W. Williams, Mrs. Shirley (Hitchin) Woof, Robert
Willey, Rt. Hn. Frederick Williams, W. T. (Warrington)
Williams, Alan (Swansea, W.) Willis, Rt. Hn. George TELLERS FOR THE NOES:
Williams, Alan Lee (Hornchurch) Wilson, Rt. Hn. Harold (Huyton) Mr. Alan Fitch and
Williams, Clifford (Abertillery) Woodburn, Rt. Hn. A. Mr. Ernest G. Perry.

6.45 p.m.

Mr. Douglas Houghton (Sowerby)

I beg to move Amendment No. 94, in page 6, line 48, at end insert:

39.02 … … High density, high molecular weight polyethylene.

The Chairman (Mr. Sydney Irving)

With this Amendment we can discuss Amendment No. 102, in page 6, line 48, at end insert:

39.03. F2. … Seamless tubular artificial sausage casing made from re-generated cellulose.

Amendment No. 123, in page 6, line 48, at end insert:

39.02 … … Polymerisation and copolymerisation products (for example polyethylene, polytetra-haleothylenes, polyisobutylene polystyrene, poly (vinyl-chloride) and other poly (vinyl derivatives) poly (acrylic derivatives) and poly (methacrylic derivatives) conmarone-indene resins).

and, for a Division if the Committee so wishes, Amendment No. 58, in page 6, line 49, after '40.01' insert:

40.02 … … Synthetic rubber.

Mr. Houghton

Amendment No. 94 is one of a group of Amendments to the Schedule which I understand relates to artificial resins and plastic materials and covers as wide a range as synthetic rubber and seamless tubular artificial sausage casing made from regenerated cellulose. I am not aware of ever having had sausages encased in that material, but I have no doubt that it is very important.

Mr. John Hall (Wycombe)

The seamless tubular material to which the right hon. Gentleman refers is used for making skins for skinless sausages.

Mr. Houghton

It is, so to speak, a non-skin.

I will confine my remarks to Amendment No. 94. I suppose that this is a smaller moonbeam in the larger illumination of this Schedule. I cannot say that it has any great importance to the industrial activity and exports of this country, but it reveals the kind of anomaly and difficulty which many firms will encounter under the scheme. I make no apology for raising it as a purely constituency matter in which I have no personal interest whatsoever.

The remarks of the Financial Secretary were extremely discouraging to this Amendment, because he said that it was necessary to draw the line somewhere—we all understand that—and that exemption is given to those raw materials which have gone through only elementary processes. This results in anomalies. For example, the importation of raw timber is exempt, but the importation of a basic material to make substitutes for timber is caught by the Bill. I will refer to that later.

I should think that after the years that the Government have had since the import surcharge they could have found a more sophisticated Schedule of exemptions—[HON. MEMBERS: "Hear, hear."] I realise that when the Government first introduced the import surcharge they had to use what was readily at hand as the basis of distinction or discrimination between one import and another.

The Committee will remember that when the Government introduced the Selective Employment Tax they used what was readily available, the Ministry of Labour Schedule, which had been drawn up for different purposes. It was adapted to the introduction of that tax. It is undesirable that taxation and financial measures of this kind should be erected upon a basis intended for entirely different purposes, because if that is done we are bound to get the kind of anomalies and injustices to which hon. Members on both sides of the Committee have referred.

This material is purchased from Germany, in sheet or rod form, although it is produced originally from powder, and machined into a great variety of shapes and sizes. This is a new branch of the plastics industry, making a number of novel changes in the materials used for manufacture, with a considerable export potential. For example, with this material the firm in my constituency makes what are known as polymatic hammers. They are described as "durable, non-split, soft faced hammers"—just the sort of hammers that we want in the Parliamentary Labour Party. It seems a shame that one should have to pay a 50 per cent. deposit on the importation of raw materials which have such a desirable purpose as that.

Mr. John Hall

Does the right hon. Gentleman believe that it is necessary to import such hammers? Is not he getting on very well without them?

Mr. Houghton

We are getting on very well, but any additional equipment which enables us to get on better will be very welcome.

With this material it is possible to make shuttles for textile manufactures. I am informed that the wood for a wooden shuttle will be imported under the exemptions provided for in the Schedule, but that the raw material to make a plastic shuttle will be caught by the Bill. I am told that a wooden shuttle lasts for one year, while a plastic shuttle will last for ten years. This is another use of a new material which will not only save the import of raw materials, but offer better prospects of export business.

This firm on whose behalf I admit I am speaking is a small family business. If it were a public company, I should have to declare an interest in it, because I have a modest shareholding in every public company in my constituency. This is a matter of principle, because I think it enables one to see how businesses are doing, and to get a little closer to the industrial activity in one's constituency. I do not want any doctrinaire ideological interventions. That is what I consider to be the right thing to do. This is a private company, and it will have to place a deposit on the importation of all its raw materials. This will be a very severe drain on the firm's resources, and that is why I am making this plea on its behalf.

I think it is a pity that under the Bill, because of our difficulty of drawing lines more sensibly than is done here, we exempt peanuts, but put the deposit limitation upon materials of the kind I have described. For the life of me I cannot understand why unmanufactured tobacco is exempted under the Bill, considering the content of it, the danger of it, and the dollar source of a great deal deal of it. However, this is all to do with the broad lines which have been drawn in distinguishing between those things which shall be subject to an import deposit, and those which are to be given exemption.

This is a short case and it is, I am afraid, only an addition to the rather dreary queue of cases put by hon. Members who are seeking some concession from the Government. But, whether the case is hopeless or not, I think it is the duty of us in the House constantly to draw attention to anomalies and injustices of proposed legislation, because it is only by doing that that we can warn the Government that in adopting measures, albeit emergency measures, albeit measures for an overriding economic purpose, they should have regard to their effect on particular interests and spheres of activity, and the hardship and harm which they are doing to many people who are busy working for Britain in the export trade.

It is sad that we have to accept the overriding objective of the Measure as being desirable in the national interest. We should have pulled out of our troubles by now, by greater efficiency, by greater effort, and by a greater realisation of the perils and problems which confront Britain in the world of today. The Bill really is another warning to the British people that we are not out of the wood. We are still in a highly precarious position in a rapidly changing world, and the Bill is necessary only because of our failure to overcome the difficulties of the last few years.

Mr. John Hall

The right hon. Member for Sowerby (Mr. Houghton) has my utmost sympathy and complete support. It is not very often that I can say that about speeches made by the right hon. Gentleman.

I am sure that the right hon. Gentleman will forgive me if I concentrate on my Amendment to which he was kind enough to refer during his speech. It relates to seamless tubular artificial sausage casing made from re-generated cellulose. Perhaps I should explain what that is, because there seems to be some doubt about it. It is tubing which is used for making a wide variety of sausages and processed meats and is an indispensable part of the food industry. When I say that it is used to make skins for skinless sausages, I must tell the Committee that it is used for just that purpose. It is used to form a sausage and the skin is then peeled off, leaving a form of sausage without a skin.

This item is imported mainly from Canada, from the United States, from France, and from Germany. In passing, perhaps I might point out that under the Bill it will be possible to import sausages and processed meats from those countries with the kind of cellulose casing to which I have referred, and without having to pay any deposit. Presumably this will mean greater encouragement for importers to import sausages and other prepared meats with the skins on, rather than have to pay the augmented price resulting from buying cellulose skins made here, or processed here, with the deposit charge interest added to them.

The basic tubing is not manufactured here, and there is no possibility that it will be in the near future, largely because of the high cost of putting down the necessary chemical plant, and the large market which is necessary in the country to justify expenditure of that kind. But there is one company—and here I must declare an interest, because it is a company of which I am the chairman—which undertakes part of the manufacturing process. This factory is in a development area and it imports partly from the United States of America, but very largely from France.

I stress that it imports largely from France because it will not have escaped the notice of the Government that recently the French Government imposed quite severe restrictions. They have restricted the credit which can be given by French exporters to their customers. So it is very difficult indeed to look to the providers of what for us is a basic raw material to help us in the difficulty of finding the necessary deposit for six months.

7.0 p.m.

This company will have to find, over the six months' period, £250,000. Like all the firms affected or likely to be affected by this Bill, naturally it has approached its bank to see what is the position about obtaining accommodation. It has been told, in accordance with the directives given by the Chancellor to the Bank of England, that although the bank can help in the first few weeks to overcome immediate problems concerning shipments on the way or at present in the docks, after that some other method of financing will have to be arranged.

If this company is unable to find a quarter of a million pounds to leave on deposit, and pay the interest on it as an interest-free loan for the Government for that period, at the best it will have seriously to restrict output and at the worst to close down. At the best it will have to reduce its labour force in a development area where every encouragement has been given to manufacturers to take on more labour. At the worst it will have to close the factory.

It will be unable to supply the food trade with an essential part of that trade's requirements. This will be an encouragement to the food trade to import sausages and prepared meats which are already in artificial casings and do not have to pay the deposit. All this is at a time when the company is developing its market to a point at which there is a strong possibility of it being able in the next few years to set up a manufacturing plant and put down the very large sums necessary to manufacture the complete article in this country. By those means it would save a considerable amount in imports.

I stress the main points about this Amendment. This semi-manufactured casing is the raw material of this industry. It is not obtainable here. It has already been said by the Financial Secretary that non-availability is not an argument, but surely non-availability must be an argument should an industry not be able to obtain materials or not be able to find the money to pay the deposit and have to close its factory.

Whatever success the company may or may not have in finding the money to finance these imports, the money for the deposit will have to come out of its expansion programme. Hon. Members on both sides of the Committee are much concerned that a great deal of money has to be put aside for six months after being raised under considerable difficulty and that this will affect capital programmes of firms throughout the country. They will not be able in addition to the deposit money to raise money to finance those programmes, many of which are already planned. To give an example of the company with which I am concerned, we have been planning our expansion programme for the last five to seven years. If we have to find money for deposits that programme will be halted.

The plans of this company to set up manufacturing plant here, with considerable saving of imports, will be put in jeopardy. When I was last speaking in the Committee between 2 o'clock and 3 o'clock this morning, I pointed out that that was generally regarded as the hour when human vitality is at its lowest. I expressed the hope that the Minister might have had his resistance so lowered that he would accept an Amendment. May I now express the hope that he is even more tired and will not resist but will be prepared to accept this Amendment?

Mr. John Page

When my hon. Friend the Member for Wycombe, (Mr. John Hall) started talking about skins for skinless sausages I was irresistably reminded of the speech of the Attorney-General yesterday when he said that it was either a duty or a charge or not a duty or not a charge.

I shall speak briefly in discussing two Amendments in my name and the name of my hon. Friend the Member for Honiton (Mr. Emery) and also the Amendment in my name, No. 58. Amendment No. 121 deals with rubber accelerators. A rubber accelerator is something which speeds up the vulcanising process in the rubber industry.

The Chairman (Mr. Sydney Irving)

Order. I am afraid that the hon. Member has misread the provisional selection list. His Amendment No. 121 was down for discussion with Amendment No. 91. I am afraid that he has lost his opportunity.

Mr. Page

I think I am right, Mr. Irving, in believing that Amendment No. 123 is being discussed with the Amendment that has been moved. I shall not bore the Committee with a discussion of polytetrahaleothylenes, which I believe are vital, technical and strange to relate a very basic raw material. I shall address my remarks mainly to Amendment No. 58, which deals with the subject of synthetic rubber.

I declare an interest as I am one of the 150,000 people employed in the rubber industry. About half the rubber used in this country is natural rubber and all that is, of course, imported. About £12 million-worth of synthetic rubber is imported and a little less than that is synthetic rubber in a basic form. It would be quite impossible for any import-saving to be made by increasing the output of British synthetic rubber factories. So it is merely a matter of the potential loss of growing export markets for synthetic rubber if manufacturers in the home factories are confined to the home market.

The deposit on £12 million-worth of synthetic rubber imports will mean that throughout the year the industry would have a £3 million running deposit on the goods which are imported. That is a considerable sum and it will cause a considerable on-cost for a large number of products made by the rubber industry. There will be an absolutely nil import effect and a virtually nil liquidity effect. Already, with good stock management and foreknowledge of the market demands, there is not over-stocking of imported synthetic rubber. So the Bill will not reduce imports or stocks, and therefore will not reduce the quantities of imported goods. There is the greatest possible reason for exempting imported synthetic rubber.

Among the chapter headings, 40.01, natural rubber, 40.03, reclaimed rubber, and 40.04, waste rubber, are all exempt, yet 40.02 mysteriously receives no exemption. The first illogicality of this is that it is the only block of four items of which one has been singled out for discriminatory treatment. But the real illogicality is that reclaimed synthetic rubber can be imported without deposit being required. This needs more expensive further processing than the basic manufacture reclaimed rubber as it leaves the factory.

So the Government say that one raw material of this important industry is being singled out, while its "brother-in-law" can be freely allowed in. This is an extraordinary anomaly. The Government should consider this and show the industry and the country that they can be flexible by accepting the Amendment. I hope that we shall have as good a response as I had yesterday from the Minister of State, but that this time he will stick to his guns and accept the Amendment.

Mr. Emery

The case made by my hon. Friend the Member for Harrow, West (Mr. John Page) was very telling. I have two more facts concerning the Amendment which relates to synthetic rubber which seem to make an impressive argument irresistible. Consumption of natural rubber during the first six months of this year was 97,900 tons, while that of synthetic rubber was 114,600 tons. In other words, the consumption of synthetic rubber was slightly greater than that of natural rubber. There is no major division between the uses of synthetic and natural rubber with one used in some processes and the other in others. They are usually blended to give a better process, certainly in tyre production. A total of £33 million-worth of loose tyres were exported.

How do the Government propose that an importer—whether the Dunlop Rubber Company or any other major firm—shall obtain remission of deposit, when he cannot absolutely stipulate how much of this synthetic rubber to be used will be imported and how much will not? This cannot be decided at that one stage, so how is remission to be allowed?

The second and more powerful question is, how can the Government possibly argue that it is right to exempt ordinary natural rubber but not synthetic? The two are being used as parallel raw materials and for that reason alone—if we accept the Financial Secretary's argument in our last debate—it would be sensible to accept the Amendment.

I hope that I can reinforce my hon. Friend's argument that it is palpably obvious that this is a golden opportunity for the Government to give way. It is not as if no Amendments had yet been accepted. If the Government had to stick to their guns so as not to have to reprint the Bill before Report, there might be some argument for resisting our suggestions. But since we are to have a Report stage, it would be simple for them to give way on this well-intentioned and admirably argued Amendment, which makes sense for the rubber industry and for the motor industry which is so concerned with many rubber products.

Sir G. Nabarro

I wish to intervene because an important establishment in my constituency is the Richmond Sausage Company. It is not unusual, of course, to find a sausage and pie manufacturing plant in an important agricultural area, and South Worcestershire produces many pigs. One of the by-products of pig meat is, of course, the filling of a sausage. If the Amendment were carried, regenerated cellulose sausage casings would be exempt from deposit. The sausage is ubiquitous. The value of sausages imported as finished sausages and not as their constituent parts is quite surprising. As my hon. Friend comments, they are fully fashioned.

I looked up the value, and I was surprised to discover that sausages are separately classified, so important are they, in the Overseas Trade Accounts of the United Kingdom for October, 1968. Hon. Members will find them on page 11, section O, headed "Food and live animals" and under subsection 013.4— sausages not in air-tight containers and sausages in airtight containers. That means whether the sausages are tinned or not.

If they read these statistics, hon. Members will see that, based on the imports of sausages for the first ten months to October, 1968, we are importing foreign sausages at the rate of £2.2 million per annum. The Government's present proposals favour an increase in the import of foreign sausages and a diminution in the production of home-produced sausages in establishments all over the country, including the Richmond Sausage Company in my constituency. The point is that all the sausages being imported at a rate of £2.2 million per annum are ready made, finished sauages, with skins around them, for example as frankfurters, and they escape the import deposit scheme because they are classified as food.

But if my farmers in South Worcestershire sell their pig carcases to a conversion factory, and from the pig meat is derived the sausage meat, and then that food processing plant has to import the regenerated cellulose sausage casing from abroad, that casing is classified under the import deposit scheme as attracting the proposals for 180 days and 50 per cent. ad valorem deposit. That is a disgraceful state of affairs. It is a deliberate move by the Chancellor to favour the foreign "banger" and to depreciate the value of the British "banger". It demon-states to the Treasury Bench the ridiculous limits to which they have taken us through their discriminatory practices in the Bill.

The right hon. Member for Sowerby (Mr. Houghton) was exactly correct. These semi-manufactured materials, which are so essential to the export trade of the country and to the production of food in Britain, ought to be totally exempt. The cost to the Government would be negligible and importers would be greatly facilitated in being able to bring into the country materials of this kind without the payment of the import deposit.

The discussion has been highly technical. My hon. Friend the Member for Wycombe (Mr. John Hall) is expert in these matters as chairman of a company dealing with the manufacture and distribution of these casings. No doubt his company supplies the Richmond Sausage Company.

Mr. John Hall

Indeed we do.

Sir G. Nabarro

I am delighted to see that he nods agreement at once. His company supplies the material to the company in my constituency, the Richmond Sausage Company at Evesham, and that immediately adds validity to the case which I am putting forward about these regenerated cellulose sausage casings. I hope that I have impressed the point on the Treasury Bench sufficiently to make them agree to relaxation in respect of this important semi-manufactured commodity.

Mr. Taverne

It is inevitable in the debate on the Schedule that some of the arguments which have been advanced on these Amendments are not entirely dissimilar from those advanced earlier, and it will be no more surprising that some of the answers will be much the same as those previously advanced. My right lion. Friend the Member for Sowerby (Mr. Houghton) was aware of this, because he had heard a full reply by my hon. Friend the Financial Secretary on an earlier Amendment and he was not particularly hopeful about the fate of his own Amendment. He realised that all that my hon. Friend said in answering the debate on a previous group of Amendments applied with exactly the same force to his Amendment.

Amendments 94 and 123 deal with products of the chemical industry and clearly it would be inconsistent for the Government to refuse exemption in relation to the pharmaceutical industry, to helium and other products and substances which we discussed in the previous debates, and then to exempt the group of products covered by these Amendments. Indeed, the Amendment illustrates the trap which the Financial Secretary sought to avoid, because if we make a concession on one point, inevitably more and more anomalies will appear. If we do not consider each case carefully in the terms in which my hon. Friend indicated, we shall build up pressure to widen the scope of exemptions, and by the time we have finished the scope of the entire scheme will have narrowed enormously.

The hon. Member for Wycombe (Mr. John Hall) was supported volubly by the hon. Member for Worcestershire, South (Sir G. Nabarro).

Sir G. Nabarro

Eloquently.

Mr. Taverne

Eloquently and volubly. Both hon. Gentlemen realised that they were talking of a manufactured article. The Amendments refer to manufactured articles. To exempt them would be a breach of the broad category running through the Schedule by which manufactured articles are not exempt.

Mr. John Hall

I cannot have made myself clear, and no doubt that is my fault. For my company this is a semi-manufactured article which we have to process thereafter.

Mr. Taverne

It is manufactured, and it falls outside the category of raw materials and the other exempt categories which my hon. Friend outlined. The hon. Member said that in this case it is used as a raw material for the industry. That is precisely the argument with which my hon. Friend dealt in resisting the last batch of Amendments.

The hon. Member also said that it is not manufactured in this country, but my hon. Friend pointed out that it would be wrong for the Government to base the case for particular exemptions on the ground that the goods were not made in this country, because that would give a protectionist character to the Bill which would be totally opposed to the spirit of the E.F.T.A. Treaty. The fact that it is manufactured in France, the United States or anywhere else cannot determine whether an article comes within the exempt category.

Mr. John Hall

I do not think that the Minister has understood the problem. Not only is this material not available here but no other competing casing is available here. The concession for which I am asking does not raise the question of protecting a home industry.

Mr. Taverne

I am afraid that the hon. Member does not follow the argument. He said chat the casing is not available here and that it can be obtained only from abroad, therefore it should be exempt. The implications are that if it were available here and if there were another source from which it could be obtained, then it should not be exempt. The inevitable logic of that argument is that the exemptions should be so directed that goods which are liable to attract the deposit are goods which in some way are competing with those produced in this country.

7.30 p.m.

Sir A. V. Harvey

Does not the hon. and learned Gentleman agree that he is giving an advantage to the miserable German frankfurter as against the British sausage?

Mr. Taverne

I am saying that we cannot base categories of exemptions on the basis of protecting home industries. I am sure that the hon. Gentleman would not wish us to infringe the spirit of the E.F.T.A. Treaty.

Sir G. Nabarro

I am not sure that the hon. and learned Gentleman has understood the agricultural implications of what I was putting to him. It is a first principle of Government policy to encourage import substitution. I demonstrated from the trade and navigation returns that sausages imported are worth £2.2 million per annum. What we are discussing militates against an increase in output of British sausages and encourages an increase in imports of foreign sausages.

Mr. Taverne

The hon. Gentleman has cited one case where, to a negligible extent, his case may be supported. But his logic is that we should so arrange the scheme hat home production is protected at the expense of imports, and this is no basis on which particular articles can be exempted.

Sir G. Nabarro rose—

Mr. Taverne

No.

Sir G. Nabarro rose—

Mr. Taverne

There must be a limit.

Sir G. Nabarro

We are in Committee.

Mr. Taverne

No, I will not give way.

Sir G. Nabarro

I will make another speech.

Mr. Taverne

The hon. Gentleman can do so. But he has failed to grasp the fundamental fact that my hon. Friend the Financial Secretary made abundantly clear earlier and which I have repeated.

Mr. John Hall

I tried to answer the point made previously by the Financial Secretary by saying that, although the argument of non-availability may have some merit in it—I do not say that it has—if it comes to a question of denial of material to an industry, bringing it to a stop, the non-availability argument has no other merit in it.

Mr. Taverne

The hon. Gentleman is putting forward a different point. He says that the deposit will have such a drastic effect that the whole industry will be ruined. This is familiar ground. There is no reason to suppose that those who are in the sort of position which the company the hon. Gentleman spoke of is in will find it impossible to raise capital. We had the agricultural argument about this. Many hon. Members opposite have said that the scheme will not have the desired effect on the volume of imports because it will be too easy to raise capital. What the hon. Gentleman is concerned with here is a fractional effect of extra costs which this company will have to bear.

I turn now to the Amendment dealing with synthetic rubber. Rebate on exports would be better considered on a later Government Amendment, which if selected will determine how the rebate will work. Here we are concerned not so much with the rebate but how far one can raise the deposit.

The hon. Member for Harrow, West (Mr. John Page) pointed out that £12 million worth of synthetic rubber is imported. Immediately, this draws attention to the fact that the Amendment would mean exempting £12 million of imported goods. He said that the scheme means that about £3 million will be on deposit. I strongly contest his argument that, in this situation, the effect on liquidity will not apply. Of course it will apply. A sum of £3 million will be placed on deposit and, to that extent, liquidity of the home market will be reduced, unless there is a loan from a foreign bank which, to that extent, will bring an immediate gain to the reserves.

Once again we have here a fully manufactured product, made abroad from chemicals which are themselves subject to the deposit. It would be inconsistent with the scheme as a whole if synthetic rubber were exempted. The hon. Gentleman said that reclaimed and waste rubber were themselves exempt but, like rags, these are treated as raw materials. Synthetic rubber is in a different category, obviously, from waste rubber and reclaimed rubber, just as rags are in a different category from other forms of textiles.

Mr. John Page

I am listening to the hon. and learned Gentleman with care, and I do not think that a comparison of reclaimed rubber with rags stands up. Reclaimed synthetic rubber is a known product of known specification and is quite a thing of itself. It is not like rags, which can be converted and used in a certain way.

Mr. Taverne

It is more akin to raw materials. Synthetic rubber could not be in the category of waste products which are exempt. The hon. Gentleman says that we cannot save imports here by producing more at home. Once again, the argument which applies in the case of sausage casings and other goods of non-availability at home must apply. In all the cases raised by these Amendments, as in those raised on earlier Amendments, there is the fundamental difficulty that one has to balance broad categories. We have to balance certain anomalies with the need to keep the scheme as broad as possible so that the credit restriction effect will be as wide as possible and, therefore, as advantageous to the economy as possible.

Sir G. Nabarro

The hon. and learned Gentleman is burying his head in the sand. I shall proceed in words of two syllables so that he cannot possibly fail to understand. There is only one commodity in this group of Amendments that relates to food manufacture—that is, sausage casings. I am not talking about reclaimed rubber or anything but sausage casings. What is the objection to exempting sausage casings and thereby not giving preference to German frankfurters as compared with British pork sausages?

Sir A. V. Harvey

And beef sausages.

Sir G. Nabarro

I do not want to talk about beef sausages because they are not of the same quality as pork.

Sir A. V. Harvey

They use the same casings.

Sir G. Nabarro

I agree, however, that they use the same casings. The only manufactured commodity in this group which is related to food in any way is the sausage, and as finished sausages come into the country without paying import deposits because they are food, would it not be equitable to allow sausage casings in without import deposits in order that British manufacturers should not be penalised in comparison with their overseas competitors?

Mr. Taverne

The hon. Gentleman has added nothing to the argument put forward by the hon. Member for Wycombe (Mr. John Hall) and to the point he himself put earlier. The answer is exactly the same as before. If this were the basis on which we were to proceed, then similar exemptions would have to be made in similar circumstances, and we would inevitably be drawn into a selection which would be a selection in order to protect the home market and discourage competition.

Mr. John Hall

Have we now to wait until a company, mine or that of anyone else, is so affected by these provisions, so affected by the Government's own recently imposed restrictions on the banks, has to reduce output and discharge its employees? Is that what the Government are trying to do? Have we to wait until that happens before the Government adjust the Schedule?

Mr. Taverne

My right hon. Friend has said that we will look at how the scheme works. There may be cases in which an Order will be made to exempt certain products, but it is totally fallacious to suppose that the effect will be to drive companies out of business. It is totally fallacious to suppose that it will be possible that a company that has to pay the import deposit, and raise capital to do so, will find the interest charged on that capital totally ruinous.

Mr. Patrick Jenkin

Ever since I arrived in this House over four years ago I seem to have spent an unconscionable amount of time listening to Her Majesty's Ministers attempting to defend indefensible distinctions. We have had from the very beginning a whole series of legislation—with the temporary charge on imports in the first Finance Bill, in the debates on which it was my honour to take part—through investment grants and the Selective Employment Tax, and now with the import deposits. The Government have sought to draw distinctions and to discriminate between things that qualify and things that do not.

While I have a great deal of sympathy for my right hon. and hon. Friends who have had to debate this present legislation, I have very little for the right hon. Gentleman the Member for Sowerby (Mr. Houghton) because, after all, he has for years supported a Government which believes in purposive intervention in industry, in Government taking discriminatory powers, and he cannot now complain if he finds that when the Government attempt to do this and it hurts some of his constituents—

Mr. Houghton

I did not come here for the hon. Gentleman's sympathy, but for a concession from my right hon. Friends.

Mr. Jenkin

If I may say to the right hon. Gentleman with great respect, he will not be disappointed by my lack of sympathy for him.

The right hon. Gentleman has quite rightly put his finger on one of the three anomalies which this group of Amendments has shown up. He quite correctly said that the Customs Tariff is a document based on the Brussels nomenclature, agreed internationally in 1958, and form- ing part of our own tariffs in 1959, as amended from time to time, drawn up with the purpose of classifying goods in order that import duties and Customs duties could be attached to the goods identified and classified.

He is perfectly correct, if I may say so with respect, in pointing out that it forms absolutely no basis at all on which to try to distinguish between categories of goods, as the Government are attempting to do in this Bill—between raw materials, food and fuel on the one hand, and manufactured articles on the other. Therefore, the right hon. Gentleman should not be surprised—and I do not think, quite honestly, that he was surprised—when he moved his Amendment to find that having adopted a system of classification exactly as he says—the Standard Industrial Classification was used for the S.E.T.—that all sorts of anomalies and nonsenses have been thrown up.

This, I point out to him as kindly as I can, is an inevitable concomitant of any policy that seeks to intervene and discriminate. It is not possible to discriminate in the way in which the Government have attempted to do over and over again, and to draw distinctions which will result in rational answers. Inevitably, they are left wallowing in irrationality, and wallowing, if I may respectfully say so, as the Minister of State has done this evening, in attempting to explain the inexplicable and defend the indefensible.

7.45 p.m.

Another anomaly was brought out by my hon. Friends the Members for Harrow, West (Mr. John Page) and for Honiton (Mr. Emery) in drawing to the attention of the Committee, which they did with great force, the fact that in relation to synthetic rubber the Government have taken but one subhead out of the whole list of subheads in Section 1 of Chapter 40, where all the other headings are exempt—natural rubber, natural rubber latex, pre-vulcanised natural rubber latex balata, guttar perchar, reclaimed rubber, waste and parings, unhardened rubber, and so on. These are all excluded from the deposit but synthetic rubber latex—40.02—is not.

The Minister of State tried to defend this on the ground that we were dealing with a manufactured product, and so we are, but this seems to have regard not to the nature of the product—and what we are talking about as raw materials—but to the nature of the process by which the product is arrived at. On the one hand, one has the natural product drawn from tapping rubber trees and, on the other hand, one has a processed product. My hon. Friend the Member for Harrow, West strengthened his case by pointing out that reclaimed rubber, which is exempt from the deposit, may still have undergone more processing than the synthetic rubber. That is what I mean by saying that the Government are driven to defending the indefensible and explaining the inexplicable.

Again, my hon. Friends the Members for Wycombe (Mr. John Hall) and for Worcestershire, South (Sir G. Nabarro) have put their fingers firmly on a third anomaly, because if one is to draw distinctions between goods which are exempted from paying the deposit and goods which pay the deposit, one will inevitably result in penalising components which are imported for the manufacture of products which, if they themselves were imported, would be free. That is what my hon. Friend the Member for Worcestershire, South tried to point out to the Minister of State over and over again. The case is unanswerable, therefore my hon. Friend got no answer.

This is a further inevitable anomaly that will result. When one is dealing with manufactured products one can, perhaps, in a chain of products that has been drawn up, make sure that one does not subject to import deposit a product where one has exempted a product further down the manufacturing line, but when one starts exempting a whole range of foodstuffs, including manufactured and processed foodstuffs which themselves require components which may or may not be imported, one is inevitably laying up for oneself a trap and an anomaly. It may be that the question of "bangers" from abroad, of regenerated cellulose sausage skins, is a rather bizarre example, but it clearly illustrates exactly the kind of anomaly that such a scheme as this creates.

I do not know whether the right hon. Member for Sowerby intends to press his Amendment to a Division. I hope that he will, because he made, if I may say so, a powerful speech. If he does not, I understand, Mr. Irving, that you indicated that you would allow a separate Division on Amendment No. 58. I cannot do otherwise than advise my hon. and right hon. Friends to divide on which-so-ever Amendment is put for a Division.

Question put, That the Amendment be made:—

The Committee divided: Ayes 138, Noes 210.

Division No. 23.] AYES [7.48 p.m.
Alison, Michael (Barkston Ash) Dean, Paul Hirst, Geoffrey
Allason, James (Hemel Hempstead) Deedes, Rt. Hn. W. F. (Ashford) Holland, Philip
Awdry, Daniel Dodds-Parker, Douglas Hordern, Peter
Baker, W. H. K. (Banff) Eden, Sir John Hunt, John
Beamish, Col. Sir Tufton Elliott, R. W. (N'c'tle-upon-Tyne, N.) Hutchison, Michael Clark
Bell, Ronald Emery, Peter Iremonger, T. L.
Biffen, John Errington, Sir Eric Irvine, Bryant Godman (Rye)
Blaker, Peter Eyre, Reginald Jenkin, Patrick (Woodford)
Boardman, Tom (Leicester, S.W.) Farr, John Jennings, J. C. (Burton)
Body, Richard Fletcher-Cooke, Charles Johnson Smith, G. (E. Grinstead)
Boyle, Rt. Hn. Sir Edward Fortescue, Tim Joseph, Rt. Hn. Sir Keith
Braine, Bernard Fraser, Rt. Hn. Hugh (St'fford & Stone) Kaberry, Sir Donald
Bruce-Gardyne, J. Giles, Rear-Adm. Morgan Kerby, Capt. Henry
Buchanan-Smith, Alick (Angus, N & M) Gilmour, Ian (Norfolk, C.) Kimball, Marcus
Buck, Antony (Colchester) Gilmour, Sir John (Fife, E.) King, Evelyn (Dorset, S.)
Bullus, Sir Eric Glover, Sir Douglas Kirk, Peter
Burden, F. A. Cower, Raymond Knight, Mrs. Jill
Campbell, B. (Oldham, W.) Grant-Ferris, R. Lancaster, Col. C. G.
Carlisle, Mark Gresham Cooke, R. Legge-Bourke, Sir Harry
Channon, H. P. G. Curden, Harold Lloyd, Ian (P'tsm'th, Langstone)
Clark, Henry Hall, John (Wycombe) Lubbock, Eric
Clegg, Walter Hall-Davis, A. G. F. MacArthur, Ian
Cooke, Robert Hamilton, Michael (Salisbury) Maclean, Sir Fitzroy
Costain, A. P. Harrison, Brian (Maldon) McNair-Wilson, Patrick
Crowder, F. P. Harrison, Col. Sir Harwood (Eye) Maginnis, John E.
Cunningham, Sir Knox Harvey, Sir Arthur Vere Marten, Neil
Currie, G. B. H. Hastings, Stephen Maude, Angus
Dalkeith, Earl of Heald, Rt. Hn. Sir Lionel Maudling, Rt. Hn. Reginald
Davidson, James (Aberdeenshire, W.) Heseltine, Michael Mawby, Ray
d'Avigdor-Goldsmid, Sir Henry Hiley, Joseph Maxwell-Hyslop, R. J.
Mills, Peter (Torrington) Price, David (Eastleigh) Tapsell, Peter
Mills, Stratton (Belfast, N.) Pym, Francis Temple, John M.
More, Jasper Quennell, Miss J. M. Tilney, John
Morgan, Geraint (Denbigh) Ramsden, Rt. Hn. James Turton, Rt. Hn. R. H.
Munro-Lucas-Tooth, Sir Hugh Rees-Davies, W. R. Waddington, David
Murton, Oscar Renton, Rt. Hn. Sir David Webster, David
Nabarro, Sir Gerald Rodgers, Sir John (Sevenoaks) Wells, John (Maidstone)
Noble, Rt. Hn. Michael Rossi, Hugh (Hornsey) Whitelaw, Rt. Hn. William
Onslow, Cranley Royle, Anthony Williams, Donald (Dudley)
Osborn, John (Hallam) Russell, Sir Ronald Wills, Sir Gerald (Bridgwater)
Osborne, Sir Cyril (Louth) Shaw, Michael (Sc'b'gh & Whitby) Winstanley, Dr. W.P.
Page, Graham (Crosby) Silvester, Frederick Wolrige-Gordon, Patrick
Page, John (Harrow, W.) Smith, Dudley (W'wick & L'mington) Worsley, Marcus
Pardoe, John Speed, Keith
Pearson, Sir Frank (Clitheroe) Steel, David (Roxburgh) TELLERS FOR THE AYES:
Peel, John Stoddart-Scott, Col. Sir M. Mr. Bernard Weatherill and
Pink, R. Bonner Summers, Sir Spencer Mr. Humphrey Atkins.
Powell, Rt. Hn. J. Enoch
NOES
Abse, Leo Ennals, David McBride, Neil
Albu, Austen Evans, Fred (Caerphilly) McGuire, Michael
Allaun, Frank (Salford, E.) Evans, Gwynfor (C'marthen) McMillan, Tom (Glasgow, C.)
Alldritt, Walter Evans, Ioan L. (Birm'h'm, Yardley) MacPherson, Malcolm
Allen, Scholefield Fernyhough, E. Mahon, Peter (Preston, S.)
Anderson, Donald Finch, Harold Mahon, Simon (Bootle)
Archer, Peter Fitch, Alan (Wigan) Manuel, Archie
Ashley, Jack Fletcher, Ted (Darlington) Mapp, Charles
Ashton, Joe (Bassetlaw) Foley, Maurice Marks, Kenneth
Atkins, Ronald (Preston, N.) Ford, Ben Mason, Rt. Hn. Roy
Atkinson, Norman (Tottenham) Forrester, John Mellish, Rt. Hn. Robert
Bagier, Gordon A. T. Fowler, Gerry Mendelson, John
Barnett, Joel Freeson, Reginald Millan, Bruce
Beaney, Alan Galpern, Sir Myer Milne, Edward (Blyth)
Benn, Rt. Hn. Anthony Wedgwood Gardner, Tony Morgan, Elystan (Cardiganshire)
Bidwell, Sydney Garrett, W. E. Morris, Alfred (Wythenshawe)
Binns, John Gordon Walker, Rt. Hn. P. C. Morris, Charles R. (Openshaw)
Bishop, E. S. Gray, Dr. Hugh (Yarmouth) Morris, John (Aberavon)
Blackburn, F. Greenwood, Rt. Hn. Anthony Moyle, Roland
Blenkinsop, Arthur Gregory, Arnold Neal, Harold
Boardman, H. (Leigh) Grey, Charles (Durham) Newens, Stan
Booth, Albert Griffiths, David (Bother Valley) O'Malley, Brian
Braddock, Mrs. E. M. Griffiths, Will (Exchange) Orme, Stanley
Brooks, Edwin Hamilton, James (Bothwell) Owen, Dr. David (Plymouth, S'tn)
Broughton, Dr. A. D. D. Hamilton, William (Fife, W.) Padley, Walter
Brown, Hugh D. (G'gow, Provan) Hannan, William Page, Derek (King's Lynn)
Brown, R. W. (Shoreditch & F'hury) Harper, Joseph Paget, R. T.
Buchan, Norman Harrison, Walter (Wakefield) Palmer, Arthur
Buchanan, Richard (G'gow, Sp'burn) Haseldine, Norman Park, Trevor
Butler, Herbert (Hackney, C.) Hazell, Bert Parker, John (Dagenham)
Butler, Mrs. Joyce (Wood Green) Henig, Stanley Pavitt, Laurence
Cant, R. B. Herbison, Rt. Hn. Margaret Pearson, Arthur (Pontypridd)
Carmichael, Neil Hilton, W. S. Pearl, Rt. Hn. Fred
Castle, Rt. Hn. Barbara Hobden, Dennis Pentland, Norman
Chapman, Donald Howarth, Robert (Bolton, E.) Perry, George H. (Nottingham, S.)
Coe, Denis Howell, Denis (Small Heath) Prentice, Rt. Hn. R. E.
Coleman, Donald Huckfield, Leslie Price, William (Rugby)
Corbet, Mrs, Freda Hughes, Rt. Hn. Cledwyn (Anglesey) Randall, Harry
Craddock, George (Bradford, S.) Hughes, Emrys (Ayrshire, S.) Roberts, Albert (Normanton)
Crawshaw, Richard Hughes, Hector (Aberdeen, N.) Roberts, Rt. Hn. Goronwy
Cullen, Mrs. Alice Hughes, Roy (Newport) Robertson, John (Paisley)
Dalyell, Tam Hunter, Adam Roebuck, Roy
Darling, Rt. Hn. George Hynd, John Rogers, George (Kensington, N.)
Davies, Ednyfed Hudson (Conway) Jackson, Peter M. (High Peak) Rose, Paul
Davies, G. Elfed (Rhondda, E.) Janner, Sir Barnett Ross, Rt. Hn. William
Davies, Dr. Ernest (Stretford) Jay, Rt. Hn. Douglas Rowlands, E.
Davies, Harald (Leek) Jeger, Mrs. Lena (H'b'n & St. P'cras, S.) Shaw, Arnold (Ilford, S.)
Davies, Ifor (Gower) Jenkins, Hugh (Putney) Sheldon, Robert
Davies, S. O. (Merthyr) Johnson, James (K'ston-on-Hull, W.) Shore, Rt. Hn. Peter (Stepney)
Delargy, Hugh Jones, Dan (Bumley) Short, Mrs. Renée (W'hampton, N.E.)
Dell, Edmund Jones, T. Alec (Rhondda, West) Silkin, Rt. Hirt. John (Deptford)
Dempsey, James Kenyon, Clifford Silkin, Hn. S. C. (Dulwich)
Dewar, Donald Lawson, George Silverman, Julius
Diamond, Rt. Hn. John Ledger, Ron Skeffington, Arthur
Dickens, James Lee, Rt. Hn. Frederick (Newton) Slater, Joseph
Dobson, Ray Lee, Rt. Hn. Jennie (Cannock) Small, William
Doig, Peter Lee, John (Reading) Snow, Julian
Dunnett, Jack Lever, Harold (Cheetham) Spriggs, Leslie
Eadie, Alex Lewis, Arthur (W. Ham, N.) Steele, Thomas (Dunbartonshire, W.)
Edelman, Maurice Lewis, Ron (Carlisle) Strauss, Rt. Hn. G. R.
Edwards, Robert (Bilston) Lomas, Kenneth Summerskill, Hn. Dr. Shirley
Edwards, William (Merioneth) Loughlin, Charles Swain, Thomas
Ellis, John Lyons, Edward (Bradford, E.) Symonds, J. B.
Taverne, Dick Watkins, Tudor (Brecon & Radnor) Williams, Mrs. Shirley (Hitchin)
Tinn, James Wellbeloved, James Willis, Rt. Hn. George
Tomney, Frank Wells, William (Walsall, N.) Woodburn, Rt. Hn. A.
Tuck, Raphael Whitlock, William Woof, Robert
Urwin, T. W. Wilkins, W. A.
Varley, Eric G. Willey, Rt. Hn. Frederick TELLERS FOR THE NOES:
Wainwright, Edwin (Dearne Valley) Williams, Alan (Swansea, W.) Mr. Ernest Armstrong and
Wallace, George Williams, Clifford (Abertillery) Mr. Ernest G. Perry.
Watkins, David (Consett)
Sir G. Nabarro

I beg to move Amendment No. 118, in page 7, line 10, at end insert:

44.15 … … Plywood, blockboard, laminboard and battenboard and similar laminated wood products (including veneered panels and sheets); inlaid wood and wood marquetry.

The Chairman (Mr. Sydney Irving)

With this Amendment we are to discuss Amendments Nos. 59, in page 7, line 9, after '44.12' insert 'and 44.15'.

No. 60, in page 7, line 10, at end insert:

44.25 … … Tool broom and brush handles.

No. 88, in page 7, line 10, at end insert:

44.13 … … Wood (including blocks, strips and friezes for parquet or wood block flooring not assembled) planed, tongued and grooved, rebated, chamfered, V-jointed, centre V-jointed, beaded, centre beaded or the like, but not further manufactured.

No. 89, in page 7, line 10, at end insert:

44.14 … … Wood sawn lengthwise, sliced or peeled but not further prepared of a thickness not exceeding 5 mm; veneer sheets and sheets for plywood of a thickness not exceeding 5 mm.

No. 90, in page 7, line 10, at end insert:

44.18 … … Reconstituted wood, being wood shavings, wood chips, sawdust, wood flour or other ligneous waste agglomerated with natural or artificial resins or other organic binding substances in sheets blocks or the like.

No. 128, in page 7, line 10, at end insert:

Boxboards and other wood sawn lengthwise, sliced or peeled, but not further prepared, of a thickness not exceeding five millimetres, and used for box manufacture, within 44.14.

Imported unassembled softwood boxboards within 44.21.

No. 129, in page 7, line 10, at end insert:

Finger jointed sawn timber, within 44.28.

No. 132, in page 7, line 10, at end insert:

44.21 … … Complete wooden packing cases, boxes, crates, drums and similar packings imported assembled, unassembled or partly assembled—
(a) imported unassembled, and consisting of softwood boxboards—
(i) dove-tailed, mortised or tenoned at the ends,
(ii) other;
(b) other

No, 130, in page 7, line 10, at end insert:

Canadian Lumber Standard timber within 44.13.

and No. 127, in page 7, line 10, at end insert:

44.22(C) … Used barrels of oak whether assembled or not, staves and barrel heads being parts of such barrels.

Sir G. Nabarro

I propose to address myself, first, to the importance of wood in our national economy, and the figures I shall employ are massive compared with those of earlier Amendments. During 1968, imports of wood and wood products will amount to about £326 million, which is a figure far larger than those associated with any earlier Amendments. That figure includes items which are exempt from import deposits and I delineate those at once as being 44.01 to 44.12, described as wood not planed or further manufactured, and 45.01 and 45.02 natural cork and waste cork. Broadly, those are in Division 24 of Imports in the Overseas Trade Accounts of the United Kingdom.

The Amendment seeks to add to those items in Division 24 a group of timber products which are only part manufactured in the crudest sense and which are extensively used for essential purposes in the United Kingdom and in connection with our export trade.

I expressed these apprehensions when speaking to the ways and Means Resolution on 26th November: The Order means that the Government will take millions of pounds in import deposits from plywood importers in respect of raw materials which are then reconverted and used for packaging essential British exports on an economic basis to go all over the world."—[OFFICIAL REPORT, 26th November, 1968; Vol. 774, c. 261.] Earlier, I had referred to the use of plywood for a wide range of building and construction purposes.

8.0 p.m.

I wish first, to establish the contradistinction between the exempted and non-exempted items. Broadly, the exempted items are raw lumber. The timber trade may call them short ends, deals, or sleeper blocks, but, in other words they are felled trees, from the Soviet Union, Sweden or Finland, for example, if they are softwoods, and from West Africa, North America and elsewhere if hardwoods. They are trees which have been converted in a primary sense, roughly cut in section to rectangular shape, shipped in that shape, rough sawn, to this country. That timber has been excluded from the import deposit arrangements.

Broadly, that timber falls within section 2 of Division 24 in the Overseas Trade Accounts of the United Kingdom, and it amounts in value of imports to £230 million sterling in this year, 1968, the figures being based on the first 10 months and grossed up to give the appropriate figure for the full year. Thus, £230 million worth of imports would be outside the import deposit scheme this year.

There is then another large group, the group to which the Amendment refers, which falls within Division 63 of the Overseas Trade Account of the United Kingdom. I shall quote what is there said, since it relates fairly closely to the Amendment. It comprises Plywood, blockboard, laminboard, batten-board, and similar laminated wood products (including veneered panels and sheets), inlaid wood and wood marketry, cellular wood panels". Again grossing up the imports to the full year, basing the figure on the intake during the first 10 months, we have a figure in Division 63 of £96 million. Thus, £230 million-worth of wood and wood products would be exempted from the import deposits arrangement, where- as £96 million-worth would attract the import deposit.

My claim and that of my right hon. and hon. Friends is that plywood and associated products are truly raw materials. This large volume of plywood brought into the country saves vast quantities of timber. The timber I allude to here is rough sawn timber, principally in the form of softwoods. For example, the tendency during the past 20 years has been for nearly all the packages which carry exports from this country to be switched gradually from softwood to ply. wood packing cases. The reason is that plywood saves a great deal in shipping cube compared with the much bulkier softwood largely used in pre-war days.

Although both softwood and plywood are imported for this purpose, one must bear in mind that with plywood wastage in the conversion of the trees largely takes place overseas before it is shipped to us, whereas the softwood is largely converted, with consequent wastage, in this country.

In the context of this large user of both softwood and plywood—but most largely of plywood—it is grossly uneconomic to ask importers of plywood who will convert that material for export packaging to find 50 per cent. of the ad valorem landed cost of the plywood as a deposit for 180 days.

I should be out of order, as we established during earlier debates, if I strayed to the later Amendment which, in broad terms, would provide that any raw materials brought into this country which are subsequently for export may be relieved of the import deposit. All I do at this stage is make a passing reference to it. If a timber importer brings in 1,000 bales of plywood—we all know what a bale of plywood looks like—he then sells that plywood partly for the manufacture of export packages, partly for purposes in connection with house building and partly for construction, mainly civil engineering construction purposes—for instance, to make contract shuttering for concrete members in civil engineering works, road buildings and the rest.

It is utterly impossible for that primary timber importer in Manchester, Liverpool or any of the other great timber centres to declare at the moment of import that of, say, £100,000 worth of plywood which he is bringing in from Finland or the Soviet Union, he will undertake that the whole will ultimately be used for export purposes. He cannot do it. A major part of the plywood may be used for construction purposes, another major part may be used for house building and similar work, and a further part may be used ultimately for export purposes.

Mr. Harold Lever

This is an important point. I want to assist the hon. Gentleman. He is back again—I do not complain—on the point which depends on the value of the Government Amendment dealing with exemption where export or export equivalent is to take place. If he has a dissatisfaction, his dissatisfaction must be with that Amendment. Although he may have a separate complaint regarding plywood in the sense which he is now putting it, he will be much better off, if he wants an answer from me, if he raises it, with his usual acumen, when we come to the Amendment which gives me power to do something for him. I suggest that he will be far happier with his reply if he waits until we are discussing that Amendment.

Sir G. Nabarro

I am grateful to the hon. Gentleman, but I am in difficulty here because I cannot talk about that Amendment. All I can say is that it does not meet the case which I am now putting.

Before going further, perhaps I should say that I have no interest to declare in the matter, as I have left the timber trade now, although I spent 20 years in it and know it intimately. The point is that it is impossible for a big importer to say in advance how much of the timber which he is bringing in will ultimately find its way into purposes which can be classified as contributing to the export trade.

In any event, the inherent inflationary effect of the 50 per cent. deposit for 180 days in putting up the basic price of plywood by 2½ per cent. will result in substantial increases in the cost of these products. In the case of some plywoods, it amounts to an increase in price of as much as 5s. per 100 ft. All that increase must be attributed to essential purposes in this country because plywood, in view of its expensive character, is never used for anything but an absolutely indispensable purpose.

I quote an example from random. It may be within the knowledge of many hon. Members that the second stage of the High Wycombe by-pass is nearing completion. There is a long viaduct there on the A40 road to Oxford. It is a huge civil engineering works and it comprises very largely reinforced concrete members which were fabricated on the site by pouring concrete into shuttering, the shuttering being the form piece to create the shape of the large structure which is to carry the road. All that shuttering is made in expensive plywood. All of it will rise in price by 2½ to 3 per cent. as a result of this import deposit arrangement. I think that that is incontrovertible.

The ultimate use of plywood for export packaging is widespread and millions of pounds worth of plywood is used for that purpose every year. It is in connection not only with exports that I plead the case, but the very inflationary effect which the scheme will have on the cost of civil engineering construction and house building, which cannot escape the influence of the price increase as a result of the later Government Amendment.

I wish to say a few words about the invidious contradistinction between softwood timber and plywood. I suppose that timber technologists have spent the last 30 years encouraging the use of plywood because it is so much more efficient and economic for a wide range of constructional and packaging purposes than softwood or hardwood. The very act of excluding softwoods from and including plywoods in the import deposit scheme discriminates against timber efficiency. We should be doing exactly the opposite.

If the Financial Secretary claims that plywood is a manufactured commodity because three veneers have been glued together—

Mr. Harold Lever

Five.

Sir G. Nabarro

Sometimes five, but most plywood to which we refer is three-ply.

Plywood can be 3, 4, 5, 6, 8, 9, or 12 millimetre. Its thickness can vary. Generally, the thicker it is the more veneers there are and the more gluing there is.

The off-cuts are used to make blockboard, laminboard, and so on. But plywood is hardly a manufactured article, any more than a softwood deal coming into this country is a manufactured article. The tree is chopped down in Russia and is put through a large band mill. The waney edge of the timber is taken off on four sides, thereby making the section of the timber rectangular. It is cut to lengths of 6, 9, or 12 feet.

All those manufacturing processes are carried out in the Soviet Union, Sweden, Finland, or whatever the timber-producing country may be, before the sawn deals are shipped to this country. Yet we discard all that and say that these deals are not manufactured and exempt them from the import deposit scheme. The same country, Russia, fells the tree, brings to the timber mill, lops to a length of perhaps 18 or 24 ft., puts a spike in each end of the log and rotates the log against a peeling knife so that a veneer of wood flows from the log. That veneer is then dried, steamed and glued to another veneer of wood. It is then trimmed and sent to this country and is called plywood.

It is argued by the Treasury that the deals or softwood are less fully manufactured than plywood.

Mr. Harold Lever

It seems so from the hon. Gentleman's description.

8.15 p.m.

Sir G. Nabarro

I do not think that it does. The processes are approximately equal. Throughout the scheme there is the invidious distinction made between manufactured timber products and the exempted items of wood products to which I referred at the beginning of my speech.

I said that wood and wood product imports this year will total £326 million, of which £230 million worth would have been exempted from the import deposit scheme and £96 million worth would be made the subject of import deposits. But, that figure will be diminished if the Government's Amendment is carried exempting from the scheme those items which ultimately find their way into exports. I should have thought that in the interests of the efficiency of British industry, trade and commerce it would be wise to exempt all wood and wood products, except furniture, which does not come into the figures to which I have alluded; it is entirely separate. I should have thought that, in the interests of general efficiency, it would have been wiser to exempt wood and wood products coming into this country which form the largest single commodity with which we deal in our Amendments.

For these reasons, I hope that Amendment No. 118, at least, will be acceptable to the Treasury.

Mr. Arnold Gregory (Stockport, North)

I listened with great interest to the hon. Member for Worcester, South (Sir G. Nabarro). I do not claim to have an expert knowledge of the industry, but I have a deep constituency interest in it. I do not intend to take up the hon. Gentleman's argument. It was essentially a global argument dealing with colossal figures.

I wish to refer specifically to how the import deposit scheme applies to plywoods, including the range of laminated wood used in the furniture-making industry. Since I shall refer to things like roomliners and unit furniture, it will be appreciated that this is a specialised part of the industry. I emphasise the point made by the hon. Member for Worcestershire, South that there is a strong argument within the industry that this is a raw material. I shall say later why those in the industry stress this point, but first I wish to describe the magnitude of the problem.

I discussed the problem with people in the furniture-making industry only a few days ago. This specialised part of it is growing. My area is not a development area, but in Stockport and North-East Cheshire generally there has been a lot of diversification and new industries are emerging. There is the obvious feeling that if investment is made in a new industry and machinery is bought and installed the best must be made of it.

I am referring essentially to small firms.

Stress has been laid on the fact that the wood products are shaped in a highly competitive market for export purposes. Roomliners made by the firm of Peak Joinery Limited, of Stockport, are being sold in difficult export markets. The firm has to go to the length of filing away in shaping the product for sale in areas like Sweden, West Germany and the United States, the very countries which themselves export the raw material for making it up.

There is, furthermore, a re-export process. In many cases, if it is desired to sell a highly sophisticated article of this nature for a world market in which there is keen competition, it is re-exported to Italy for relaying for veneer purposes. Polished woods of a particular nature are applied to finish the goods for this special market.

The firm to which I have referred claims—I think, with justification—that the import deposit system will set it back in three respects. First. it wishes to make a still bigger challenge in the market and has had five years of development to prepare for this. Secondly, the company wants to continue an expansion programme in the industry. Thirdly, an aspect which we do not want to see anywhere, certainly not in my area, is the run down of the growing labour force.

Plywood is imported from Finland and some has come from the Soviet Union. Dealings in softwood have been extended to as many markets as possible, but the main import is from Sweden. We re-export the finished article, in the form of furniture to that country.

By virtue of having within the furniture industry a fall-out from the main activity, there is a demand for new types of woodworking machinery to meet the need. The company in question feels that if this were to reach the global terms mentioned by the hon. Member for Worcestershire, South, not only would the field be limited to a relatively small firm in Stockport, but there could be an influence on the much greater engineering industry to meet the demands for this new industry at home.

In a letter confirming a conversation of mine a few days ago, Peak Joinery states that: Our aim was to be the fulfilment of two separate but interrelated two-year plans. The first was implemented on 1st June, 1967, with the intention of consolidating the home market to a turnover of £750,000 per annum. Subject to the success of stage 1, the second plan is the exploitation of the export potential in Sweden, West Germany and the United States of America". That is no mean effort. It is up to the House and the Government to ensure that firms like this shape themselves in future in these terms. In no circumstances should we in any way hinder them.

Wih regard to exports"— writes the company— our plan was to commence on 1st June, 1969, but due to the success of stage 1, we have already been able to undertake preliminary negotiations for an agency in Sweden and anticipate the contract, worth a minimum of £50,000 per annum, which will be completed in the next three weeks. This contract has taken six months of protracted negotiations and cost approximately £2,000 of our resources. The firm points out that it is preparing to sell its product on the basis of an expanding operation to meet the autumn and winter mail order trade in the United States.

In referring to what is done in West Germany, Peak Joinery states that: Our preliminary market researches show that in two years from June, 1969, we could reasonably expect to build up level to 1 million per annum by opening 10 branches in strategically placed cities. I could continue quoting from the letter to show how the exercise of this firm will be hampered by the restrictions to be imposed under the Bill. The company tells me that there will be cancellation of export projects for at least 12 months and a reduction of output for the home market in 1967–68.

Mr. Harold Lever

I should like to be able to reply to my hon. Friend's satisfaction. Do I understand the letter to mean that those export projects will be frustrated because of the import deposits which the firm will have to pay on the materials to be processed for re-export? If that is the fact, I remind the hon. Member that the Government have put down a later Amendment to deal with precisely this problem. To the extent that my hon. Friend is addressing himself to that matter, perhaps he would like to contribute to the later debate upon it.

Mr. Gregory

My hon. Friend is very helpful. The company will be pleased to know what he has said and I will not. therefore, develop that part of the argument at too great length.

On the direct usage side, the company's concern was that in having to pay out so much money, it did not want to make a practice of borrowing from the bank for support in whatever was demanded by the new system of payments. This it has not done so far.

The company expects a reduction in its labour force of from 160 to 100 employees, and the cancellation of plant and machinery investment for 1968–69 will represent a loss of engineering investment in terms of 25,000 men. This would be tragic.

In view of what my hon. Friend the Financial Secretary has said, and in view of the time factor in dealing with so large a group of Amendments, I merely express the hope that the Government will give special consideration to the position as it affects plywoods and laminated woods, bearing in mind the global argument but remembering also that in some areas a new export trade is emerging and is producing a new line of products. The company could certainly he hampered in what it wants to do.

Mr. James Allason (Hemel Hempstead)

I wish to support the important case made by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro.) and, perhaps, to take it a little further. My four Amendments would extend the area in Chapter 44.15 which my hon. Friend has discussed.

It must be realised that other timber imports should be considered, and I suggest that they should be considered against the background that certain wood is exempt, as explained by my hon. Friend. I am speaking of wood not planed or further manufactured. We ought to remember the test which the Government apply to this, for these are materials which have gone through some elementary process. It is a very great pity that there is no Minister here at the moment from the Board of Trade, because while I have deep respect for the Financial Secretary to the Treasury, nevertheless, it is in the Board of Trade that they have knowledge of just how much manufacturing does take place in these wood products.

8.30 p.m.

I will deal with Amendment No. 60 about tool broom and brush handles. There is in the Board of Trade a sample of a brush handle such as is imported by a firm in my constituency, William Turner and Co., manufacturers of industrial wire brushes. I am very glad to see that a Minister from the Board of Trade has now arrived, just in the nick of time. These brush handles are pieces of wood only very roughly shaped, but are, nevertheless, essential raw materials for the brush industry. They have in the past been manufactured in the United Kingdom, but they are difficult to obtain now. One firm has gone out of production, and the other firm making them is finding such extreme difficulty in producing them that it recently doubled its prices and has had to quote two to three months delivery, which is pretty unsatisfactory for the delivery of raw materials to any industry. Now, that firm has found a source in Denmark, and that source will be supplying at 60 per cent. of the price which would have had to be paid in Britain, but now the firm finds that items which it receives will be subject to the import deposit scheme.

That firm, as a small firm, will be up against the whole difficulty of finding finance to meet the scheme. I want to deal later with the general point about the implications of the scheme for small businesses, but in general terms I suggest that something which is only very slightly manufactured should be exempt from the scheme.

I turn to Amendment No. 88 which deals with planed or jointed hardwood or softwood. A great deal of this is under Canadian lumber standards and is timber which is slightly manufactured and is used for industrialised building. At least, that is one of its main uses, but that is not exclusively its use. It is cheaper than sawn timber because it is further shaped than ordinary sawn timber which my hon. Friend was describing, and so has lost a lot of its bulk and therefore is cheaper in freight. The other reason why it is cheaper is that the waste material from it is of value and is used elsewhere. So here we have timber which really ought to be exempt as well.

There is a new form of timber which is finger jointed goods. This is a method of joining short lengths of timber together in order to make longer lengths. This saves importing long lengths and then chopping them down to the size required and so wasting a considerable amount, and, because of this saving, it is economical, and, therefore, of value to this country. Otherwise, it has no advantage over the comparable solid length. I suggest it ought to be treated in the same way as sawn timber.

Amendment No. 89 deals with veneer sheets. My hon. Friend the Member for Maidstone (Mr. John Wells) tells me he wishes to speak on that and therefore I will leave it.

Mr. John Wells

No. Go on.

Mr. Allason

The simple case is that veneer, as described by my hon. Friend the Member for Worcestershire, South, is just sliced from the solid sawn timber, but it is still timber and barely manufactured at all, and in those circumstances it would be much more sensible to treat it as sawn timber.

Amendment No. 90 deals with particle board. Here, there are some very substantial imports. This year 200,000 tons will be coming in to the value of from £9 million to £10 million. This is used for the building and construction industry, for the furniture industry and for the caravan building industry. There is no effective replacement for the furniture industry, and for the other industries the alternative is more expensive or imported substitutes. The home production of roughly 40 per cent. of requirements is fully committed at the moment and for the first part of 1969. It is quite clear that this is a raw material needed by industry, and I hope therefore that that too may be exempt.

I am still trying to clear my mind as to the main purpose of the scheme. Is it to discourage unnecessary imports? I think this is so. The Financial Secretary spoke as if the mopping up pools of liquidity was the main purpose of the scheme, but this cannot be so. If he wanted to mop up pools of liquidity he could do so by much simpler means than by this elaborate process of involving firms which want to import in the immense intricacies of depositing money and trying to borrow it from somewhere.

The small businessmen will not be able to get the necessary loans, and I fear that a large number will have to close shop for lack of raw materials. The Government say that they will keep this under review; so that, presumably, when small businesses close and unemployment is created, they will start to do something about it. Surely the time to do something about it is before that happens. I suggest that the view of the Board of Trade that anything handled and pro- cessed, other than where there has been a very elementary process, ceases to be a raw material, is now out-of-date. Raw materials for industry are sometimes quite sophisticated, and the Board of Trade ought to know this. Where a good case is made for exemption, surely it is better to err on the side of generosity and grant the exemption than to go the other way.

We must remember that when many small businesses have been ruined, the goods which they made in the past will still be in demand, and there will be only one source of supply, from overseas. There will then be a greater demand for imports than if the scheme had never been introduced. Therefore, let us exempt the raw materials of industry rather than run the risk of having to import finished goods. I appeal to the Government to think again.

Mr. Arthur Blenkinsop (South Shields)

I intervene briefly more for information than for anything else. I have had constituency representations on this matter, many of which have already been met by the Government, but I am still concerned about some elements.

If the deposit scheme resulted in the greater development of our own plywood-making industry, I would welcome it, but, as I understand it, this represents only a minute proportion of the total user and, certainly for any immediate purposes, this is out of the question. The industry is already more than fully booked for its existing capacity. The main demand in my area is undoubtedly in the shipyards. As I understand it, the point has been met already, but I would be grateful if my hon. Friend could confirm that that is the case. I think it is true that supplies for shipyards will be met by special exemption and that provision is made for exports and re-exports, though whether it will prove adequate no doubt will be argued later.

There remains the problem of supplies for housing, furniture and all the provisions for housing. Firms who have been in touch with me are concerned that this might lead to considerable shortages of plywood and, as a result, to real difficulties in our housing programme. Naturally, that is a matter which is of considerable concern to me.

Not only is there the possibility of increased costs but one of shortage of supplies. I would like my hon. Friend to say whether he can assure us, first, about supplies for shipyards and, second, about the fear of a shortage in such an important area of activity as housing.

Mr. John Wells

I am glad to have the opportunity of following the hon. Member for South Shields (Mr. Blenkinson) in his remarks about shipyards. For a moment, I want to direct attention to Amendment No. 89, because the timber, veneers and plywoods referred to in it are the kind used frequently in smaller boatyards. Will the exemptions outlined in Schedule 2 apply to boatyards as well as to shipyards, and will they enable ship builders to use timber, not as the actual equipment on a vessel, but as part of the equipment for mending and repairing? I raised the specific point with the hon. Gentleman a few days ago when we discussed the Ways and Means Resolution. I would be glad for a clear answer to the point, either now or when we discuss the later Amendments.

Turning from that point to Amendments Nos. 128 and 132, these are designed to exempt from this impost boxes primarily used by horticulturists and food processors and manufacturers as containers. Kipper curers and many other manufacturers and vendors of foodstuffs pack their products in boxes. Generally speaking, fish boxes have a life several times round, being transported from ports to the fish markets and back again to the ports. However, orchard boxes lie out of doors for longer periods than any other type of food box. Almost inevitably, they have a shorter life and have to be replaced more frequently. I am aware of the trend away from wooden orchard boxes to non-returnable boxes made of cardboard, but the fact remains that wooden boxes are still widely used, not only in apple orchards but in other orchards in the West of England and elsewhere. For that reason, I am glad that the debate on this group of Amendments was initiated by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), because it brings to light what is a genuine nation-wide horticultural problem.

The Financial Secretary gave some very unsatisfactory answers about the lowly mushroom compared with the arrogant caviar. When we come to the containers for these more humble English foodstuffs, particularly bearing in mind the popularity of English apples in this House, I hope that he will be able to give a satisfactory reply. The Government have given way on absolutely nothing so far. This will cost them very little, but it will do a great deal to improve the position of the British horticulturist. I hope, therefore, that we will at last have some enlightenment.

8.45 p.m.

Mr. W. H. K. Baker (Banff)

I wish to address my remarks to Amendment No. 127, standing in my name. As the Financial Secretary knows, I have written to him on this subject. I therefore await his reply with a great deal of interest, if not a good deal of anxiety, as I will endeavour to show.

The operative industry which I had in mind in tabling this Amendment was the whisky distilling industry in Scotland which has a tremendous revenue producing potential both in the home market and in exports.

Sir G. Nabarro

Over £100 million a year.

Mr. Baker

As my hon. Friend rightly points out, more than £100 million a year.

Sir G. Nabarro

That is exports.

Mr. Baker

Exports, yes. The raw material—because I maintain that the commodity I am about to remark upon is a raw material and, therefore, should be exempt under the scheme—comes from the United States. Apparently there is a law in the United States forbidding the use of a whisky cask more than once. I do not pretend to know the reason. The cask is made of very close-grained oak. We cannot grow oak of a sufficient texture for that purpose. When a cask has been used, it must, by United States law, be broken down. It is then packaged up and becomes known as a shook. In barrel form a shook is 40 gallons capacity.

The coopers in the United Kingdom and notably, but not exclusively, in Scotland, make up these shooks into 50 gallon hogsheads. Experience has taught the distillers that whisky is best matured for varying periods, depending on the distiller, in a 50-gallon cask, because that gives the best surface area per gallon, and by that method we get the famous Scottish whisky.

Shooks need headings. Under Chapter 44.01 to 44.12, wood, not planed or further manufactured, is exempt from the import deposit. We can have as many headings to complete a cask as we like, but we cannot make a whisky cask exclusively out of headings. Therefore, we have an anomaly. If we want to mature our whisky, we have the headings, the top and the bottom of the barrel, but nothing to go between them under the terms of the Bill.

Independent coopers, of whom, unfortunately, there are a declining number, are finding that their volume of business from the repairing of casks is declining as fast, if not faster, than their business itself. The reason is that blenders and the large distilling companies are employing their own coopers to do the repair jobs on the casks.

Last week a cooper in my constituency received the following letter from his importing agent in Glasgow: As you will appreciate this"— that is, the import deposit— will result in our having to deposit with the Customs Authorities large sums of money, consequently it will be impossible for us to pay these deposits in advance of receiving your remittance."— this is the important point— In the circumstances we suggest that the best system which could be adopted is that we will telephone you immediately the amount of Import Deposit required has been calculated, and that you will, by that day's mail, forward to us a cheque in payment of same. That is a tall order for a small firm. The amount of capital tied up in a cooperage is not enormous. There is not very much machinery. The work is done by extremely skilled men, and their cash liquidity, if I may use that expression, though it probably offends some of the financial pundits on this side of the Committee, and no doubt on that side, too, is not great, and they cannot, on the receipt of a telephone call, raise the sums of money which are required for the import deposit. We know the stringency of bank lending, on the instructions of the Government. We know how difficult it is for people to raise money in a hurry. That is the basis of the problem.

There are three small cooperages, among many others, which work in my constituency as a consortium. They import more than 100,000 shooks per year. They are worth about £120,000, and thus at one time they will find themselves having to lay out £60,000 over 180 days.

Mr. Harold Lever indicated dissent.

Mr. Baker

The Financial Secretary shakes his head.

Mr. Lever

Half the amount quoted by the hon. Gentleman. Does he wish me to explain?

Mr. Baker

I agree it should be half the amount I quoted originally.

If no home grown timber is available, what are the alternatives? Either the coopers have to go out of business, or we have to get some kind of redress for them, and that is why I hope the Government will accept the Amendment. Surely it is contrary to the Government's intentions and policy to affect the export market in any way? This proposal is bound to affect the export of whisky from Scotland to the rest of the world.

The three firms which I have mentioned employ between them about 90 men. They are all, or nearly all, skilled coopers. These three small firms reckon that unless we can get an alleviation for them, 60 per cent. or 70 per cent. of their staff will quite shortly become redundant. I admit that those are small figures in terms of cash, and in terms of manpower, when considered in the wider national context, but they are extremely important for a small country area which I have the honour to represent.

This morning I received a letter from the managing director of one of these small firms. He said: … to offset the disastrous impact of this new charge we will be faced with the necessity of cutting down our labour force by 60 to 70 per cent., thereby making it almost impossible to carry on production at all, and certainly impossible to meet our customers' demands for delivery within a specified time. I therefore hope that the Government will see fit to include shooks for exemption under the terms of the Bill.

Sir Eric Errington (Aldershot)

I wish to refer to Amendment No. 113, which deals with things known as ebauchons, pieces of briar root which have been cleaned, boiled, partly dried and sawn into convenient shapes and sizes for transportation. The sole reason for boiling and drying them is to prevent rotting during such transportation. It is my contention that it cannot be maintained that these ebauchons are other than raw materials which have not been manufactured in any way. For this reason they should be excluded from the ambit of the Bill.

It might have been said that ebauchons could be properly classified under the Customs tariff 1959 heading 44.04, wood that is roughly squared or half squared but not further manufactured. They are in the Customs tariff 98.11B, Briar root blocks, roughly shaped by sawing but not further manufactured. The peculiar feature of 98.11 is that it deals mostly with smoking requisites including pipes, pipe bowls, cigar and cigarette holders. It would seem, therefore, that this is not in the right place. One of the peculiar features of this entry in the Customs tariff is that under the heading "rate of duty", briar root blocks, roughly shaped by sawing but not further manufactured —that is, ebauchons—are free so far as full rate of duty, and Commonwealth preference and E.F.T.A., are concerned. All the other things mentioned in the tariff list have a substantial percentage of the full rate of tariff.

Small firms are concerned in this trade, and one is in my constituency. Proportionately, they have a high rate of exports. I am not founding my justification for this Amendment on the high rate of export, but purely on the fact that this is a non-manufactured article which, in my constituency and other places, is manufactured into briar pipes.

In view of what the Customs tariff of 1959 says, that it is free in regard to all these matters, it must have been left out in error. There is nothing between 92.12 and Chapter 99, all headings. This seems to be a mistake. Whether it is or not, there is full justification for saying that this is not a manufactured article, but a raw material. This firm, my constituents, for whom I am speaking, feels strongly that it will do them great financial harm if full exemption is not granted. I hope the Minister will say something to ease their minds.

[Mr. HARRY GOURLAY in the Chair]

9.0 p.m.

Mr. Frederick Sylvester (Walthamstow, West)

My hon. Friend the Member for Aldershot (Sir E. Errington) has mentioned most of the points which I wish to make about briarwood, but there are some others of importance with regard to Amendment No. 113. Following their own logic, the Government are obliged to accept the Amendment and I am confident that they will do so.

My hon. Friend described how this material is provided, and there can be no serious doubt that the form in which it reaches this country is not manufactured in any material way. It serves as a raw material. During the war, we tried to make pipes from other materials, but I am sure that the Prime Minister would agree that there are very few things that serve so satisfactorily as briar-wood. Beech was used, with unfortunate results.

Briarwood is indispensable to the industry. It is available only from Mediterranean areas, so there is no question of trying to promote the development of a British source of supply. In these circumstances, the Government must recognise that it is a raw material. It comes in in the only suitable form and is used solely as a base for manufacture. It is not replaceable from any British source and therefore qualifies, on any ground which they could name, as a raw material. I hope that the Minister, in return for my being so brief, will give an even briefer answer and accept the Amendment.

Mr. John Biffen (Oswestry)

This debate has taken on an exotic flavour, with discussions of shooks and ebauchons. I wish to speak more in support of Amendment No. 118, so forcefully moved by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro).

In the narrow context of this series of commodities, my hon. Friend highlighted the many disadvantages of the Bill. The first is the immense difficulty, once we have a policy of selectively seeking to identify what we believe to be raw materials or otherwise. The argument that a certain amount of processing of timber is permitted, but that beyond that point it ceases to be raw material and becomes a manufactured product, clearly indicates that the Government recognise that at some point they must make a distinction and that at some point there is a degree of arbitrariness. A very substantial case has been made that the line should be drawn other than where it is now proposed to draw it.

Although I said that I would not follow the arguments of my hon. Friends the Members for Aldershot (Sir E. Errington) and Walthamstow, West (Mr. Sylvester), I must point out that the case made in respect of Amendment No. 113 seems overwhelmingly powerful. I hope that at least in respect of that Amendment there will be an indication of sympathy and flexibility on the part of the Treasury Bench.

What worries me is that hon. Members are still discussing this legislation as though it had some capability of import substitution. The hon. Member for South Shields (Mr. Blenkinsop) commented on the difficulty which he foresaw in any import substitution taking place, although he conceded that this could be desirable. It seems to me that it is fallacious to think that there will be any degree of import substitution in a situation in which, on the figures given by my hon. Friend the Member for Worcestershire, South, the cost of the imported product would rise by 2½ per cent. to 3 per cent. and in which, on the Government's professed intention, this is to be a temporary Measure.

It seems to me that in this situation we are driven to the conclusion—and here I beg to differ slightly from my hon. Friend the Member for Hemel Hempstead (Mr. Allason)—that this is primarily a piece of credit-squeezing legislation which is much more likely to be effective in that context than in any inducement to import substitution.

Speaking to Amendment No. 118, I am concerned about the effect which the Bill will have on the building and construction industry, because I believe that one of two things will follow: either there will be a diminution in building and constructional activity because of the credit restrictions which will be felt by those intimately concerned with importing those products which are essential to the building and construction industry; or, alter- natively, there will be an increase in building and construction costs. The latter is a prospect which should be particularly daunting within the shadow of the White Paper just issued on local government finance, because any doubt about the very effective squeeze which will be operated in that part of local authority administration concerned with building and construction must have been speedily removed by the publication of that Paper.

It would be a gesture of some generosity if the Financial Secretary were to accept the Amendment of my hon. Friend the Member for Worcestershire, South and if the Treasury Bench were to show a blinding spasm of good sense and good nature—because I am certain that his own generous and charitable inclinations would lead the Financial Secretary to accept that Amendment and I hope that he will disregard any official advice which he may have had to the contrary.

Mr. Harold Lever

We have had a wide-ranging and, as I have said previously, closely-argued debate because those who have spoken obviously have close knowledge of their industries. Before dealing with detailed points, perhaps I may be permitted, even at the risk of repetitiveness, to set my remarks in context, because the matter has come up again, although it has been raised before.

The two purposes in the light of which the Amendments must be seen are, firstly, to bring marginal pressure towards economising on certain imports—and to this end we cover a range of nearly £3,000 million—and, secondly, to bring selective pressure on liquidity by reason of immobilising deposits, month by month, to about £600 million, unless the rate is reduced or further exemptions granted.

In the light of that—and I do not accept "either/or"—hon. Members opposite seem to be divided into two schools of thought. The first is the school which believes that the mopping-up of liquidity is a characteristic Government chatter, not seriously intended. The second school includes those who believe that it is the heart of the scheme. But both these factors apply—pressure to economise in stock management but not to bar the imports or impose a tariff on them, and the pressure on liquidity which will automatically arise as these deposits mount up. Bearing in mind the second purpose, that of the pressure on liquidity, hon. Members must appreciate that the Government, in taking power to amend the exemption list—to add exemptions or to lower the rate in what is a scheme temporary in intent, in function in relation to the Government's general strategy and in the wording of the legislation—have as their objective to act swiftly and usefully to get the balance of payments more rapidly into surplus.

In this connection, it becomes important that we do not start the scheme too weakly, because we have no power in the Bill to strengthen it, nor would it be desirable to strengthen it, as we go along. We need to start with a reasonable impact, and we then have power to weaken that impact provided that there is no disruption of a serious kind.

Hon. Members say that the time to act is before firms are ruined. I agree, and we have power to do so. We shall keep a close and continuous watch in consultation with the Board of Trade and all other interested Departments. We will be in touch and will watch the situation very closely. The powers are not taken for academic reasons or to evade the necessity for adjustment. They are taken for the vital reason that we can make appropriate adjustments, either in volume of the liquidity pressure as a whole by exemption additions or by lowering the rates in some categories and exempting others. That will depend upon the working of the scheme and how the export-import balance moves under its impact, which we believe will be fairly immediate.

I repeat that I agree that there is no overwhelming logical policy to exempt one article rather than another at particular points. There is a general scheme, which we have outlined more than once, upon which the Government are acting. Conditioning that general scheme is not some absolute theological tying-down to first principles, but an attempt to apply reasonable selectivity in a non-protective way but always bearing in mind that we have to have an aggregate total of nonexempt goods approaching £3,000 million.

Having conceded that, I still say that there are differences once one has the broad guide of basic materials not subjected to a significant amount of processing and others. I stress the practical consequences to be evaluated as the scheme is in operation rather than the perhaps impossible task at present to prove that one article rather than another should be subjected to the scheme because it has been subjected to more rather than less processing. On the other hand, as a broad guide it is not without its uses.

9.15 p.m.

The hon. Member for Worcestershire, South (Sir G. Nabarro) has quoted the very large figures of timber that would be affected. A very serious hole would be driven in the scheme as a whole if we were to exempt plywood and other timbers on the scale suggested in the Amendments. I therefore regret to say that it would need an overwhelming case for me to feel favourably inclined towards accepting the plywood exemption, particularly at this stage, before we have had an opportunity of seeing what the consequences are.

Let us deal with some of the consequences, about which a very real natural and justifiable anxiety is felt by hon. Members on both sides. The first question is: what about the exports that figured in the arguments advanced by the hon. Member for Worcestershire, South and my hon. Friend the Member for Stockport, North (Mr. Gregory). I hope that, with the leave of the Committee, I can defer argument on this until we come to my Amendment dealing with exports. It is sufficient now for me to say that I believe that that Amendment, when it is proper to consider it, will reveal to the Committee that we have done everything humanly possible to relieve our export trade from the burden of import deposits.

Sir G. Nabarro

If the importer of the plywood were selling the material wholly and directly to an exporter who was to use it the later Amendment would be satisfactory, but the fact is that millions and millions of pounds worth of this plywood is brought in by timber importers who do not know what the ultimate user and destination of the plywood will be. Probably two-thirds or three-quarters is used in the home market, and therefore would not qualify under the later Amendment, and possibly one-third or one-quarter might find its way into exports at some future indeterminate date. So the whole situation is hypothetical at the moment when the plywood is imported. That is why I say to the Financial Secretary that the later Amendment cannot meet this conundrum.

Mr. Lever

I do not want to be guilty of dealing with the later Amendment in advance. It has, however, I would respectfully submit, some relevance. I take the hon. Gentleman's point. In deciding whet her or not he presses his Amendment to include plywood the hon. Gentleman might be influenced by the extent of the concession on export goods, and I will try to give him, as far as I properly can, a word or two on the subject.

When merchants bring in the plywood the rule will still apply if they satisfy the Customs of the percentage of it which is to go to exports. I do not suggest that the Customs will be able to follow every yard of the plywood or ought to try to follow every yard of the plywood. I remember as a lad reading a popular book of that day about the adventures of a 3-guinea watch: we do not want a similar tale of ten square yards of plywood which someone follows to their ultimate and, perhaps, romantic destination in another country. The Customs will deal with the matter with a very broad brush as far as they lawfully can. They are there to help, and with any reasonable evidence as to the ultimate destination coming from the merchant they will be ready to be satisfied and exempt the plywood.

I do not want to go into more detail, but at least what I have said meets some of the hon. Gentleman's interests and certainly those of my hon. Friend the Member for Stockport, North. It is not beyond the wit of merchants to give evidence of a satisfactory character to the receptive ear of the Customs, who are certainly instructed, and who are certainly anxious, to ensure that as far as they possibly can help they will help to avoid a penny piece of this import deposit falling on exports. I do not say that they should be able to trace every last penny piece, and nor do we want to create waste of time administratively, but there is good sense in the Customs on this matter and a great deal of experience. However, I will enlarge on that more fully when the Amendment itself arises for discussion. I hope that I have satisfied hon. Members that a very liberal Amendment is on its way and, of course, the faster we can get through our work, the sooner we shall come to that enjoyable aspect of the debate when we shall be examining export protection.

The hon. Member for Hemel Hempstead (Mr. Allason) asked about broom handles. I am afraid that they cannot with any logic be exempt at this stage, although that is not to say that they will not be candidates, like other candidates, for exemption later. He was anxious about mopping up pools of liquidity. I have already dealt with that. It may be a somewhat outlandish and somewhat eccentric and bizarre occupation for the Government to engage in, but I assure him that they are so engaged in it and he may be consoled as to the seriousness of the purpose and possibly the usefulness of the purpose by his hon. Friend the Member for Oswestry (Mr. Biffen), who believes it to be a matter of major importance in the scheme.

I do not want to go into great detail, but I must say that the case for Amendments Nos. 88 and 89 was one of the strongest which I have heard today. Whereas it would be inconsistent with the principle which I have put before the Committee and which I hope has been sympathetically received, to accept these Amendments until we have had a little more experience of the working of the scheme, I must say—and I do not mind if this is used against me—that there is certainly a case which is worth considering and it will be among those which will get prior examination when we come to operate in the light of practice, if the House sees fit to give the Bill a Third Reading.

The hon. Member for Aldershot (Sir E. Errington) and the hon. Member for Walthamstow, West (Mr. Silvester) put their case for briar root very forcibly and ably and were it not for the fact that I think that it is a sounder principle not to rely entirely on abstract argument but to have a look a little longer at the operation of the scheme, I would have said that there was a great deal of force in their argument.

Sir E. Errington

Will the hon. Gentleman deal with what seems to me to be an error? In the Customs tariff for 1959, briar root is free of all rates of duty, and if the Amendment is not accepted the Bill will seem to slap on a duty which was not previously payable.

Mr. Lever

I am grateful to the hon. Gentleman, because that reinforces our point that this is not a duty in the sense that a tariff is. We would not think of putting a Customs duty on briar root—in fact. we have taken it off—but that does not mean that it should not bear this import deposit which has functions other than that of a duty, which is normally protective in character. It was not a mistake which lead to its being there. I accept that the hon. Gentleman has made a case which will require to be considered at an early date and, while I do not want to raise any false hopes, I can assure him that it will be one of the cases which I shall recommend for consideration with high speed as soon as we get the Third Reading of the Bill.

Sir K. Joseph

This is such a small commodity with such a minimal impact on the Government's strategy. Will not the hon. Gentleman go so far as to make an exception for this undoubted raw material and let us have one Amendment?

Mr. Lever

I do not wish to seem obdurate or unfeeling, and I hope that it was clear from my reaction to the hon. Gentleman that my motive was not lack of kindness but a feeling that it would be unwise in the Commitee stage to depart on an individual item. But I promised the hon. Gentleman that his argument had made an impact upon me, and, further, I promised that I shall not be slow to see that it is brought home to the appropriate quarters. That applies also to Amendments Nos. 88 and 89.

Now, shipyards. Plywood for use in registered shipyards is exempt under Schedule 2, and perhaps we can look at that again. I see that there is a good deal of anxiety on the plywood front, as it were, about how far the scheme will affect the price of building. There will be a small effect on the price of plywood as of other articles affected by import deposits, but plywood is only one item in a building project and it need not necessarily represent more than a fraction of the cost of a building, save in the most unusual circumstances. Therefore, we are dealing here with a tiny fraction of a tiny fraction. One is not justified in being alarmed to an undue extent. I need hardly repeat my regret that this is necessary, but necessary it is in the circumstances of our export-import situation and for a short period of time.

Now, boatyards. The answer will depend on the boatyard, the size of ship and the like, but small boats are unlikely to qualify under any plywood exemption. Again, the smaller the boat, the less the value of the plywood and the more miniscule the deposit effect on the cost of the boat.

Certain specific problems have been raised such as that faced by coopers, to whom the hon. Member for Banff (Mr. W. H. K. Baker) referred. I sincerely sympathise particularly with smaller firms of this kind which are not accustomed to making detailed financial manipulations in the course of their business and are not endowed with large sums of liquid capital. I do not give them false reassurance, but I give them this advice. They ought to consult their bank manager. In certain cases he will at the early stages of the scheme be able to help them. In other cases he will be able to advise them where they can get the money. Perhaps I might repeat again what may not be understood by these firms, that they will be in a position to offer whoever lends them the money for the deposit a gilt-edged security of guaranteed six months' date. With a little friendly advice from their bank manager, lawyer, or whoever advises them, they ought to be able to raise the money so far as it is required beyond their liquid funds.

I accept that this is an inconvenience. I greatly regret it. But the point here—I urge it upon the Committee—is that in imposing this inconvenience upon importers we are imposing the least inconvenience in any scheme intended to affect imports which we could bring in.

I am willing to suffer all the points about the interesting anomaly as between mushroom spawn and caviare. I was not unimpressed by the case for mushroom spawn. Caviare, unhappily, is another matter. I cannot withdraw caviare from the list, even if I were so minded, as the Ways and Means Resolution has obviously been drawn by a Parliamentary draftsman addicted to it. It is not within the power of the Government now to withdraw caviare from the exemption list.

9.30 p.m.

Sir K. Joseph

These Amendments could hardly have demonstrated more clearly the large and small scale effects of the stroke of lightning which the Bill has imposed on all sizes and shapes of British industry.

First, we have had demonstrated, as my hon. Friend the Member for Oswestry (Mr. Biffen) pointed out, the absurdities into which the Government are being led by trying to decide where a raw material ceases, because of the slightly less or slightly greater processing, to be a raw material. Then, when we have accepted that that absurdity runs through the Bill and the Schedule, we come to the severe impact on small scale industry illustrated by the admirable speeches of my hon. Friends the Members for Maidstone (Mr. John Wells), Aldershot (Sir E. Errington), Walthamstow, West (Mr. Silvester) and Banff (Mr. W. H. K. Baker).

The speech of my hon. Friend the Member for Banff showed how severe the impact of the Bill can be in a firm devotedly and competently getting on with its business to the benefit of all concerned with it and of the country, suddenly to find the whole environment in which it works altered. I hope that my hon. Friend will advise the firm in his constituency to which he referred to seek financial advice urgently in the light of what the Financial Secretary said.

I suppose that we have to express modified gratitude to the Financial Secretary for saying that he will look urgently at the formidable case made by my hon. Friends the Members for Maidstone, Aldershot, and Walthamstow, West for what cannot be anything but a raw

material. I was glad that the hon. Gentleman expressed some sympathy with the case put forward by my hon. Friend the Member for Hemel Hempstead (Mr. Allason).

At the other end of the scale of size, we come to the timber and plywood Amendment put so forcefully and clearly by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro). Whether one considers the credit squeeze results or the import squeeze results of this Bill, one is bound to recognise, and the Government must recognise that the effect of the exclusion of plywood from the list of exemptions can only be to reduce the amount of house building and increase its cost. I should have thought that that was a result which the Government would wish to avoid, even if there were to be some inroads into the range of non-exempted goods.

It is said that stocks of plywood in this country are low at the moment and that, therefore, unless the building and furniture industries are to suffer severely there will have to be considerable imports, which, if the money can be found for the deposit, are bound to increase the price of goods.

We have had an excellent debate in which some of the absurdities of the Bill have been shown. I very much hope that, despite the sympathy of the Financial Secretary, my hon. Friends will support the Amendment by calling for a vote.

Question put, That the Amendment be made:—

The Committee divided: Ayes 144, Noes 213.

Division No 24.] AYES [9.24 p.m.
Alison, Michael (Barkston Ash) Burden, F. A. Elliott, R. W.(N 't'tle-upon-Tyne, N.)
Atkins, Humphrey (M't'n & M'd'n) Campbell, B. (Oldham, W.) Emery, Peter
Awdry, Daniel Campbell, Gordon (Moray & Nairn) Errington, Sir Eric
Baker, W. H. K. (Banff) Carlisle, Mark Eyre, Reginald
Beamish, Col. Sir Tufton Channon, H. P. G. Farr, John
Bell, Ronald Clark, Henry Fletcher-Cooke, Charles
Bennett, Dr. Reginald (Cos. & Fhm) Clegg, Walter Fortescue, Tim
Bitten, John Cooke, Robert Fraser, Rt. Hn. Hugh (St'fford & Stone)
Blaker, Peter Costain, A. P. Giles, Rear-Adm. Morgan
Boardman, Tom (Leicester, S. W.) Crowder, F. P. Gilmour, Ian (Norfolk, C.)
Body, Richard Currie, G. B. H. Gilmour, Sir John (Fife, E.)
Boyd-Carpenter, Rt. Hn. John Dalkeith, Earl of Glover, Sir Douglas
Boyle, Rt. Hn. Sir Edward Davidson, James (Aberdeenshire, W.) Goodhart, Philip
Braine, Bernard d'Avigdor-Goldsmid, Sir Henry Cower, Raymond
Bromley-Davenport, Lt.-Col. Sir Walter Dean, Paul (Somerset, N.) Grant-Ferris, R.
Bruce-Gardyne, J. Deedes, Rt. Hn. W. F. (Ashford) Gresham Cooke, R.
Buchanan-Smith, Alick (Angus, N & M) Dodds-Parker, Douglas Grimond, Rt. Hn, J.
Buck, Antony (Colchester) Drayson, G. B. Gurden, Harold
Bullus, Sir Eric Eden, Sir John Hall, John (Wycombe)
Hall-Davis, A. G. F. Maclean, Sir Fitzroy Russell, Sir Ronald
Hamilton, Michael (Salisbury) McNair-Wilson, Patrick Scott, Nicholas
Harrison, Brian (Maldon) Maginnis, John E. Shaw, Michael (Sc'b'gh & Whitby)
Harrison, Col. Sir Harwood (Eye) Maude, Angus Silvester, Frederick
Harvey, Sir Arthur Vere Maudling, Rt. Hn. Reginald Sinclair, Sir George
Heseltine, Michael Mawby, Ray Smith, Dudley (W'wick & L'mington)
Hiley, Joseph Maxwell-Hyslop, R. J. Smith, John (London & W'minster)
Hill, J. E. B. Mills, Peter (Torrington) Speed, Keith
Hirst, Geoffrey Mills, Stratton (Belfast, N.) Steel, David (Roxburgh)
Holland, Philip Morgan, Geraint (Denbigh) Stoddart-Scott, Col. Sir M.
Hordern, Peter Munro-Lucas-Tooth, Sir Hugh Summers, Sir Spencer
Hunt, John Murton, Oscar Taylor, Sir Charles (Eastbourne)
Hutchison, Michael Clark Nabarro, Sir Gerald Taylor, Frank, (Moss Side)
Iremonger, T. L. Noble, Rt. Hn. Michael Temple, John M.
Irvine, Bryant Godman (Rye) Onslow, Cranley Tilney, John
Jenkin, Patrick (Woodford) Osborn, John (Hallam) Waddington, David
Jennings, J. C. (Burton) Osborne, Sir Cyril (Louth) Wainwright, Richard (Colne Valley)
Johnson Smith, C. (E. Grinstead) Page, Graham (Crosby) Weatherill, Bernard
Jopling, Michael Peel, John Webster, David
Joseph, Rt. Hn. Sir Keith Pink, R. Bonner Wells, John (Maidstone)
Kaberry, Sir Donald Powell, Rt. Hn. J. Enoch Whitelaw, Rt. Hn. William
Kerby, Capt. Henry Price, David (Eastleigh) Wiliams, Donald (Dudley)
Kershaw, Anthony Pym, Francis Wills, Sir Gerald (Bridgwater)
Kimball, Marcus Quennell, Miss J. M. Winstanley, Dr. M. P.
King, Evelyn (Dorset, S.) Ramsden, Rt. Hn. James Wolrige-Gordon, Patrick
Kirk, Peter Renton, Rt. Hn. Sir David Worsley, Marcus
Knight, Mrs. Jill Rhys Williams, Sir Brandon
Legge-Bourke, Sir Harry Rodgers, Sir John (Sevenoaks) TELLERS FOR THE AYES:
Lloyd, Ian (P'tsm'th, Langstone) Rossi, Hugh (Hornsey) Mr. Jasper More and
Lubbock, Eric Royle, Anthony Mr. Hector Monro.
MacArthur, Ian
NOES
Albu, Austen Dewar, Donald Howarth, Robert (Bolton, E.)
Allaun, Frank (Salford, E.) Diamond, Rt. Hn. John Howell, Denis (Small Heath)
Alldritt, Walter Dickens, James Huckfield, Leslie
Allen, Scholefield Dobson, Ray Hughes, Rt. Hn. Cledwyn (Anglesey)
Anderson, Donald Doig, Peter Hughes, Hector (Aberdeen, N.)
Archer, Peter Dunn, James A. Hughes, Roy (Newport)
Ashley, Jack Eadie, Alex Hunter, Adam
Ashton, Joe (Bassetlaw) Edelman, Maurice Hynd, John
Atkins, Ronald (Preston, N.) Edwards, Robert (Bilston) Jackson, Peter M. (High Peak)
Atkinson, Norman (Tottenham) Edwards, William (Merioneth) Janner, Sir Barnett
Barnett, Joel Ellis, John Jay, Rt. Hn. Douglas
Beaney, Alan Ennals, David Jeger, Mrs. Lena (H'b'n & St. P'cras, S.)
Benn, Rt. Hn. Anthony Wedgwood Evans, Fred (Caerphilly) Jenkins, Hugh (Putney)
Bidwell, Sydney Evans, Gwynfor (C'marthen) Johnson, James (K'ston-on-Hull, W.)
Bishop, E. S. Evans, Ioan L. (Binn'h'm, Yardley) Jones, Dan (Burnley)
Blackburn, F. Faulds, Andrew Jones, T. Alec (Rhondda, West)
Blenkinsop, Arthur Fernyhough, E. Kenyon, Clifford
Boardman, H. (Leigh) Finch, Harold Lawson, George
Booth, Albert Fitch, Alan (Wigan) Leadbitter, Ted
Braddock, Mrs. E. M. Fletcher, Rt. Hn. Sir Eric (Islington, E.) Ledger, Ron
Brooks, Edwin Fletcher, Ted (Darlington) Lee, Rt. Hn. Jennie (Cannock)
Broughton, Dr. A. D. D. Foley, Maurice Lee, John (Reading)
Brown, Hugh D. (G'gow, Provan) Ford, Ben Lever, Harold (Cheatham)
Brown, R. W. (Shoreditch & F'bury) Forrester, John Lewis, Arthur (W. Ham, N.)
Buchanan, Richard (G'gow, Sp'burn) Fowler, Gerry Lewis, Ron (Carlisle)
Butler, Herbert (Hackney, C.) Freeson, Reginald Lomas, Kenneth
Butler, Mrs. Joyce (Wood Green) Galpern, Sir Myer Loughlin, Charles
Callaghan, Rt. Hn. James Gardner, Tony Lyons, Edward (Bradford, E.)
Cant, R. B. Garrett, W. E. McBride, Nell
Carmichael, Neil Gordon Walker, Rt. Hn. P. C. Macdonald, A. H.
Castle, Rt. Hn. Barbara Cray, Dr. Hugh (Yarmouth) McGuire, Michael
Chapman, Donald Greenwood, Rt. Hn. Anthony Mackintosh, John P.
Coe, Denis Grey, Charles (Durham) McMillan, Tom (Glasgow, C.)
Coleman, Donald Griffiths, David (Rother Valley) MacPherson, Malcolm
Corbet, Mrs. Freda Griffiths, Will (Exchange) Mahon, Peter (Preston, S.)
Craddock, George (Bradford, S.) Hamilton, James (Bothwell) Mahon, Simon (Bootle)
Cawshaw, Richard Hamilton, William (Fife, W.) Manuel, Archie
Grossman, Rt. Hn. Richard Hamling, William Mapp, Charles
Cullen, Mrs. Alice Hannan, William Marks, Kenneth
Dalyell, Tam Harper, Joseph Mason, Rt. Hn. Roy
Darling, Rt. Hn. George Harrison, Walter (Wakefield) Mendelson, John
Davies, Ednyfed Hudson (Conway) Haseldine, Norman Mikardo, Ian
Davies, G. Elfed (Rhondda, E.) Hazell, Bert Millan, Bruce
Davies, Dr. Ernest (Stretford) Henig, Stanley Milne, Edward (Blyth)
Davies, Harold (Leek) Herbison, Rt. Hn. Margaret Morgan, Elystan (Cardiganshire)
Davies, Ifor (Gower) Hilton, W. S. Morris, Alfred (Wythenshawe)
Davies, S. O. (Merthyr) Hobden, Dennis Morris, Charles R. (Openshaw)
Delargy, Hugh Horner, John Morris, John (Aberavon)
Dell, Edmund Houghton, Rt. Hn. Douglas Moyle, Roland
Dempsey, James Neal, Harold
Newens, Stan Robertson, John (Palsley) Tuck, Raphael
Noel-Baker, Rt. Hn. Philip (Derby, S.) Roebuck, Roy Urwin, T. W.
O'Malley, Brian Rogers, George (Kensington, N.) Varley, Eric G.
Orme, Stanley Rose, Paul Wainwright, Edwin (Dearne Valley)
Owen, Dr. David (Plymouth, S'tn) Ross, Rt. Hn. William Wallace, George
Padley, Walter Rowlands, E. Watkins, David (Consett)
Page, Derek (King's Lynn) Shaw, Arnold (Ilford, S.) Watkins, Tudor (Brecon & Radnor)
Paget, R. T. Sheldon, Robert Wellbeloved, James
Palmer, Arthur Shore, Rt. Hn. Peter (Stepney) Wells, William (Walsall, N.)
Park, Trevor Short, Mrs. Renée (W'hampten, N. E.) Whitlock, William
Parker, John (Dagenham) Silkin, Rt. Hn. John (Deptford) Willey, Rt. Hn. Frederick
Pavitt, Laurence Silverman, Julius Williams, Alan (Swansea, W.)
Pearson, Arthur (Pontypridd) Slater, Joseph Williams, Clifford (Abertillery)
Peart, Rt. Hn. Fred Small, William Williams, Mrs. Shirley (Hitchin)
Pentland, Norman Snow, Julian Willis, Rt. Hn. George
Perry, Ernest G. (Battersea, S.) Spriggs, Leslie Wilson, William (Coventry, S.)
Perry, George H. (Nottingham, S.) Steele, Thomas (Dunbartonshire, W.) Woodburn, Rt. Hn. A.
Prentice, Rt. Hn. R. E. Summerskill, Hn. Dr. Shirley Woof, Robert
Price, William (Rugby) Swain, Thomas
Randall, Harry Symonds, J. B. TELLERS FOR THE NOES:
Rankin, John Taverne, Dick Dr. M. S. Miller and
Roberts, Albert (Normanton) Tinn, James Mr. Ernest Armstrong.
Roberts, Rt. Hn. Goronwy Tomney, Frank
Mr. Charles Fletcher-Cooke (Darwen)

I beg to move Amendment No. 95, in page 7, line 13, at end insert:

Printing paper within Chapter 48.

The Deputy Chairman (Mr. Harry Gourlay)

With this Amendment we can also discuss Amendment No. 131, in page 7, line 13, at end insert:

48.09 … … Building board of wood pulp or of vegetable fibre, whether or not bonded with natural or artificial resins or with similar binders.

9.45 p.m.

Mr. Fletcher-Cooke

These two Amendments deal with paper, that is to say, one of the basic vehicles of knowledge, and we propose that printing paper within Chapter 48 should be excluded from the operation of the Bill.

I would call the attention of the Committee to what is already excluded, which is easily visible on page 7 of the Bill, for the Schedule excludes Paper-making materials (pulp and waste paper) that is to say, the basic raw material of the communication of the written word, and also Books, newspapers, maps, charts, manuscripts, typescripts, stamps, etc. which, I suppose, are the end products of the written word.

Then it goes on, very mysteriously, to exclude a whole variety of types of the printed word, some of which, I should have thought, ought to have been caught. They are: Trade advertising material … being material the primary purpose of which is to stimulate travel outside the United Kingdom. Trade advertising material within 49.11, being publications, illustrated or not, the primary purpose of which is to stimulate study or travel outside the United Kingdom … and less than full-size reproductions thereof … parts of books or booklets in the form of printed pictures or illustrations not bearing a text and less than full-size reproductions thereof … ". It is difficult to discover what is behind this. I assume that we have entered into an international undertaking by which we do not impose duty, if that be the word, on trade advertising material being publications whose primary purpose is to stimulate travel outside the United Kingdom. Unless we are obligated so to do, it seems incredible that we should exempt from a Bill designed to protect our balance of payments printed material designed to stimulate travel outside the United Kingdom.

Will the Minister explain the exact terms of this supposed international obligation by which, in a Schedule more or less exclusively reserved to raw materials, there appears the extraordinary feature that printed booklets and brochures designed to induce our citizens to spend their holidays abroad can be imported without being subject to deposit. The situation is paradoxical. Will the Minister identify those obligations and their terms? Do they say that no duty or import duty or charge should be imposed?

The use of those words would cast an interesting reflection upon the speech yesterday of the right hon. and learned Attorney-General. If all that those obligations say is that no duty or import duty or charge for Customs may be imposed, the Minister of State is a sufficiently good lawyer to realise that that casts an interesting and, maybe, sinister reflection upon the advice given yesterday to the Committee by the Attorney-General. Otherwise, the presence of this exception is ludicrous, to put it no higher.

The purpose of Amendment No. 95 is this. If the raw materials of paper making under line 12 on page 7 are excluded, and if the finished product of paper, namely, books, newspapers, maps, charts, manuscripts, typescripts, stamps, etc. are excluded, it is quite inconsistent that the middle range, namely, printing paper, should attract the deposit.

The former Chancellor of the Exchequer, now the Home Secretary, who conducted the 1964 surcharge Bill through the House of Commons will no doubt find echoes in this argument, since it was deployed by my right hon. Friend the Leader of the Opposition in those distant days in almost exactly the same words, namely, if one is excluding from the operation of the various barriers the raw materials of the printed word, and the printed word, it is absurd to exclude the intermediates, that is to say, printing paper within Chapter 48.

That, quite briefly and, I hope, fairly cogently, is the case that I wish to advance on Amendment 95. We would like to include newsprint. I am not sure about the complexities of the various categorisations in the Her Majesty's Customs and Excise Tariff and the complications of Chapters 47, 48 and 49. But we have done it, and I am sure that the Minister will not take that point.

As everyone knows, the newspaper industry is in financial difficulties. Importers of newsprint say that interest at 8 per cent. on the deposit will add 24s. to the price of one ton of newsprint. Added to other rises in costs, it will mean that newspapers will have to put up their prices, and we know that the growth of monopoly and the decrease in the number of newspapers available exercises public concern.

I hope that the Minister will deal with the effect of the deposit upon newspapers and other media of public information and the dissemination of news. That increase in the price of a ton of newsprint strikes me as serious in the context of the newspaper industry at the present time.

I come then to Amendment No. 131, which deals with building board of wood pulp or of vegetable fibre, whether or not bonded with natural or artificial resins or with similar binders. I should have thought that it is a raw material in every sense of the word. Fibre building board is reconstituted wood and is basically a raw material. Hardboard is used extensively by the construction industry for flush doors, kitchen fitments, renovations and maintenance work. The production of fibre building board in the United Kingdom is about 10 per cent. of our consumption and falls far short of requirements. If the Amendment is not accepted, the inevitable effect is that building costs will go up, and one socially undesirable feature at the moment is that building costs should increase.

There, in a nutshell, is this group of Amendments—[An HON. MEMBER: "A nutshell?"] Yes, a nutshell. I think that I may say to the Home Secretary, who has seen this scenario through several times, that I have been relatively brief in moving these Amendments.

In the history of this country there have never been taxes on knowledge to the extent that the Government have imposed by putting deposits, surcharges, and so on, on printing paper. This demand for an exception is quite outside the general run of arguments about polymers, billets, or whatever it may be. Material for the dissemination of the printed word should be exempt. The Government have recognised this by exempting end products, like books, newspapers, maps, charts, manuscripts, typescripts, and stamps, including these ridiculous brochures to entice our countrymen to take their holidays abroad. They also exempt paper-making materials, including pulp and waste paper. Yet they claw out the middle range of intermediates, and that takes some explanation from the Minister of State. I hope that he will give it to the Committee.

Sir Harry Legge-Bourke (Isle of Ely)

In the early hours of this morning I attempted to extract from the Minister of State some comment on the philosophy underlying these exemptions. He chose on that occasion to ignore anything that I said. I hope that tonight he will not do the same thing.

Before proceeding further with these Amendments, I think that we ought to know what is in the Government's mind about the philosophy on which they are basing these exemptions. The difference between an absolute raw material and a partly finished material which is essential to a completed product, but which, partly completed, is useless for any other purpose, seems to be so fine that we can virtually lump the whole lot together as raw material.

I do not know what else can be done with printing paper, except eventually to print upon it—[Interruption.] I suppose that a man could paper his house with it if he chose to do so, but I have a feeling that the general atmosphere would become a little monotonous as a result of that exercise.

By looking at the original exemptions I have been endeavouring to discover the underlying philosophy in the Government's mind in making them. So far as I can see, it is basically, first, foodstuffs; secondly, works of art, such things as pearls and jewellery and matters of that kind; and, thirdly the necessary basic materials from which a manufacturer eventually produces something which can be sold by this country.

I should think that printing paper naturally fell in the third category. I may conceivably have a remote interest in printing paper in that I am a director of a company which does a lot of offset lithographic printing. However, from this definition I am not sure whether this is so. It is not newsprint as we understand it that I am interested in, but other forms of paper on which printing takes place, so I declare an interest.

I find it hard to understand why the Government should at one moment say that woven jute or one or two other substances which are already exempted in the Schedule should be exempt if they are not prepared to accept the Amendment.

What disturbs me most is that information is already coming in on various fronts indicating that companies affected by this new legislation by having to put down deposits are already starting to put up prices to cover interest free loans being extracted from them by the Government for a period of six months. The Government will only have themselves to blame if our balance of payments situation is adversely affected, because they are making it more difficult for exporters to export the products which rely on partly finished materials coming in. If they impose this loan obligation—it is a loan, not a Customs duty; I shall never agree that it is other than a compulsory loan to the Government—they will only have themselves to blame if they further damage the economy of the country.

Mr. R. T. Paget (Northampton)

I am much more concerned about the exclusions than the inclusions. Surely we have reached the point at which the idea that the Press conveys news is a delusion. People get their news from the B.B.C. and the television. They do not believe a word of the news they read in newspapers, because, quite rightly, they know that it is angled. What the Press conveys to them is sex, crime, scandal and Comment, and I do not see why those should not be taxed.

10.0 p.m.

Sir Douglas Glover (Ormskirk)

The hon. and learned Member for Northampton (Mr. Paget) is far too modest, because very often when I read my papers I note his comments, usually hostile to the Government of the day, and agree with every word he says. The Press has an enormous job to do in reporting comments of the so-called supporters of the Government. It helps the nation to form its conclusion about how the Government are running the country, and it would be deplorable if the hon. and learned Gentleman was not allowed to be so self-destructive to the Government whom he helped to put into office, much to his regret.

What worries me about the Bill is that a good deal of the opposition has been hamstrung and spoiled by the original Ways and Means Resolution. There are some Members on this side of the Committee who, although they are critical of any interference with international trade, understand that when there is a crazy lunatic driving the car, and it is running downhill headlong into the sea, it is not a bad thing occasionally to put the brakes on.

Under the Ways and Means Resolution, whereas the Government are bound to resist the Amendment to the hilt because it will reduce the amount of money which they will control as a result of the Bill, we on this side are inhibited from moving an Amendment to take out of the exemption list certain things which, if we are to have a Bill of this sort, are crazy.

We are inhibiting learning, communication and study by a tax on newsprint and paper, but at the same time we have exempted the importation of caviare, and foie gras from Strasbourg. All the luxury foods are in some strange way now considered by the Labour Party to be the staple diet of the public, and every council house is now using these strange viands as the staple diet and no longer eating scrambled eggs and sauce for breakfast. Instead, there is a diet of caviare and foie gras.

Mr. Houghton

The hon. Gentleman will realise that peanuts are also exempt.

Sir D. Glover

The right hon. Gentleman knows that his comments and interjections in the House are always earthshaking, but he was standing on a bed of peanuts when he made his interjection—I am not usually unkind—and he fell flat on his back when he made. Peanuts are exempt, but are they an essential part of the diet of the nation?

When I first got the Bill and looked through it, I thought that the list of exemptions was the list of the goods in respect o which the Government were going to insist on a deposit, because in the minds of the great mass of the British public half the items in the list are not essential. We are here dealing with an Amendment which seeks to remove an impost on something which it is in the national interest to import without any let or hindrance. Surely no democratic society thinks it is a good thing, despite what the hon. and learned Member for Northampton said about the B.B.C. being the only proper forum, to inhibit in any way the dissemination of news by the Press? I still think that the national local and weekly Press has an enormous rôle to carry out in this country. This Bill will inhibit the dissemination of knowledge, yet the same measure allows exemption; for luxury imports of so-called foods. This is supposed to be a Government which is looking after the interests of the people and not of the interests of those who are better off.

I am not hostile to the Government trying to do something about our import bill and the situation which largely has been brought about by their mismanagement of the economy, but it has reached a stage at which urgent action is needed. As usual, and this has happened ever since 1964, they are doing it in the wrong way. They are trying to stop the import of vital machinery and putting an impost of 50 per cent. deposit on it while allowing luxury foods to be brought in although that is not what they intended.

We cannot bring forward reasoned Amendments to provide a better balance because, if we did so, they would be out of order in view of the Ways and Means Resolution. The whole debate has been very frustrating because it is all one-sided. All that we can do is to bring forward Amendments to increase the list of exemptions; we cannot balance that by deleting items from the list. This has made for a sterile debate which is not helpful to the economy nor constructive from the point of view of the Government. The Government are to blame because of the way in which they introduced the Ways and Means Resolution.

Mr. Taverne

I turn, first, to the point made by the hon. Member for Isle of Ely (Sir H. Legge-Bourke). I apologise for not answering it early this morning, but it related rather more to the Schedule than to the Amendment we were then discussing. It is a point which has been covered in discussion of earlier Amendments to the Schedule. Since I want to deal with it specifically, I will say briefly what the basic theme of the Schedule is.

The Schedule is an attempt to reconcile two things which to some extent are in conflict. On the one hand, it is designed that this scheme should cause the minimum interference with commerce and industry. For this reason, certain particular categories of food, fuel and unmanufactured raw material have been totally exempted. On the other hand, it is also the desire of the scheme to cover as much of a group of products as possible and to reconcile these two objects, particular categories have been excluded.

Because there is to some extent conflict and in our debates some hon. Members have successfully made a case for exemption of particular cases, I cannot pretend that there are not anomalies. There are bound to be anomalies just as there are when one draws up a list of Purchase Tax exemptions or a list of differential tariffs. There are anomalies but one has all the time to preserve the basic intention of the scheme and not to narrow the scope because the scheme is a measure of credit control concerning a large number of goods.

The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) very forcefully exploited one of the obvious anomalies which appears in the scheme. Before dealing with that anomaly which relates to his first Amendment I shall briefly comment on his second Amendment. The same kind of considerations apply to the second as led us to reject other Amendments. Whatever the merits of an Amendment to exempt building board of wood pulp or vegetable fibre, these are processed goods, composed of wood pulp, fibre and other vegetable material reduced to a fibrous state and compressed into sheets. If this category were exempted it would clearly lead to claims for similar treatment of a wide variety of comparable articles of wood and paper which are subject to deposit, and the scope of the scheme would be much narrower.

But I think that the hon. and learned Member recognised that the stronger case related to the anomaly which he mentioned on the first Amendment. The anomaly does not arise out of the exclusion from the Schedule of printed paper—out of what is not exempted—but, as he stressed, from what is exempted. Printed paper is a fully manufactured product and, if it were exempted, it would create a contrast with other manufactured products. He himself pointed out that books and other forms of printed and publication material are exempted under the Schedule, so the argument to which I must address myself is why books and these other publications are exempt.

Books have always been treated in a somewhat special fashion. They were specially removed from the scope of Purchase Tax in a celebrated wartime debate. They are also the subject of a special international Convention. The hon. and learned Member asked whether I could refer to any such Convention, and I can. It is the same Convention which deals with the trade advertising material referred to. I cannot find that actual part of the Convention, but the operative part, which he wanted me to quote, is Article 1, which states: The Contracting States undertake not to apply customs duties or other charges on, or in connexion with, the importation of … Books, publications and documents which are listed, it says, in annex A of the Convention.

So books have always been specially treated for tax purposes. Books are also the subject of an international U.N.E.S.C.O. Convention. We are not compelled by that Convention to exempt books in this scheme, but books were exempted under the surcharge arrangements four years ago, because there was an international obligation to do so. We are not compelled to exempt books, but we did decide, on balance, since they were specially treated in the way of Purchase Tax and were the subject of this Convention, to create what I accept is a totally anomalous position for them within this Schedule as a special exemption. With the same Convention applying to the other kind of material as well, it was decided that books and trade advertising material should be within the exemption.

On the other question, the effect on newspapers, that is no different from the effect on anything else. The extra cost which will have to be borne will amount to the interest on the deposits which the newspaper companies will have to forgo or the amount which they will have to pay if they borrow the money. This will be about 2 or 2½ per cent. That is why books are within this exemption. However, since it is not open to us to alter the exemptions in the Schedule, and we must have regard to what it is now proposed to exempt, the same arguments advanced in the past apply also to this Amendment.

10.15 p.m.

Mr. Fletcher-Cooke

The Minister was obliged to say that he was not compelled to exclude what he has excluded in the Schedule, otherwise he would have cast great doubt on the advice given to the Committee yesterday by the Attorney-General. I understand why he used that form of words. But it is not persuasive to say that the Government would voluntarily have excluded from the import deposit advertising material from abroad the primary purpose of which is to stimulate study or travel outside the United Kingdom". I do not believe that any Government would have excluded such material from this deposit unless they were obliged to do so, otherwise it is totally contrary to the purposes of the Bill. Of course, the Minister is obliged to do so by the international Convention which he cited, which says that Customs duties or other charges on imports are not to be levied on such material—and that completely conflicts with the advice given by the Attorney-General yesterday that the Bill does not impose Customs duties or other charges on imports. This is the litmus paper, acid test of the degree to which that advice is compellable and persuasive.

We are not, however, dealing with that Amendment at the moment. We are dealing with whether exempting paper-making materials (pulp and waste paper) at the bottom of the scale, and exempting books, newspapers, maps, charts, manuscripts and typescripts not to mention material for publications, illustrated or not, the primary purpose of which is to stimulate travel outside the United Kingdom does not inevitably, in any proper balance of trade, involve the exemption of the intermediate printing paper—and of course it must. There is no logic in it if it does not.

This is a totally different matter from the other brave attempts to include materials which may not be absolutely and totally raw, but which are, neverthe-

less, intermediate raw materials. This is a tax on the written word and upon the dissemination of information. This is a tax which will raise the price of newsprint to newspapers by £24 a ton, a figure not denied by the Minister of State. It is, therefore, a tax which in the whole of the tradition of this country, even in wartime, as the Minister of State reminded us, we have rejected, and I do not see why we should now reverse that policy.

The hon. and learned Member for Northampton (Mr. Paget) said that the Press is ghastly, that no one believes it any longer and that the radio, the spoken or oral word, is much more trustworthy than the printed word. We prefer to allow the Press and the people to judge whether that is right or wrong. But let there be no doubt about it. This is a tax on the Press, a tax on knowledge. The Minister's attempts to defend it were not up to his usual very high level. He has a very difficult brief. He has a compulsion in respect of books, newspapers and brochures inducing our people to travel abroad. At the other end of the scale he has to exempt paper-making material. To try to squeeze out from the middle printing material, printing newspaper and newsprint is more than even he can do. I therefore recommend to my right hon. and hon. Friends that we register our protest in the Lobby.

Question put, That the Amendment be made:—

The Committee divided: Ayes 129, Noes 187.

Division No. 25.] AYES [10.20 p m.
Alison, Michael (Barkston Ash) Davidson, James (Aberdeenshire, W.) Hill, J. E. B.
Awdry, Daniel d'Avigdor-Goldsmid, Sir Henry Hirst, Geoffrey
Baker, W. H. K. (Banff) Dean, Paul Holland, Philip
Bennett, Dr. Reginald (Gos. & Fhm) Deedes, Rt. Hn. W. F. (Ashford) Hordern, Peter
Bitten, John Drayson, G. B. Hunt, John
Blaker, Peter Eden, Sir John Hutchison, Michael Clark
Boardman, Tom (Leicester, S. W.) Emery Peter Iremonger, T. L.
Body, Richard Errington, Sir Eric Irvine, Bryant Godman (Rye)
Boyd-Carpenter, Rt. Hn. John Eyre, Reginald Jenkin, Patrick (Woodford)
Boyle, Rt. Hn. Sir Edward Fletcher-Cooke, Charles Johnson Smith, G. (E. Grinstead)
Braise, Bernard Fraser, Rt. Hn. Hugh (St'fford & Stone) Jopling, Michael
Bruce-Gardyne, J. Giles, Rear-Adm. Morgan Joseph, Rt. Hn. Sir Keith
Buchanan-Smith, Alick (Angus, N & M) Gilmour, Ian (Norfolk, C.) Kershaw, Anthony
Buck, Antony (Colchester) Gilmour, Sir John (Fife, E.) Kimball, Marcus
Burden, F. A. Glover, Sir Douglas King, Evelyn (Dorset, S.)
Campbell, B. (Oldham, W.) Goodhart, Philip Kirk, Peter
Carlisle, Mark Gower, Raymond Kitson, Timothy
Channon, H. P. G. Grant-Ferris, R. Knight, Mrs. Jill
Clark, Henry Gresham Cooke, R. Legge-Bourke, Sir Harry
Clegg, Walter Gurden, Harold Lloyd, Ian (P'tsm'th, Langstone)
Cooke, Robert Hall, John (Wycombe) Longden, Gilbert
Costain, A. P. Hall-Davis, A. G. F. Lubbock, Eric
Crowder, F. P. Harrison, Col. Sir Harwood (Eye) Mackenzie, Alasdair (Ross & Crom'ty)
Currie, G. B. H. Harvey, Sir Arthur Vere Maclean, Sir Fitzroy
Dalkeith, Earl of Hiley, Joseph McNair-Wilson, Patrick
Maude, Angus Quennell, Miss J. M. Temple, John M.
Maudling, Rt. Hn. Reginald Renton, Rt. Hn. Sir David Tilney, John
Mawby, Ray Rhys Williams, Sir Brandon Turton, Rt. Hn. R. H.
Maxwell-Hyslop, R. J. Rodgers, Sir John (Sevenoaks) Vickers, Dame Joan
Mills, Peter (Torrington) Rossi, Hugh Waddington, David
Mills, Stratton (Belfast, N.) Royle, Anthony Wainwright, Richard (Colne Valley)
Monro, Hector Russell, Sir Ronald Weatherill, Bernard
Morgan, Geraint (Denbigh) Scott, Nicholas Webster, David
Munro-Lucas-Tooth, Sir Hugh Shaw, Michael (Sc'b'gh & Whitby) Wells, John (Maidstone)
Murton, Oscar Silvester, Frederick Whitelaw, Rt. Hn. William
Nabarro, Sir Gerald Sinclair, Sir George Williams, Donald (Dudley)
Noble, Rt. Hn. Michael Smith, Dudley (W'wick & L'mington) Winstanley, Dr. M. P.
Onslow, Cranley Smith, John (London & W'minster) Wolrige-Gordon, Patrick
Osborn, John (Hallam) Speed, Keith Worsley, Marcus
Page, Graham (Crosby) Steel, David (Roxburgh) Wright, Esmond
Page, John (Harrow, W.) Stoddart-Scott, Col. Sir M.
Pink, R. Bonner Summers, Sir Spencer TELLERS FOR THE AYES:
Powell, Rt. Hn. J. Enoch Taylor, Sir Charles (Eastbourne) Mr. R. W. Elliott and
Price, David (Eastleigh) Taylor, Frank (Moss Side) Mr. Jasper More.
Pym, Francis
NOES
Albu, Austen Fernyhough, E. MacPherson, Malcolm
Allaun, Frank (Salford, E.) Fitch, Alan (Wigan) Mahon, Peter (Preston, S.)
Alldritt, Walter Fletcher, Rt. Hn. Sir Eric (Islington, E.) Mahon, Simon (Bootle)
Allen, Scholefield Fletcher, Ted (Darlington) Manuel, Archie
Anderson, Donald Foley, Maurice Mapp, Charles
Archer, Peter Forrester, John Marks, Kenneth
Ashley, Jack Fowler, Gerry Mason, Rt. Hn. Roy
Ashton, Joe (Bassetlaw) Freeson, Reginald Mendelson, John
Atkins, Ronald (Preston, N.) Galpern, Sir Myer Mikardo, Ian
Atkinson, Norman (Tottenham) Gardner, Tony Millan, Bruce
Barnett, Joel Garrett, W. E. Milne, Edward (Blyth)
Beaney, Alan Gordon Walker, Rt. Hn. P. C. Morgan, Elystan (Cardiganshire)
Benn, Rt. Hn. Anthony Wedgwood Gray, Dr. Hugh (Yarmouth) Morris, Alfred (Wythenshawe)
Bidwell, Sydney Greenwood, Rt. Hn. Anthony Morris, Charles R. (Openshaw)
Bishop, E. S. Gregory, Arnold Morris, John (Aberavon)
Blackburn, F. Grey, Charles (Durham) Moyle, Roland
Blenkinsop, Arthur Griffiths, David (Rother Valley) Mulley, Rt. Hn. Frederick
Booth, Albert Griffiths, Will (Exchange) Noel-Baker, Rt. Hn. Philip (Derby, S.)
Boston, Terence Hamilton, James (Bothwell) O'Malley, Brian
Braddock, Mrs. E. M. Hamilton, William (Fife, W.) Orme, Stanley
Brooks, Edwin Hamling, William Owen, Dr. David (Plymouth, S'tn)
Broughton, Dr. A. D. D. Hannan, William Page, Derek (King's Lynn)
Brown, Hugh D. (G'gow, Provan) Harper, Joseph Paget, R. T.
Brown, Bob (N'c'tle-upon-Tyne, W.) Harrison, Walter (Wakefield) Palmer, Arthur
Brown, R. W. (Shoreditch & F'bury) Hart, Rt. Hn. Judith Park, Trevor
Buchanan, Richard (G'gow, Sp'burn) Haseldine, Norman Parker, John (Dagenham)
Butler, Herbert (Hackney, C.) Hazell, Bert Pearson, Arthur (Pontypridd)
Butler, Mrs. Joyce (Wood Green) Herbison, Rt. Hn. Margaret Pearl, Rt. Hn. Fred
Callaghan, Rt. Hn. James Hobden, Dennis Perry, Ernest G. (Battersea, S.)
Cant, R. B. Horner, John Perry, George H. (Nottingham, S.)
Carmichael, Neil Houghton, Rt. Hn. Douglas Prentice, Rt. Hn. R. E.
Castle, Rt. Hn. Barbara Howarth, Robert (Bolton, E.) Price, William (Rugby)
Chapman, Donald Howell, Denis (Small Heath) Roberts, Albert (Norrnanton)
Coe, Denis Huckfield, Leslie Roberts, Rt. Hn. Goronwy
Corbet, Mrs. Freda Hughes, Emrys (Ayrshire, S.) Roebuck, Roy
Crawshaw, Richard Hughes, Roy (Newport) Rogers, George (Kensington, N.)
Cullen, Mrs. Alice Hunter, Adam Rose, Paul
Dalyell, Tam Jackson, Peter M. (High Peak) Ross, Rt. Hn. William
Davies, Ednyfed Hudson (Conway) Janner, Sir Garnett Rowlands, E.
Davies, G. Elfed (Rhondda, E.) Jay, Rt. Hn. Douglas Shaw, Arnold (Ilford, S.)
Davies, Dr. Ernest (Stretford) Jeger, Mrs. Lena (H'b'n & St. P'cras, S.) Sheldon, Robert
Davies, Ifor (Gower) Johnson, James (K'ston-on-Hull, W.) Shore, Rt. Hn. Peter (Stepney)
Davies, S. O. (Merthyr) Jones, Dan (Burnley) Short, Mrs. Rende (W'hampton, N. E.)
Delargy, Hugh Jones, T. Alec (Rhondda, West) Silkin, Rt. Hn. John (Deptford)
Dell, Edmund Kenyon, Clifford Silverman, Julius
Dempsey, James Lawson, George Slater, Joseph
Dewar, Donald Leadbitter, Ted Small, William
Diamond, Rt. Hn. John Ledger, Ron Snow, Julian
Dickens, James Lever, Harold (Cheetham) Steele, Thomas (Dunbartonshire, W.)
Dobson, Ray Lewis, Arthur (W. Ham, N.) Strauss, Rt. Hn. G. R.
Doig, Peter Lewis, Ron (Carlisle) Summerskill, Hn. Dr. Shirley
Dunn, James A. Lomas, Kenneth Swain, Thomas
Eadie, Alex Lyons, Edward (Bradford, E.) Taverne, Dick
Edelman, Maurice McBride, Neil Tinn, James
Ellis, John Macdonald, A. H. Urwin, T. W.
Ennals, David McGuire, Michael Varley, Eric G.
Evans, Fred (Caerphilly) Mackintosh, John P. Wainwright, Edwin (Deame Valley)
Evans, Gwynfor (C'marthen) Maclennan, Robert Wallace, George
Evans, Ioan L. (Birm'h'm, Yardley) MacMillan, Malcolm (Western Isles) Watkins, David (Consett)
Faulds, Andrew McMillan, Tom (Glasgow, C.) Wellbeloved, James
Wells, William (Walsall, N.) Willis, Rt. Hn. George
Willey, Rt. Hn. Frederick Wilson, William (Coventry, S.) TELLERS FOR THE NOES:
Williams, Alan (Swansea, W.) Woodburn, Rt. Hn. A. Dr. M. S. Miller and
Williams, Mrs. Shirley (Hitchin) Woof, Robert Mr. Ernest Armstrong.

10.30 p.m.

Mr. Blaker

I beg to move Amendment No. 62, in page 8, leave out lines 22 and 23 and insert:

Chapter 50 (all headings). Silk and waste silk.

The Deputy Chairman (Mr. Harry Gourlay): With this Amendment, we will take the Amendments, Nos. No. 76, in page 7, line 11, at end insert:

46.01 to 46.03 Plait, braid and straw hoods and braids and hoods made of man-made fibre.

No. 63, in page 8, line 23, at end insert:

Chapter 51 (all headings). Man-made fibres, continuous.

No. 124, in line 23, at end insert:

51.01 Yarn of man-made fibres (continuous) not put up for retail sale.

No. 64, in line 33, leave out 'and 55.04' and insert '55.04 and 55.05'.

No. 65, in line 34, after 'combed' insert: 'and cotton yarn, not put up for retail sale'.

No. 87, in line 47, after 'bags', insert 'and cotton mesh bags'.

Mr. Blaker

Amendments Nos. 62 and 63 raise the question of what is a raw material, and the items covered by both are the raw materials for some industries, even if many of them are not raw materials in the sense of having had no process applied to them. As an example, I will mention the manufacture of ties. Many hon. Members will have seen a letter from the Tie Manufacturers' Association setting out the problem. The manufacturers say that this is a highly specialised product and that the material cannot be replaced by British manufacturers whose capacity is fully utilised, and they therefore buy abroad because they have to do so.

They say, further, that the fabric represents 50 or 60 per cent. of the total cost of ties and they add that the industry consists of small manufacturers who, therefore, will suffer as much as anybody if not more than anybody from problems of liquidity.

Amendment No. 87, which stands in the name of my hon. Friend the Member for Maidstone (Mr. John Wells), relates to cotton mesh bags or nets. These are a finished product, but the fact that they are not exempted by the Schedule illustrates a further anomaly, because, if they are not exempted, there will be an effect on the price of food, because these nets or bags are used, I am told, only to wrap food for sale to the public, for instance, to wrap parsnips, carrots and so on, but not, so far as I am aware, cabbage.

I am also told that there is no substitute which is as good for this purpose and that jute bags, for example, which are exempted by the Schedule, are not so satisfactory, at least for this purpose. If we are not to include these cotton mesh bags in the exemptions, there will be an effect on the price of food to the public.

Mr. Drayson

This morning I raised the question of the problem faced by two firms in my constituency, a problem covered by Amendment No. 62 and others. The matter with which we are concerned is the extent to which yarn used in a manufacturing process can be regarded as a basic raw material.

The yarn with which one of the firms in my constituency is concerned is imported from Austria, but the firm tells me categorically that it would have no wish particularly to buy from Austria if it could get its requirements in the United Kingdom. It points out that this yarn is part Terylene, which has previously been exported from the United Kingdom, while the rest is Australian wool. The two are brought together in Austria and spun into yarn, which is then imported by my constituents, who tell me that they have firm contracts at fixed prices going right to the end of 1969 with delivery in November and December of that year.

The final product manufactured in my constituency from that yarn is light-weight tropical suitings for export. The company's export performance is 98 per cent. of total production. Now, it faces the problem of having to pay the import deposit on the yarn, the basic raw material which comes in from the Continent. Even if the goods which the company manufacturers are exported within less than the three months for which the deposit is paid, it sees little prospect of obtaining draw-back on that money.

I am encouraged by Government Amendment No. 73, and I hope to be told that this sort of case will be covered by it. This is a typical example of a material being imported with a view to re-export. The part of that Amendment which encourages me to think that it is covered is paragraph (1)(a): The Commissioners may remit import deposit payable in respect of any goods if satisfied—. (a) that it is intended to re-export the imported goods, or goods incorporating the imported goods, or goods manufactured or produced from the imported goods. That is precisely this case. Although the Terylene and wool have gone through certain spinning processes, the yarn is imported for the express purpose of re-export. As I have said, the company's export record is excellent.

The problem is accentuated because the company is working three shifts a day, something which successive Governments have urged the textile industry to do. It uses the yarn at a great rate, so that the import deposit will have a heavy impact, and it is anxious to hear at the earliest possible moment that the new charge will not, under the Government Amendment, actually fall upon it.

A further major problem confronting this company is that it is now embarking on a programme of re-equipment, and it cannot both carry through that programme and pay the import deposit. Which do the Government prefer? Do they want companies to modernise and re-equip, or do they want them to use their resources to pay the import deposit? In its letter to me, the company says: If we have to pay the deposit, we shall have to abandon the modernisation and re-equipment scheme". It goes on to say that its main competitors are in Germany, Japan and the United States, and it is having a hard struggle to keep ahead, though the present position is satisfactory. But it sees the import deposit scheme as a further handicap.

This is another example of the way in which the policies pursued by the Government act as a brake on progress and hamper our export programme. The firm is quite a small one, employing 100 people, but the cloth it manufactures is exported to the value of £1 million. In its letter to me the firm says: We think that we are making a useful contribution to the balance of payments. I should say that with 98 per cent. exports that firm is making an understatement, and that it is making an outstanding contribution to exports, and that the Board of Trade might consider the firm for the Queen's Award to Industry. If the Minister would like further details of this company's achievements, I shall be only too pleased to send them to him.

In its letter the firm goes on to say that its order books extends well into 1969, and the firm is prepared to give an undertaking to Customs and Excise that it will accept orders only for export, provided, of course, that it can get an assurance that it will not have to pay this import deposit. I cannot see how this firm, which has an outstanding export record, can assist the Government or the country any more than it is doing at present.

I hope, therefore, that the Government will find it possible to relieve this kind of yarn from the levy or, if that is not possible, to include firms with such export records as this firm has in the provisions of the Amendment to be moved by the Government later. When this import levy was imposed the firm asked me, "Do the Government really want us to export?" I am sure that we can assure the firm that the Government do want it to, but the Government are not giving very much encouragement to firms trying so hard to export.

I have another example of a firm—I am sure there must a vast number of similar examples in Yorkshire and Lancashire—which, because it cannot get a supply of yarn from the United Kingdom, has to go overseas for it. It tells me it despatched some samples of cloth to Denmark on 20th November in a 25s. postal packet and up to 29th November it had not be received.

I know that that does not really come within the scope of the Amendment, but it is an example of the difficulties which are being placed in the way of exporters, and they are entitled to ask the Government whether they will support them in this important work which they are doing.

Sir A. V. Harvey

I want to say a few words about the tie industry, because it plays an important rôle in my constituency. Macclesfield ties are known all over the world for their quality, and are making a very real contribution to our exports, particularly the high-quality ties. silk ties and others.

During the postwar Parliament, under the Attlee Government, ties got a poor deal from that Government, who, at one time, classified them as haberdashery so that they carried 100 per cent. Purchase Tax. I remember having a debate with the then Chancellor, Mr. Dalton, in the early hours of a morning, and eventually getting the tax reduced.

Raw silk and silk waste is a raw material and is not affected, but spun silk is, and 50 per cent. of it, I understand, comes from E.F.T.A. countries, mainly Switzerland. That material goes into ties made in this country.

I asked the hon. Member for Harrow, East (Mr. Roebuck) what tie he was wearing; he looked at the back and said, "Swiss". I think that hon. Members should wear British ties, good Macclesfield ties. The quality of the ties, and the materials, have changed considerably. Many ties are now made of synthetic materials. I do not know whether the Home Secretary wants to intervene. Perhaps he will tell us what tie he is wearing; it is probably a black one, in mourning for the Government. For over 50 years tie fabrics have been imported—

The Secretary of State for the Home Department (Mr. James Callaghan)

My tie is made of silk, in England.

10.45 p.m.

Sir A. V. Harvey

I am relieved to hear that.

Approximately 78 per cent. of tie fabrics are imported. In Macclesfield, some ties are made in larger factories, but many are made up in the homes of individuals, as they have been for a hundred years; firms put out the work to be done in homes, and great skill is shown in the making up of ties. These firms are in no financial position to put down the 50 per cent. import deposit required under the scheme; they cannot raise the money from banks as large companies can. They are faced with intense competition from France, Italy and other European countries; and exporting to North America is a tough business. I hope that the Government will give sympathetic consideration to this matter.

It seems to me that Ministers made up their minds 48 hours ago not to give way on anything. Is this a democracy, or not?

Mr. Hirst: Not!

Sir A. V. Harvey

What is the point of spending 48 hours in the House of Commons debating this when Ministers have decided beforehand to give away absolutely nothing? This is not the way to encourage industry. At the end of the day the Government rely on free enterprise to bring home the goods. Only by selling overseas at competitive prices goods which have been made here will the country solve its problems. These measures will put up the price of goods, certainly in the tie industry. I hope that the Chief Secretary will give this matter his favourable consideration, not for large firms, who are probably able to finance themselves, but for small firms who need help.

Mr. Emery

Amendment No. 124, in my name, goes further than the silk and tie industry; it is concerned with manmade fibres.

I have looked at my tie to see whether it bore the label "B.N.S."—British Nylon Spinners—and I am delighted to be able to assure my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) that it bears the label "Made in Macclesfield", which, perhaps, will help his constituency.

I am delighted to see the Home Secretary on the Front Bench. He will remember that on 2nd December, 1964 he was sitting in the same position and dealing with Amendments to the Finance Bill under the same tariff headings. In column 553 of HANSARD of that date he is quoted as saying that he would look at concessions and consider whether they were justified. We were hopeful that concessions would be made, but I can assure my hon. Friend the Member for Macclesfield that, as he might expect, nothing came of it.

These are of special concern to many aspects of industry. When the debate was taking place in 1964, home production was able nearly to meet the total consumption of man-made fibres in industry. We produced about 98 per cent. of our requirements. As the Chief Secretary will know, that is not the position today. The amount available for the home market is such that 20 per cent. of industry's requirements has to be imported. I am surprised that my hon. Friend the Member for Worcester, South (Sir G. Nabarro) is not here, because carpets take about 80 per cent. The rubber industry is another that is affected, and, of course, so is the clothing industry.

We know that the First Schedule to the Bill is that which applied at the end of the import surcharge in 1966. The Government's arguments in 1964 might have been relevant then, but the situation has altered considerably, and man-made fibre yarn is in much greater demand as a raw material in industry than it was in 1964. On that basis alone, it would seem that there is a strong argument for making a concession to man-made fibre yarn.

It is suggested that if such a concession is made purely for man-made fibres, it would not necessarily cover those which are essentially for industry. I take that point. But if the Government were disposed to do it, I am sure that they could devise a sub-heading to ensure that it applied only to man-made fibre for industrial consumption.

There is a strong argument which I hope that the Chief Secretary will consider. If he cannot give me a direct answer, we will be more than pleased to have an assurance that he will consider it before the Report stage.

Mr. Charles Mapp (Oldham, East)

I have been most interested in the argument about ties and man-made fibres. However, the special pleas that have come from the benches opposite are not sustained by the state of the market as a whole. A good deal of it is controlled by monopolies, and other areas are subject to well-understood arrangements about production both here and in Europe. In the main, the only effective, reasonably free and unregulated competition comes from the Far East, and perhaps some attention to the state of the industry at home is just as desirable as the claims of other countries.

I am very familiar with the man-made fibre side of the industry, which is of crucial importance. Its use is now overtaking that of natural cotton stock, and I would be hesitant to resist a small element of discouragement to imports of it.

Mr. Emery

Following the hon. Gentleman's argument to its logical conclusion, if he is arguing against a monopoly or oligopoly position, the last thing that he would want to see is more "featherbedding" of home producers by limiting competition and giving them the safeguard of making importers pay the duty before they can put competitive goods on the market. I think that he should be on our side, rather than arguing as he is.

Mr. Mapp

The hon. Member has failed to notice that I said the trade was largely monopolistic in this country and that I added that it was somewhat well-regulated on the Continent of Europe. The alleged open competition which he argued is present in this trade does not exist, apart from heavy rivals in the Far East with a low-paid labour basis. Because I am a member of this House and not a House in the Far East, I am anxious that an industry which has had a fair share of injury, inflicted by this and other Governments in the last decade or two, should have whatever small privilege as is conferred.

There is some merit in the point made by the hon. Member for Macclesfield (Sir A. V. Harvey), but it is not so substantial as he suggested. I am not unfamiliar with his constituency, which is not far from where I live Equally, I am not unfamiliar with the claims of the silk industry, but I do not think it is so spread in individual homes as the hon. Gentleman suggested. Generally, this is a consumer element which most of us can afford whatever infinitesimal addition to the price is involved. For these reasons I hope that the Minister will resist the pressures put on him.

Half an hour ago I listened to discussion about another industry in which an hon. Member said prices had already gone up. I wondered how a private firm, in a matter of two or three days, with all the problems arising from this Measure, could decide to increase its prices. That is an arbitrary decision. We are moving into an era in which price increases must be justified and be seen to be justified. This applies to salaries and incomes and must also apply to prices. If they can be justified, I would be the first to agree.

Sir A. V. Harvey

It is all very well for the hon. Member to suggest that he does not mind paying more for ties—I am glad that he can afford to do so—but these firms have had two doses of Selective Employment Tax and they face increased costs. The hon. Member is completely out of touch with reality.

Mr. John Wells

I am grateful to my hon. Friend the Member for Blackpool, South (Mr. Blaker) for drawing attention to Amendment No. 87, which is in my name. That Amendment seeks to exempt cotton bags in which nearly all field vegetables are now packed.

The aim of the Ministry of Agriculture, Fisheries and Food is to get more heavy vegetables grown in this country. The Ministry and its supporters are anxious to increase the acreage of home-grown onions, brussels sprouts and other foodstuffs which go to market in cotton bags. My hon. Friend said that he did not think that cabbages go to market in cotton bags, but they do. I must declare an interest as one who uses them to send cabbages to market.

11.0 p.m.

Mr. Blaker

Is my hon. Friend suggesting that it was I who said that cabbages do not go to market in these bags? I am well informed on what cabbages go to market in.

Mr. Wells

I apologise to my hon. Friend. I must have misheard him.

These bags are used exclusively for the wrapping of foodstuffs. The quantity imported is between 25 million and 30 million a year, mainly from Hong Kong. The total duty under this new impost will be about £125,000 a year and this will be a direct charge on the horticultural industry. Although the hon. Member for Oldham, East (Mr. Mapp) may be able to afford a few more shillings for a silk neck-tie, the housewife in the supermarket will not pay more for her vegetables and the horticulturist is in the middle of this unfortunate position.

The housewife is unable to pay more, the Government are forcing the grower to pay more for string bags, and all the costs of production are going up. The Government have just hit the horticulturist with increased oil fuel duties and the costs of marketing have gone up. It is invariably the grower who suffers. We have had a disturbing evening, with the Government giving way on nothing. Here is a golden opportunity. These units are used only for foodstuffs.

The Government pay lip service to getting foodstuffs to the shops and to the housewife in a clean and wholesome condition, efficiently, and as quickly and cheaply as possible. Let us have some practical help by putting this one small item in the Schedule.

[Mr. SYDNEY IRVING in the Chair]

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

I count myself privileged to have listened to a debate in which a number of hon. Members spoke robustly, demonstrating their knowledge of the materials with which they are concerned, and of their constituency interests, as hon. Members should. I have been interested to hear the great variety of articles which hon. Members would seek to exclude from the scheme.

The debate has made it clear that if any one of these items were excluded on the grounds put forward, other than the export ground, the number of items entitled to exemption would be such that the coverage of the scheme would be sharply diminished. The principle of the scheme is that it is intended to have a sharp impact, and if hon. Members have regard to this, they will realise that to exclude such a wide and substantial range of goods would—I will not go so far as to say destroy—but would reduce the effectiveness of the scheme in a way we could not possibly accept.

We have to have regard to the coverage of the scheme and, within that, to see which items could be excluded. With the exception of the export argument, these Amendments have sought to exclude materials which are in no sense raw materials. They are materials which many manufacturers use, and I see the starting point in terms of materials, but that is a common experience and has nothing to do with having raw materials or materials which would be excluded on the basis that they have reached only a simple processing stage.

All these materials go much further than that. Indeed, many hon. Gentlemen have been pressing me about manmade fibres, many of which are made from complex chemicals not excluded from the scheme because of their complexity and the distance which they are removed from raw materials. Therefore, it would be wholly illogical to include the chemicals and to exclude the manmade fibre which is a further stage in the manufacturing process.

I am bound to invite the Committee to say that these proposals in these various Amendments, if all similar proposals which could justifiably be attached to them were accepted, would really damage the scheme in such a way that it would be pointless to go on with it. The hon. Member for Macclesfield (Sir A. V. Harvey) and others who have spoken in similar strain are wrong when they say that we come here with a closed mind. It is also wrong to say that we do not wish to meet the reasonable desires of the Committee, at the same time retaining the main shape of the scheme.

The major argument addressed to me by the hon. Member for Macclesfield, the hon. Member for Shipley (Mr. Hirst) and one other hon. Member was on exports. I am in difficulty here, because there is an Amendment down on this subject. I think that the Committee will not be unhappy to discuss the Amendment and to hear the Government's views about it, but we cannot discuss it now and it does not help to try to anticipate it. However, I believe that we are meeting the real needs of the situation on exports, but not arising out of these Amendments.

Mr. Robert Cooke (Bristol, West)

Will the Chief Secretary give the Committee a clearly defined definition of a raw material? It would be helpful if he could.

Mr. Diamond

That has been gone into before. None of these Amendments deal with raw materials or materials in the first stage of processing. They are all quite complex materials. The grounds on which they ought to receive special consideration are not those set out in these Amendments or in this Schedule. but in a separate Amendment which I should like to come to as soon as I reasonably can.

Having said those encouraging words about exports, for the reasons I have given these Amendments must fall as all similar Amendments have fallen.

Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)

It will not be any surprise to the Committee that the Chief Secretary has looked on these Amend- ments with just as little sympathy and receptiveness—certainly receptiveness—as he and his colleagues have looked on earlier Amendments.

It is important that those who will be affected by the rejection of these Amendments should understand that one of the fundamental reasons for the Government's closed mind is that it has become increasingly clear that we have been considering not one scheme, but two schemes: a scheme of import deposits to exercise a moderating effect on imports coupled with a credit restriction scheme.

During the discussion, perhaps more emphasis has been laid on the credit restriction aspect than on diminishing the flow of imports. It is as important, in the eyes of the Chancellor of the Exchequer, to use this scheme as a means of restricting credit as it is of restricting imports. Indeed, the Minister of State, on the last Amendment, said that the scheme, as a method of credit control, depends on it covering a large number of goods.

It is one thing to talk about a large number of goods being affected by this scheme. I do not think that it is sufficiently appreciated that the number of firms affected by it is very much more concentrated, and that the impact on them will, therefore, be very much more concentrated, too.

It is entirely understandable that those users of imported materials—and we have been talking about some of them on these Amendments—who have no possibility of turning to a home-produced material should feel aggrieved at finding such a savage financial burden imposed on them as unwilling tools of the Chancellor's credit policy, because that is what is happening. If, as is the case in these Amendments, one uses a highly discriminatory policy, applied fiercely, on a narrow sector to produce a general effect of credit restriction dispersed over a wide field, one must be prepared for some unforeseen consequence on those who are the unwilling dissipators of freeze throughout the economy. We know about heat conducting materials. Under this Government, one becomes a freeze conducting vehicle.

These unfortunate importers, who have no alternative home source of supply for their basic materials of produce, are the unwilling dissipators of freeze throughout the economy. Import restriction does not enter into this at all. It just happens to be a convenient vehicle for putting a turn on the screw of the economy, using them as an instrument.

I propose to say a few words about the effect on the textile industry of rejecting the Amendments. The hon. Member for Oldham, East (Mr. Mapp) made one of the rare contributions to the debate from the back benches opposite. I know the hon. Gentleman's great sympathy for the textile industry, and his understanding of it, but I thought that on this occasion he was wide of the mark. The hon. Gentleman said that he was not opposed to introducing a small area of privilege for an industry which, in the past, had suffered at the hands of the Government. In this case, the small area of privilege is going to those who do not need it, at the expense of those who do, because the effect of this impost will fall on those small units in the industry which have been going out of business in vast numbers.

It will not affect the monopolists about whom the hon. Gentleman was talking.

It will not affect the large producers. They will benefit. It is the small manufacturer, who has found it very difficult to get the quality and variety of yarn that he needs, and who is dependent upon imported materials to enable him to follow specialised production, and to continue in the fashion trade and specialised lines, who will be faced with this additional impost.

During the last two or three years we have seen hundreds of small textile firms going out of business. The rejection of the Amendments will have, as one consequence, an acceleration in the reduction of variety of production in the textile industry, a further reduction in the number of small specialising units in the industry, and as a result, in a comparatively short time, a propensity to increase our imports, which is the exact opposite of what the Government wish to bring about.

For those reasons I must ask my hon. Friends to reinforce the strength of their arguments by registering their votes in the Division Lobby.

Question put, That the Amendment be made:—

The Committee divided: Ayes 119, Noes 176.

Division No. 26] AYES [11.15 p.m.
Alison, Michael (Barkston Ash) Gower, Raymond Mawby, Ray
Awdry, Daniel Grant-Ferris, R. Maxwell-Hyslop, R. J.
Baker, W. H. K. (Banff) Gresham Cooke, R. Mills, Peter (Torrington)
Bennett, Dr. Reginald (Gos. & Fhm) Gurden, Harold Monro, Hector
Biffen, John Hall-Davis, A. G. F. More, Jasper
Blaker, Peter Harrison, Col. Sir Harwood (Eye) Morgan, Geraint (Denbigh)
Boardman, Tom (Leicester, S.W.) Harvey, Sir Arthur Vere Morrison, Charles (Devizes)
Body, Richard Hiley, Joseph Munro-Lucas-Tooth, Sir Hugh
Boyd-Carpenter, Rt. Hn. John Hill, J. E. B. Murton, Oscar
Bromley-Davenport, Lt.-Col. Sir Walter Hirst, Geoffrey Nabarro, Sir Gerald
Bruce-Gardyne, J. Holland, Philip Noble, Rt. Hn. Michael
Buchanan-Smith, Alick (Angus, N & M) Hordern, Peter Osborn, John (Hallam)
Buck, Antony (Colchester) Hunt, John Page, Graham (Crosby)
Burden, F. A. Hutchison, Michael Clark Page, John (Harrow, W.)
Campbell, B. (Oldham, W.) Iremonger, T. L. Pink, R. Bonner
Carlisle, Mark Irvine, Bryant Godman (Rye) Powell, Rt. Hn. J. Enoch
Channon, H. P. G. Jenkin, Patrick (Woodford) Price, David (Eastleigh)
Clark, Henry Johnson Smith, G. (E. Grinstead) Pym, Francis
Cooke, Robert Jopling, Michael Renton, Rt. Hn. Sir David
Costain, A. P. Joseph, Rt. Hn. Sir Keith Rhys Williams, Sir Brandon
Crowder, F. P. Kershaw, Anthony Rossi, Hugh (Hornsey)
Davidson, James (Aberdeenshire, W.) Kimball, Marcus Russell, Sir Ronald
Dean, Paul King, Evelyn (Dorset, S.) Scott, Nicholas
Deedes, Rt. Hn. W. F. (Ashford) Kirk, Peter Shaw, Michael (Sc'b'gh & Whitby)
Drayson, G. B. Kitson, Timothy Silvester, Frederick
Eden, Sir John Knight, Mrs. Jill
Emery, Peter Legge-Bourke, Sir Harry Sinclair, Sir George
Errington, Sir Eric Lewis, Kenneth (Rutland) Smith, Dudley (W'wick & L'mington)
Eyre, Reginald Lloyd, Ian (P'tsm'th, Langstone) Smith, John (London & W'minster)
Fletcher-Cooke, Charles Longden, Gilbert Speed, Keith
Fraser, Rt. Hn. Hugh (St'fford & Stone) Lubbock, Eric Steel, David (Roxburgh)
Giles, Rear-Adm. Morgan Mackenzie, Alasdair (Ross & Crom'ty) Stoddart-Scott, Col. Sir M. (Ripon)
Gilmour, Ian (Norfolk, C.) Maclean, Sir Fitzroy Summers, Sir Spencer
Gilmour, Sir John (Fife, E.) McNair-Wilson, Patrick Taylor, Sir Charles (Eastbourne)
Glover, Sir Douglas Marples, Rt. Hn. Ernest Taylor, Frank (Moss Side)
Goodhart, Philip Maude, Angus Tilney, John
Turton, Rt. Hn. R. H. Wells, John (Maidstone) Worsley, Marcus
Waddington, David Whitelaw, Rt. Hn. William Wright, Esmond
Ward, Dame Irene Williams, Donald (Dudley) TELLERS FOR THE AYES:
Weatherill, Bernard Winstanley, Dr. M. P. Mr. Anthony Royle and
Webster, David Wolrige-Gordon, Patrick Mr. R. W. Elliott.
NOES
Albu, Austen Garrett, W. E. Morgan, Elystan (Cardiganshire)
Allaun, Frank (Salford, E.) Gordon Walker, Rt. Hn. P. C. Morris, Alfred (Wythenshawe)
Alldritt, Walter Gray, Dr. Hugh (Yarmouth) Morris, Charles R. (Openshaw)
Allen, Scholefield Greenwood, Rt. Hn. Anthony Morris, John (Aberavon)
Anderson, Donald Gregory, Arnold Moyle, Roland
Archer, Peter Griffiths, David (Rother Valley) Mulley, Rt. Hn. Frederick
Armstrong, Ernest Griffiths, Will (Exchange) Noel-Baker, Rt. Hn. Philip (Derby, S.)
Ashton, Joe (Bassetlaw) Hamilton, James (Bothwell) Ogden, Eric
Atkins, Ronald (Preston, N.) Hamling, William O'Malley, Brian
Atkinson, Norman (Tottenham) Hannan, William Orme, Stanley
Barnett, Joel Harper, Joseph Oswald, Thomas
Beaney, Alan Harrison, Walter (Wakefield) Owen, Dr. David (Plymouth, S'tn)
Benn, Rt. Hn. Anthony Wedgwood Hart, Rt. Hn. Judith Paget, R. T.
Bidwell, Sydney Haseldine, Norman Palmer, Arthur
Bishop, E. S. Hazell, Bert Park, Trevor
Blenkinsop, Arthur Herbison, Rt. Hn. Margaret Parker, John (Dagenham)
Booth, Albert Horner, John Pavitt, Laurence
Boston, Terence Houghton, Rt. Hn. Douglas Pearl, Rt. Hn. Fred
Brooks, Edwin Howarth, Robert (Bolton, E.) Perry, Ernest C. (Battersea, S.)
Broughton, Dr. A. D. D. Howell, Denis (Small Heath) Perry, George H. (Nottingham, S.)
Brown, Hugh D. (G'gow, Provan) Huckfield, Leslie Price, William (Rugby)
Brown, Bob (N'c'tle-upon-Tyne, W.) Hughes, Emrys (Ayrshire, S.) Roberts, Albert (Normanton)
Brown, R. W. (Shoreditch & F'bury) Hughes, Roy (Newport) Roberts, Rt. Hn. Goronwy
Buchanan, Richard (G'gow, Sp'burn) Hunter, Adam Roebuck, Roy
Butler, Mrs. Joyce (Wood Green) Hynd, John Rogers, George (Kensington, N.)
Callaghan, Ft. Hn. James Jackson, Peter M. (High Peak) Rose, Paul
Cant, R. B. Janner, Sir Barnett Ross, Rt. Hn. William
Carmichael, Neil Jay, Rt. Hn. Douglas Rowlands, E. (Cardiff, N.)
Castle, Rt. Hn. Barbara Johnson, James (K'ston-on-Hull, W.) Shaw, Arnold (Ilford, S.)
Coe, Denis Jones, Dan (Burnley) Sheldon, Robert
Dalyell, Tam Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Shore, Rt. Hn. Peter (Stepney)
Davies, Ednyfed Hudson (Conway) Jones, T. Alec (Rhondda, West) Short, Mrs. Renée (W'hampton, N.E.)
Davies, G. Elfed (Rhondda, E.) Kenyon, Clifford Silkin, Rt. Hn. John (Deptford)
Davies, Dr. Ernest (Stretford) Lawson, George Silverman, Julius
Davies, Ifor (Gower) Leadbitter, Ted Slater, Joseph
Dempsey, James Ledger, Ron Small, William
Dewar, Donald Lee, Rt. Hn. Jennie (Cannock) Snow, Julian
Diamond, Rt. Hn. John Lever, Harold (Cheetham) Steele, Thomas (Dunbartonshire, W.)
Dickens, James Lewis, Arthur (W. Ham, N.) Strauss, Rt. Hn. G. R.
Dobson, Ray Lewis, Ron (Carlisle) Summerskill, Hn. Dr. Shirley
Doig, Peter Lomas, Kenneth Swain, Thomas
Dunn, James A. Macdonald, A. H. Taverne, Dick
Eadie, Alex McGuire, Michael Tinn, James
Edelman, Maurice Mackie, John Urwin, T. W.
Ellis, John Mackintosh, John P. Varley, Eric G.
Ennals, David Maclennan, Robert Wainwright, Edwin (Dearne Valley)
Evans, Fred (Caerphilly) McMillan, Tom (Glasgow, C.) Wallace, George
Evans, Ioan L. (Birm'h'm, Yardley) McNamara, J. Kevin Watkins, David (Consett)
Fernyhough, E. MacPherson, Malcolm Wellbeloved, James
Fitch, Alan (Wigan) Mahon, Peter (Preston, S.) Wells, William (Walsall, N.)
Fletcher, Rt. Hn. Sir Eric (Islington, E.) Mahon, Simon (Bootle) Whitlock, William
Fletcher, Ted (Darlington) Mallalieu, J. P. W. (Huddersfield, E.) Willey, Rt. Hn. Frederick
Foley, Maurice Manuel, Archie Williams, Alan (Swansea, W.)
Ford, Ben Mapp, Charles Willis, Rt. Hn. George
Forrester, John Marks, Kenneth Wilson, William (Coventry, S.)
Fowler, Gerry Mason, Rt. Hn. Roy Woodburn, Rt. Hn. A.
Freeson, Reginald Mikardo, Ian Woof, Robert
Galpern, Sir Myer Millan, Bruce TELLERS FOR THE NOES:
Gardner, Tony Miller, Dr. M. S. Mr. Neil McBride and
Milne, Edward (Blyth) Mr. Charles Grey.
Mr. Michael Shaw (Scarborough and Whitby)

I beg to move Amendment No. 106, in page 8, line 50, at end insert:

70.03 … … Glass in balls, rods and tubes, unworked (not being optical glass).

The Chairman (Mr. Sydney Irving)

I think that it would be convenient to discuss al the same time, Amendments No. 107, in page 8, line 50, at end insert:

69.02 … … Refractory bricks, blocks, tiles and similar refractory constructional goods.

and No. 146, in page 8, line 50, at end insert:

Graphite pipes within 69.03(B).

Mr. Shaw

This Amendment has arrived on the Notice Paper in a typical manner, disclosing the difficulties under which both industry and the Opposition have to work in dealing with a Bill like this. The formation and development of the glass industry is in the middle of a most dramatic change. Very much depends on a high state of activity and on very large sums being spent on capital development. The industry is fiercely competitive and there is a wide variety in the state of prosperity among the various firms. Such an industry therefore has a great interest in the Bill and, properly, it has taken a hurried look at the way in which it will be affected.

It has written seeking exemption in respect of at least two matters. Amendment No. 106 deals with the type of glass used for tubing, ampoules and the manufacture of clinical thermometers—glass vital for an important sector of the industry—and Amendment 107 seeks exemption in respect of refractory bricks which not only play an important and expensive part in the development of new factories but which also have to be replaced frequently. The industry states: If these items are not exempted, the extra cost involved in making the deposits may be reflected in increased prices which might well be damaging to the export of lead crystal and scientific glassware". It is worth remembering that in 1967 the industry exported nearly £29 million of glass and glass products against imports of nearly £18 million.

The industry is not certain how great the effect of the scheme will be. It comments: Owing to the speed at which legislation is being introduced to cover the import deposit scheme, we have not been able to carry out a very thorough investigation of all the implications arising from it. However, we are immediately concerned with some items —and I have mentioned them as the subject of the Amendments. That is typical of the handicap under which industry has been placed by the speed at which the legislation has been presented to the House. Even more, because this information has reached us at the last minute. it indicates the handicap under which hon. Members suffer.

In view of the Ways and Means Resolution, we have not received sufficient information why there has been this great haste in pushing through the Bill so that we had no chance of consultations with industry before we discussed the Amendments. The manufacturers do not know the full impact of the Bill on their affairs and these items, but they are sure that it will have an effect which will be ill for their trade.

Mr. Taverne

It will in no sense be out of disrespect to the hon. Member for Scarborough and Whitby (Mr. Shaw) or the glass industry if I deal with the Amendment briefly, but the issues involved are those which we have been debating for a long time. I was asked why we are in such a hurry with the Bill. With this kind of Measure, speed is of the essence. The Resolution must be introduced quickly and the Bill must follow the Resolution as soon as possible. We will, of course, in all these matters raised by hon. Members opposite look at the position very carefully, as my hon. Friend the Financial Secretary has said, with an eye on the powers in the Bill. But, when it comes to the subjects of these Amendments, the same principles apply which have so far forced us to turn down so many other requests.

These products are manufactured from basic materials by more or less elaborate processes and they have gone beyond the stage of raw materials which would qualify them for one of the basic categories for which exemption is being provided. They therefore come within the categories which will be subject to the deposit scheme.

I am sure that the Committee will understand that, however reluctant we may be in each case to turn down an Amendment, to let this one out would mean letting out many others and thus destroy the whole purpose of the scheme.

Amendment negatived.

11.30 p.m.

Sir G. Nabarro

I beg to move Amendment No. 66, in page 9, line 10, at the end insert:

73.06 … … Puddled bars and pilings, ingots, blocks, lumps and similar forms, of iron or steel.
73.07 … … Blooms, billets, slabs and sheet bars (including tinplate bars), of iron or steel; pieces roughly shaped by forging, of iron or steel.
73.08 … … Iron or steel coils for rerolling.
73.09 … … Universal plates of iron or steel.
73.10 … … Bars and rods (including wire rod), of iron or steel, hot-rolled forged, extruded, cold-formed or cold-finished (including precision made); hollow mining drill steel.
The Chairman (Mr. Sydney Irving)

With this Amendment we shall discuss Amendment No. 67, standing in the name of the right hon. Member for Leeds, North-East (Sir K. Joseph), in page 9, line 20, at end insert:

76.02 … … Wrought bars, rods, angles, shapes and sections, of aluminium; aluminium wire.
76.03 … … Wrought plates, sheets and strip (including discs and circles), of aluminium.
76.04 … … Aluminium foil.
76.05 … … Aluminium powders and flakes
76.06 … … Tubes and pipes and blanks therefor, of aluminium; hollow bars of aluminium.
76.07 … … Tube and pipe fittings (for example, joints, elbows, sockets and flanges), of aluminium.
Sir G. Nabarro

The large number of words on the Notice Paper cover, broadly ferrous metals imported into this country almost entirely for the engineering industry. Amendment No. 67 is the same in principle as Amendment No. 66, but covers non-ferrous metals and, therefore, we have exact complements in the metallurgical sense.

The imports of iron and steel into Britain have been very large during 1968—no one will deny that—and there has been a sharp increase compared with 1967, due, no doubt, to devaluation. These are the kind of figures which have demonstrated to many in the business world that devaluation is not working. In 1968, based on the first 10 months of the year and again, as in the case of timber, grossed up to represent the full year at the same rate or volume of incoming iron and steel products, the figure will now be £158 million. In 1967, the figure was £116 million. So, in the case of iron and steel products, there has been an increase in imports of no less than £42 million.

Of course, people import rolled and re-rolled steel products broadly to the specifications delineated in Amendment 66 for two reasons: first, because they cannot obtain prompt specifications in the required period of time for their engineering production processes in the United Kingdom or, secondly, because the prices offered by British steel manufacturers are not competitive with continental and other competitive suppliers.

In any event, the shutting out of continental and other classes of foreign rolled and re-rolled steel products is likely to cause substantial dislocation in the engineering industry, particularly in workshops which have become attuned over a long period to the use of specialist steel from overseas sources. Restricting or coercing buyers in the engineering industry to buy only British steel in future is not only likely to cause dislocation, but also to put up their costs of production and their prices, quite apart from the difficulty of financing the import deposits scheme.

Many of these specifications are not obtainable from British sources. Birmingham, the Black Country and Wolverhampton will suffer particularly on that score if there is a rupture of supply of iron and steel products from Continental sources, or a cesser of that supply.

I hope, therefore, that the Treasury Ministers will think again about placing impediments on our free import of certain specifications of iron and steel rolled and re-rolled products which I claim are indispensable to the British industry in all its diverse form in all parts of the United Kingdom.

Mr. John Page

I want to reinforce the case so cogently made by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) and to speak particularly of the experience of one of our largest motor manufacturers, which has asked me to raise the subject.

The British Steel Corporation agree that it has been proved that certain types of steel cannot be bought in this country, and that even if they could be bought it is important that overseas sources should be kept available to our manufacturers.

The firm writes: We have imported a minor amount of sheet and coil for many years and the reasons for this are understood and accepted by the British Steel Corporation. The need is so clear that the Corporation have given us their written approval to continue these imports and without loss of their loyalty rebate. The Corporation gives the fullest discount on what it supplies to certain customers on condition that those customers give it the whole of their business. The Corporation would not give that discount in this case if there were not very good reasons for certain steel products to be purchased abroad.

I put it to the Minister that flexibility must be left so that the import deposit need not be paid in cases where it is overwhelmingly proved to the Board of Trade that suitable types of steel are not available in this country or should for strategic reasons be purchased abroad.

Mr. Diamond

The hon. Gentleman the Member for Worcestershire, South (Sir G. Nabarro) told us a number of interesting things out of his deep knowledge of these matters. He told me—and I do not know that this is an immediate reply to him—something interesting about the non-supply of steel articles, and I propose to follow up what he had to say in order to find out why it is that these articles and this production are not available in this country. It seemed to me that this was a challenge to the steel industry that needed to be inquired into and followed up.

The hon. Gentleman made two very important statements. He said that the amount of imports was great and that the increase in the amount imported in recent years—indeed, during the past year, I gathered—was very considerable. This is what the scheme is about. It is not to put up a barrier, as he suggested. It is not to exclude completely, as he suggested, steel and steel manufactured items from abroad. It is to take note of the vastly increased import in recent times of goods, most of which, if not all of which, we can make in this country. It is to discourage importers or, at all events, to make them think twice, in the interests of all manufacturers here and, if I may say so, in the interests of those who are not yet fully employed in the steel industry—

Mr. Callaghan

Hear, hear.

Mr. Diamond

—and we should encourage them all. Therefore, on the hon. Gentleman's general remarks and very cogent arguments, it is obviously right that the Government should have taken the steps they have taken.

On the limited ground of an exception, what the form of the Amendment seeks is to remove the only tenable distinction, which is that between the wrought and the unwrought metal. Unwrought metal is excluded; the hon. Gentleman and his hon. Friends propose also to exclude wrought metal, either ferrous or nonferrous. That is a division which we could not accept.

The hon. Gentleman has made it clear that the amount involved would be very considerable, and the only way in which to be consistent with what we are doing with raw materials and materials which have been processed in a very preliminary way requires us to stick to that division. The coverage of the scheme would be considerably eroded by the Amendment, and in those circumstances I hope that hon. Members will not press the Amendment.

Mr. Patrick Jenkin

I hope that my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) will feel it right to ask the Committee to divide on the Amendment. There is a most remarkable contrast between the attitude brought to the Dispatch Box by the Chief Secretary and that which we have had through most of these debates on Amendments to the Schedule from the Financial Secretary. I am sure that the right hon. Gentleman will not misunderstand me if I say that I considered his reply protective. He was clearly seeing the import deposit not substantially as a means of impinging on credit, but as a method of trying to reduce the imports of products in order—and here he was cheered by the Home Secretary—to increase the employment of people in the steel industry in this country.

This is exactly what we have been told throughout these proceedings is not the Government's intention. We have been told all along that it may have some impact on imports, a marginal effect upon imports, but that its chief intention is to impact on credit. The Chief Secretary's reply gave a very different interpretation and I cannot help warning him that it will make the task of the President of the Board of Trade, when he confronts his colleagues in the E.F.T.A. Council, just that much more difficult. I hope that my hon. Friend will think it right to press the Amendment to a Division.

Sir G. Nabarro

I was inordinately brief in moving this important Amendment covering, as it does, about £158 million worth of imports during this year of the ferrous metal products alluded to in Amendment No. 66. I was brief because in the debate on the Ways and Means Resolution on 26th November—columns 258 to 261 of the OFFICIAL REPORT—I related this case in much greater detail. The Chief Secretary's reply this evening was not an effective answer to the case which I then related in

depth and in detail. I endorse my hon. Friend's view and hope that my right hon. and hon. Friends will press this important matter to a Division.

Mr. Peter Kirk (Saffron Walden)

Surely the most significant part of the Chief Secretary's answer was his admission that he did not know why these products could not be manufactured in this country. Surely we should not part with the Amendment until he does know.

Sir G. Nabarro

I entirely agree with my hon. Friend.

Question put, That the Amendment be made:—

The Committee divided: Ayes 106, Noes 165.

Division No. 27.] AYES [11.44 p.m.
Alison, Michael (Barkston Ash) Gurden, Harold Page, John (Harrow, W.)
Awdry, Daniel Hall-Davis, A. G. F. Pink, R. Bonner
Baker, W. H. K. (Banff) Harrison, Col. Sir Harwood (Eye) Powell, Rt. Hn. J. Enoch
Bennett, Dr. Reginald (Gos. & Fhm) Hiley, Joseph Price, David (Eastleigh)
Biffen, John Hill, J. E. B. Pym, Francis
Blaker, Peter Holland, Philip Renton, Rt. Hn. Sir David
Boardman, Tom (Leicester, S. W.) Hordern, Peter Rhys Williams, Sir Brandon
Body, Richard Hunt, John Rossi, Hugh (Hornsey)
Boyd-Carpenter, Rt. Hn. John Iremonger, T. L Royle, Anthony
Boyle, Rt. Hn. Sir Edward Irvine, Bryant Godman (Rye) Russell, Sir Ronald
Braine, Bernard Jenkin, Patrick (Woodford) Scott, Nicholas
Buchanan-Smith, Alick (Angus, N & M) Johnson Smith, G. (E. Grinstead) Shaw, Michael (Sc'b'gh & Whitby)
Buck, Antony (Colchester) Jopling, Michael Silvester, Frederick
Burden, F. A. Joseph, Rt. Hn. Sir Keith Sinclair, Sir George
Campbell, B. (Oldham, W.) Kershaw, Anthony Smith, Dudley (W'wick & L'mington)
Carlisle, Mark Kimball, Marcus Steel, David (Roxburgh)
Channon, H. P. G. King, Evelyn (Dorset, S.) Summers, Sir Spencer
Clark, Henry Kirk, Peter Taylor, Sir Charles (Eastbourne)
Cooke, Robert Knight, Mrs. Jill Taylor, Frank (Moss Side)
Costain, A. P. Legge-Bourke, Sir Harry Tilney, John
Crowder, F. P. Lloyd, Ian (P'tsm'th, Langstone) Turton, Rt. Hn. R. H.
Dance, James Longden, Gilbert Waddington, David
Dean, Paul (Somerset, N.) Lubbock, Eric Ward, Dame Irene
Drayson, G. B. McNair-Wilson, Patrick Weatherill, Bernard
Eden, Sir John Mackenzie, Alasdair (Ross & Crom'ty) Webster, David
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Marples, Rt. Hn. Ernest Wells, John (Maidstone)
Emery, Peter Mawby, Ray Whitelaw, Rt. Hn. William
Eyre, Reginald Maxwell-Hyslop, R. J. Williams, Donald (Dudley)
Fletcher-Cooke, Charles Mills, Peter (Torrington) Winstanley, Dr. M. P.
Fraser, Rt. Hn. Hugh (St'ftord & Stone) More, Jasper Wolrige-Gordon, Patrick
Giles, Rear-Adm. Morgan Morrison, Charles (Devizes) Worstey, Marcus
Gilmour, Sir John (Fife, E.) Munro-Lucas-Tooth, Sir Hugh Wright, Esmond
Glover, Sir Douglas Murton, Oscar
Goodhart, Philip Nabarro, Sir Gerald TELLERS FOR THE AYES:
Gower, Raymond Noble, Rt. Hn. Michael Mr. Timothy Kitson and
Grant-Ferris, R. Osborn, John (Hallam) Mr. Hector Moore.
Gresham Cooke, R. Page, Graham (Crosby)
NOES
Abse, Leo Bennett, James (G'gow, Bridgeton) Castle, Rt. Hn. Barbara
Albu, Austen Bidwell, Sydney Coe, Denis
Allaun, Frank (Salford, E.) Bishop, E. S. Dalyell, Tam
Alldritt, Walter Blenkinsop, Arthur Davies, Ednyfed Hudson (Conway)
Allen, Scholefield Booth, Albert Davies, Dr, Ernest (Stretford)
Anderson, Donald Boston, Terence Davies, Ifor (Gower)
Archer, Peter Brown, Hugh D. (C'gow, Provan) Dewar, Donald
Armstrong, Ernest Brown, Bob (N'c'tle-upon-Tyne, W.) Diamond, Rt. Hn. John
Dickens, James
Ashton, Joe (Bassetlaw) Brown, R. W. (Shoreditch & F'bury) Dobson, Ray
Atkins, Ronald (Preston, N.) Buchanan, Richard (G'gow, Sp'burn) Doig, Peter
Atkinson, Nonnan (Tottenham) Butler, Mrs. Joyce (Wood Green) Dunn, James A.
Barnett, Joel Callaghan, Rt. Hn. James Eadie, Alex
Beaney, Alan Cant, R. B. Edelman, Maurice
Benn, Rt. Hn. Anthony Wedgwood Carmichael, Neil Ellis, John
Ennals, David Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Palmer, Arthur
Evans, Fred (Caerphilly) Jones, T. Alec (Rhondda, West) Park, Trevor
Evans, Ioan L. (Birm'h'm, Yardley) Kenyon, Clifford Parker, John (Dagenham)
Faulds, Andrew Lawson, George Pavitt, Laurence
Fernyhough, E. Leadbitter, Ted Pearl, Rt. Hn. Fred
Fletcher, Ted (Darlington) Ledger, Ron Perry, Ernest G. (Battersea, S.)
Foley, Maurice Lee, Rt. Hon. Jennie (Cannock) Perry, George H. (Nottingham, S.)
Ford, Ben Lewis, Ron (Carlisle) Roberts, Albert (Normanton)
Forrester, John Lomas, Kenneth Roberts, Rt. Hn. Goronwy
Fowler, Gerry Macdonald, A. H. Roebuck, Roy
Freeson, Reginald McGuire, Michael Rose, Paul
Galpern, Sir Myer Mackie, John Ross, Rt. Hn. William
Gardner, Tony Mackintosh, John P. Rowlands, E.
Gordon Walker, Rt. Hn. P. C. Maclennan, Robert Shaw, Arnold (Ilford, S.)
Gray, Dr. Hugh (Yarmouth) McMillan, Tom (Glasgow, C.) Short, Mrs. Renée, (W'hampton, N.E.)
Greenwood, Rt. Hn. Anthony McNamara, J. Kevin Silkin, Rt. Hn. John (Deptford)
Gregory, Arnold MacPherson, Malcolm Silverman, Julius
Grey, Charles (Durham) Mahon, Peter (Preston, S.) Slater, Joseph
Griffiths, David (Rother Valley) Mahon, Simon (Bootle) Small, William
Griffiths, Will (Exchange) Mallalieu, J.P.W. (Huddersfield, E.) Snow, Julian
Hamilton, James (Bothwell) Manuel, Archie Steele, Thomas (Dunbartonshire, W.)
Hamling, William Mapp, Charles Strauss, Rt. Hn. G. R.
Hannan, William Marks, Kenneth Summerskill, Hn. Dr. Shirley
Harper, Joseph Mason, Rt. Hn. Roy Swain, Thomas
Harrison, Walter (Wakefield) Mikardo, Ian Taverne, Dick
Hart, Rt. Hn. Judith Millan, Bruce Tinn, James
Haseldine, Norman Miller, Dr. M. S. Urwin, T. W.
Hazell, Bert Milne, Edward (Blyth) Varley, Eric G.
Herbison, Rt. Hn. Margaret Morgan, Elystan (Cardiganshire) Wainwright, Edwin (Dearne Valley)
Horner, John Morris, Alfred (Wythenshawe) Wallace, George
Houghton, Rt. Hn. Douglas Morris, Charles R. (Openshaw) Watkins, David (Consett)
Howarth, Robert (Bolton, E.) Morris, John (Aberavon) Wellbeloved, James
Howell, Denis (Small Heath) Moyle, Roland Wells, William (Walsall, N.)
Huckfield, Leslie Mulley, Rt. Hn. Frederick Whitlock, William
Hughes, Emrys (Ayrshire, S.) Noel-Baker, Rt. Hn. Philip (Derby, S.) Williams, Alan (Swansea, W.)
Hughes, Roy (Newport) Ogden, Eric Williams, Mrs. Shirley (Hitchin)
Hynd, John O'Malley, Brian Wilson, William (Coventry, S.)
Jackson, Peter M. (High Peak) Orme, Stanley Woof, Robert
Janner, Sir Barnett Oswald, Thomas
Jay, Rt. Hn. Douglas Owen, Dr. David (Plymouth, S'tn) TELLERS FOR THE NOES:
Johnson, James (K'ston-on-Hull, W.) Page, Derek (King's Lynn) Mr. Alan Fitch and
Jones, Dan (Burnley) Paget, R. T. Mr. Neil McBride.
Sir K. Joseph

I beg to move Amendment No. 68, in page 9, line 31, at end add:

84.45 … … Machine tools for working metal or metallic carbides, not being machines falling within heading No. 84.49 or 84.50.
84.46 … … Machine tools for working stone, ceramics, concrete, asbestos-cement, and like mineral materials or for working glass in the cold other than machines falling within heading No. 84.49.
84.47 … … Machine tools for working wood, cork, bone ebonite (vulcanite), hard artificial plastic materials or other hard carving materials other than machines falling within heading No. 84.49.
84.48 … … Accessories and parts suitable for use solely or principally with the machines falling within headings Nos. 84.45 to 84.47 including work and tool holders, self-opening die-heads, dividing heads and other appliances for machine tools; tool holders for any type of tool or machine tool for working in the hand.

The Chairman (Mr. Sydney Irving)

With this Amendment we can take, also, Amendment No. 86, in page 9, line 31, at end insert:

84.25 … … Harvesting and threshing machinery; straw and fodder presses; hay or grass mowers; winnowing and similar cleaning machines for seed, grain or leguminous vegetables and egg-grading and other grading machines for agricultural produce (other than those of a kind used in the bread grain milling industry falling within heading No. 84.29):
(a) root topping machines, root lifters and root harvesters;
(b) parts of the machines of sub-heading (a) above
(c) hay or grass mowers;
(i) rotary blade type;
(ii) other;
(d) other:
(i) agricultural and commercial horticultural machines;
(ii) other.
84.26 … … Dairy machinery (including milking machines):
(a) cheese presses;
(b) milking machines;
(c) parts of milking machines;
(d) churns for butter making and combined churns and butter workers;
(e) other.
No. 147, in page 9, line 31, at end
86.08 … … Road-rail and similar containers specially designed and equipped to be equally suitable for transport by rail, road and ship.

No. 125, in Schedule 2, page 10, line 36, leave out from "yard" to "and" in line 39 and insert: for the purpose of being used for the building, repairing or refitting of ships in the yard".

No. 148, in Schedule 2, page 11, line 18, at end insert:

Spare parts for industrial and farming machinery and plant

2. The Commissioners may remit the import deposit payable in respect of any goods if satisfied that—

  1. (a) it is intended to use them as spare parts or replacements for machinery or plant in use in manufacturing or processing industry or agriculture, and
  2. (b) such spares or parts are for machines or plant of foreign origin, and
  3. (c) such spares or parts are not manufactured in the United Kingdom.

Sir K. Joseph

This is a group of most important Amendments. I shall take them quickly, because their virtues are self-evident. The first, No. 68, deals with a number of machine tools. The Government really have landed themselves in a problem here, because though they have recognised the importance of exempting imports which are to be turned into exports—and we note with pleasure that we shall be coming shortly to the Chancellor's Amendment for this purpose—they have not so far recognised that many of the exports for which firms have firm contracts depend upon machine tools which need to be imported because they are not available in this country.

I have a selection of letters here from different firms, mostly small, with firm export orders which are entirely dependant for their implementation on the arrival of machine tools from abroad. The firms concerned face the need, under the Bill, to find deposits of large sums, in one case, £90,000. That firm says that it is quite impossible for it to find this sum or borrow it, yet, if it does not find it, it will have to break contracts, in one case involving a firm order worth £1 million of foreign exchange.

I could give detailed examples, but I hope that the Government will take the point, which is amply illustrated in the letters I have received from hon. Members and directly, and which can be only a small sample of a wide-ranging problem. I hope that the Government will recognise the problem and will undertake to accept the Amendment, or to meet the point on Report or, if that is too hurried, to consider the point carefully and deal with it by discretion or by an Amendment.

Amendment No. 86 deals with the need to import agricultural machinery. If such agricultural machinery is subject to deposit on arrival, obviously there will be an implication for farm costs.

Amendment No. 147 is most important. The Government have recognised the importance of the shipping and shipbuilding industry by putting ships above a certain size in the Schedule of exemptions. I understand from the Chamber of Shipping that it has been accepted that containers should be treated in the same way as ships where the containers are, as it were, a part of a ship. The ships on which the containers go are exempt, but the containers which would go on them are not exempt. One shipbuilder has ordered abroad several thousand containers, and he is now faced with a totally unpredictable extra cost which may seriously affect the economics of his operation.

No single Amendment which has been dealt with has such force as the case for exempting containers, and I hope, again, that the Minister will either accept Amendment No. 147, or that he will, on Report, by discretion, or by a later piece of legislation, treat containers in the same way as ships with which they go.

Mr. Emery

I will attempt to be as brief as my right hon. Friend. Amendment No. 148 has equal strength with any other Amendment to this Clause. It is concerned specifically with spare parts for industrial machinery and plant already in this country and which, to enable industry to continue, must be properly maintained. It is concerned, also, with spare parts for agricultural machinery which is essential to enable the farmer to continue in operation. The Government surely cannot consider that it is right to limit imports of spare parts of machinery in such a way as to prevent the proper maintenance of machinery so that it stands idle.

Almost by definition it is impossible for the proper spare parts for foreign industrial and agricultural machinery to be obtained in this country. To safeguard the Government's position, subparagraph (c) states that these spare parts should be exempted only if they are not manufactured in the United Kingdom. If they are manufactured in the United Kingdom, my argument falls to the ground, even if they are not genuine spare parts but merely replacement parts. I am willing to bend over backwards to persuade the Government to accept my argument. By definition, the Government cannot demand import deposits for spare parts for machinery which without those spare parts would stand idle.

I cannot believe that that is the view of the Government. Therefore, I must ask them, if they will not accept the exact words of my Amendment, at least to accept the principle behind it and act upon it before we come to Report.

[Mr. JOHN BREWIS in the Chair]

12 p.m.

Mr. Kirk

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) has made a strong case generally, but I want to refer specifically to Amendment No. 86, which deals with agricultural machinery.

At a time when the Minister of Agriculture is calling for a vast increase in agricultural production, it is lunatic to limit the possibilities of doing it. We are told that British agriculture has to produce import savings of about £150 million in the period beginning 1970, but how is it to be done if our farmers cannot get the machinery with which to do it and, as my hon. Friend the Member for Honiton (Mr. Emery) said, even if they get the machinery, they cannot get the spare parts to keep it going.

The Amendment covers virtually all the necessary machinery—[Interruption.] I did not catch what the Home Secretary said. Perhaps he would care to repeat it.

Mr. Callaghan

I was thinking what a thin case right hon. and hon. Gentlemen opposite were making. and wondering when one of them would suggest that our farmers might buy British now and again. There is plenty of farm machinery which is manufactured in this country and which is of good quality, available at good prices and with early deliveries. They could buy that, instead of foreign-produced machinery.

Mr. Kirk

If the right hon. Gentleman knew anything about agriculture, which, clearly, he does not, he would know that a very large part of the machinery used on our farms is provided from home sources. But if he wishes to restrict British farmers solely to supplies coming from home sources, a lot of which come from my constituency, he will not achieve the increase in agricultural production which his Government are so anxious to see, together with the import savings which will come from it—[Interruption.] If the right hon. Gentleman can produce figures, perhaps he will produce them now, instead of sitting there muttering.

Mr. Callaghan

One of the features of the case put forward by right hon. and hon. Gentlemen opposite which have impressed me is that they have produced no figures in support of their claim.

Sir K. Joseph

I hope that the right hon. Gentleman will recognise that, with rushed panic legislation, our case cannot be as well presented as it would be given proper time.

Mr. Callaghan rose—

The Temporary Chairman (Mr. John Brewis)

Order. We cannot have intervention after intervention.

Mr. Kirk

Mr. Brewis, I am always prepared to give way to a right hon. or hon. Gentleman on the Front Bench opposite.

Mr. Callaghan

All that the hon. Gentleman needs is to go to the Library, where he will find all the statistics about imported machinery that he wants. The fact that right hon. and hon. Gentlemen opposite produce no figures shows how thin is their case.

Mr. Michael Alison (Barkston Ash)

Did the right hon. Gentleman notice that, when Mr. Catherwood spoke about exports the other day, he pointed out that we have a favourable balance of trade on machinery? His argument that we import more machinery than we export is fallacious.

Mr. Kirk

I am beginning to wonder whether the Home Secretary is now in charge of the Bill. I understood that he ceased to be Chancellor of the Exchequer a year ago. Perhaps he has resumed office and we have not heard about it.

Mr. Callaghan

That is rather discourteous, even for the hon. Gentleman, when I rose in reply to his invitation.

Mr. Kirk

I did so because I could not hear what he was muttering from a sitting position. I hope that he will not accuse me of being discourteous to him.

Before this storm of interruptions fell about my ears, I was trying to say that, if the Amendment is not made, the Government will not be able to get the import savings which I understand that they are anxious to maintain. Therefore, it is important—

Mr. Callaghan

Buy British.

Mr. Kirk

It is no use the right hon. Gentleman's muttering "Buy British". He is not the hon. Member for Buckingham (Mr. Maxwell). He is Home Secretary. He knows the facts of life. I have no doubt that he wishes that he were the hon. Member for Buckingham. He is displaying symptoms of paranoia, and appears to be unable to make up his mind whether he is Home Secretary, Chancellor of the Exchequer or Minister of Agriculture. He must choose who he is. I have said once or twice, but the right hon. Gentleman did not appear to be listening, that if he is serious about having an increase in agricultural production, he should allow this Amendment to pass, as he appears to be in charge of proceedings at the moment and he is a senior Minister.

Mr. Alison

I can hear the Home Secretary's comments almost as clearly as my hon. Friend's speech. If he believes that "Buy British" should be translated overseas and that the Germans should say, "Buy German", the Japanese should say, "Buy Japanese" and the French should say, "Buy French", would it not be a happier and more rational world?

Mr. Kirk

I think that the Home Secretary would say that is about what he wants. Despite the somewhat disruptive nature of what I have been trying to say, I hope that it has been understood and that the Committee will accept these Amendments.

Captain Walter Elliot (Carshalton)

Amendment No. 125, in my name, deals with the shipping industry. Its purpose is to widen the powers of the Commissioners to remit import deposits so as to cover also importations of productive plant and equipment for use in a registered shipbuilding yard for building, repairing and refitting ships.

Mr. Harold Lever

On a point of order. Is Amendment No. 125 being taken with this group?

The Temporary Chairman (Mr. John Brewis)

Yes.

Captain Elliot

That was an unnecessary intervention.

As at present drafted, the paragraph authorises remission only in relation to components, parts, preservatives or finishes of any ship being built, repaired or refitted in a yard or the equipment or machinery of the ship. The shipbuilding industry trades in an unprotected and international competitive market and it has long been recognised that it should be free to purchase not only materials and components, but also plant unhampered by import duties. This freedom dates back to the Import Duties Act, 1932, re-enacted and continued by Section 5(2) of the Import Duties Act, 1958.

The Amendment would substitute in the Bill the wording in the existing regulations. It covers productive plant as well as materials and components. The Amendment is particularly important because many shipbuilding undertakings are carrying out major schemes of reorganisation following the Report of the Geddes Committee. Whenever possible new plant is obtained from home sources, but some has to come from abroad because of the nature of the plant or because of the cost. Today, most major reorganisation schemes are financed by borrowed money. Even if the 50 per cent. deposit can be found, it will add materially to the cost of the reorganisation schemes. This will be to the detriment of the industry's competitive position in world markets.

Mr. Peter Mills (Torrington)

I wish to speak about Amendment No. 86. There is a very good case for using more British agricultural machinery. I fully accept that and I have said so on many occasions. Sometimes we are far too eager to use machinery coming from abroad when there is adequate and perfectly good British machinery, but we have the very serious problem of spares.

In agriculture today we have many types of foreign machines. Some are very sophisticated, particularly mowers and combine harvesters and milking machines. It is ridiculous to think, when we consider the part which agriculture should be playing in the economy, that there should be hindrance in obtaining spares. To have spares at hand and to be able to get them to farms quickly is vital and this is, therefore, a suitable Amendment. All agricultural spares should be exempt.

Another important point has not been mentioned: that certain types of machines being used on our farms are sophisticated and complicated types which we do not produce in this country. It is necessary for British agriculture to buy them. They include heavy crawlers and Dutch drainage equipment. If we want to get our farms in full working order, and capacity, it is necessary to use some of these heavy machines and tackle, particularly heavy drainage machinery and equipment from Holland and other countries. I could give other examples of heavy equipment to which the exemption should apply.

Agriculture is playing a vital part now and will be even more important in future. It is stupid for the Government to hinder spares coming here with the specialised equipment which British agriculture needs. I hope that we shall have a satisfactory answer from the Minister. He should give a promise to farmers that there will be no delay. What is the use of having combines and other gear and no spares? I hope that the Minister will set my mind, and the minds of other farmers, at rest.

Mr. Patrick McNair-Wilson (New Forest)

I support my hon. Friends the Members for Torrington (Mr. Peter Mills) and Honiton (Mr. Emery), and I am grateful to my hon. Friend the Member for Honiton for drawing attention to Amendment No. 148, which is in my name as well.

The spares question is important. It is ridiculous if machinery, albeit foreign, which upsets the Home Secretary so much, cannot be used to the full. This Amendment is a modest attempt to ensure that spares can come in so that machinery can play a full part in getting the cut in our imports which we are striving for and to enable British agriculture to expand.

One point which has emerged throughout the debate is the Government's refusal to give an inch on any item in the Bill. We are asking here for something so modest that at this late hour, at the end of the day, if the Minister could at least make this concession he would set at rest the minds of many people.

If there is one criticism, it is of the bad public relations which the Government have used in connection with the Bill. I took a party of school children from my constituency round this building this morning. We came to the postcard stand and it was selling postcards produced in Spain. That is an example. I urge the Minister to give us a satisfactory answer. Postcards from Spain, children from an agricultural constituency, look bad when we are debating import control.

12.15 a.m.

Mr. Dudley Smith

I should like to reinforce the plea made on behalf of the machine tool industry The Government's action has come as a tremendous shock to the machine tool industry. As my hon. Friend said, the Government have got their public relations badly wrong.

There are a number of machine tool firms in my constituency. One, which can by no means be described as large, has had to put down over £200,000 in deposits for machinery which cannot be obtained in this country. The industry has been doing a tremendous amount to try to get the country moving again and this scheme has come as a decided slap in the face. The Government, on this occasion, ought to give way, as my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, both on agricultural machinery and on general machine tools.

Mr. Taverne

One common feature of all the speeches made so far has been their brevity—a sterling quality at this time of night. The reason my reply to these many Amendments, covering a very wide area, can also be brief is because they are all concerned with one common feature—manufactures.

The Amendments cover a huge area. The first Amendment, for example, would exempt most machine tools from the deposit scheme. The second Amendment would exempt a huge quantity of agricultural machinery. The consequence of accepting the Amendments would be to blow a huge hole in the scheme. It would make nonsense of the scheme as a whole if this vast area of machine tools and agricultural machinery was to be made exempt.

Mr. Peter Mills

Does the hon. Gentleman realise that although it may have serious consequences for the Bill, in agriculture it will have particularly serious consequences?

Mr. Emery

And for the nation.

Mr. Taverne

The argument here would apply to a great many other manufactures. The whole credit control aspect of the scheme, which is one of the two main purposes, would be not nullified, but enormously shrunk, if these Amendments were accepted.

Various arguments were advanced in favour of making exemptions, but they were no different from those advanced in favour of other Amendments. In some cases it was suggested that there were people who needed machine tools which could only be obtained from abroad. Concerning machine tools, it is impossible to define any workable distinction between those that can only be obtained from abroad and those that cannot. It has never been the Government's intention, as my hon. Friend has explained time and again, to produce something which would be a purely protective Measure. Even if we could discriminate in favour of desirable imports, this would run counter to the spirit of the E.F.T.A. agreement.

The short answer to the major Amendments for machine tools—and we could not specially exempt machine tools in shipbuilding from this category—and for agricultural machines is that this would destroy the major effect which the deposit scheme is designed to achieve.

Two special pleas were made. One was for spare parts and the other was for containers. I do not fully understand the Amendment about spare parts, but that is a comparatively minor point. I am not clear whether it is meant to relate only to spares or, at certain stages, to whole machines.

Mr. Emery

Perhaps I might help the hon. Gentleman. There is a misprint. If he looks at the line, "parts" should be two further on. So it is always spares and not machines.

Mr. Taverne

I thought that that was probably the intention of the Amendment. But there are two diffculties about it. The first is the same fundamental point that arose on the other Amendments. This would mean that manufacturers were being exempted when the purpose of the scheme is to keep manufacturers out of the Schedule.

The second point is that the administration of this kind of provision to decide the various points brought forward would be extremely difficult. It would place a huge volume of work on the Customs. We would have the difficulty of imports being held up at the docks and confusion being created there while inquiries were made whether the conditions of this exemption applied. The moment that this kind of situation arises, other importers are affected. We must have clear criteria to try to avoid the difficulties to which these Amendments would give rise.

The most meritorious of the cases which were made was that relating to containers. The Amendment as it stands goes rather further than the representations which the Chamber of Shipping has been making, because it would apply also to containers which could be used wholly for United Kingdom domestic traffic. But this is a minor point. The difficulty here is, again, that one has manufactures, but I should like to look carefully at the position which arises, since there is obviously force in the point made by the right hon. Gentleman. A deputation from the Chamber of Shipping is discussing the matter with the Customs today. This is one of the items which will be considered carefully, with a view to the powers which the Government have in reserve being applied if a strong case arises.

We must see how this works out. We shall listen carefully to the detailed representations which the Chamber of Shipping makes, but the bulk of the Amendments go fundamentally counter to the whole scheme and for that reason I cannot recommend the Committee to accept them.

Sir K. Joseph

I thank the Minister of State at least for his attitude to containers, but my hon. Friends and I are very disappointed with the rest of his speech. Nevertheless, I ask my hon. Friends to consider that it might be better not to press the matter to a Division, to give us more time for the important group of Amendments relating to surgical instruments, and also to enable us to get, before too long, to the vital export Amendment which the Government have tabled.

So that we can discuss these matters which are so important for industry, I ask my hon. Friends to consider not pressing the Amendment to a Division.

Amendment negatived.

Mr. Patrick Jenkin

I beg to move Amendment No. 69, in page 9, line 45, leave out from beginning to end of line 15 on page 10 and insert:

Chapter 89 … Ships, boats and floating structures.
The only point on the Amendment—and I put it pursuant to representations made by a business man in my constituency to my hon. Friend the Member for Chigwell (Mr. Biggs-Davison), whose constituent he is—arises in relation to the International Boat Show. There, mostly British boats are on display. As with an increasing number of these shows, it is international, and firms there bring foreign made boats here, just as British-made boats go to foreign boat shows.

The boats which will be displayed in the new year have been ordered, and in some cases are on the high seas. I imagine that a relatively small amount will as it were be taken out of the scheme if the whole of Chapter 89 were included in Schedule 1, and not merely boats of more than 80 tons and fishing boats and other classes of vessel mentioned in the First Schedule.

This is a small Amendment which will contribute to international trade, and I hope that the Financial Secretary will feel able to make a sympathetic reply, possibly with a view to looking at this after the Bill has become law and making the necessary addition to the Schedule.

Mr. Harold Lever

The present exemption covers the largest sea-going vessels which could be mainly engaged in commerce, and light vessels, dredgers. floating cranes and floating docks used in maintaining ships or navigation. It does not exempt pleasure yachts or similar vessels of fewer than 80 tons, and that is not an unreasonable split. The hon. Gentleman moderately pressed his case for yachts at exhibitions. I can set his mind at rest. Yachts which come purely for exhibition purposes are not chargeable to the deposit.

I would only say, further, that, on this Amendment, we are on course. I say, "Steady as we go".

Sir K. Joseph

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Burden

I beg to move Amendment No. 93, in page 10, line 16, at end insert— Medical and surgical instruments and apparatus within 90.17. I must say straight away that I am filled with quite a lot of hope. It seems that the Government's attitude is changing. I accept, of course, that these are manufactured goods. They are most clearly defined, and they appeal to a very restricted and professional market. They are for the supply of equipment to skilled professional men and women engaged in the treatment of human and animal suffering, illness and disease.

I would point out that the Customs tables very clearly define what items come within this sphere. The cost of imports of medical, dental, surgical, and veterinary instruments in 1966 amounted to a total of £4,282,144, and some of these items are at present free. Among the free articles are aorted heart valves and Mitchell heart valves, and it would surely seem only logical that these should still be free.

The range of duties on medical appliances and equipment go from 12½ per cent. in the lowest scale to 32 per cent. and those from E.F.T.A. and Commonwealth countries are all free of duty. I would remind the Government that if there is to be a continuation of imports on the same scale as in 1966, then a deposit of about £2 million will be required; and yet all these items for which we are asking exemption are needed solely for the treatment of injury and suffering and disease in human beings and in animals. They are used almost entirely by hospitals and the hospital services and, therefore, a great amount of the money which is expended on them comes from the National Health Service. They are used in clinics, both private and those established in the Service, and by doctors for the treatment of human suffering and injury.

I ask the First Secretary and his right hon. Friends to consider very carefully whether these life-saving items could not be exempted from the charge.

12.30 a.m.

Mr. Taverne

The hon. Member for Gillingham (Mr. Burden) has made out a case which is deserving of careful consideration. We have not generally, under the Bill, been able to exempt imports because they were for a worthwhile purpose. The Financial Secretary had a long discussion with hon. Members earlier about chemicals, pharmaceuticals and medicaments, when much the same principles had to apply as applied to other products. Much as we would like to free an importer from the burden of the deposit if the import was for a particularly humane purpose, we cannot proceed in that way.

If there is any shortage of these instruments because importers are unable to obtain the money for the deposits—which seems inconceivable—action could and would be taken. As the hon. Member fairly realised, these are manufactures, and not an insignificant quantity—£4 million worth, for which deposits amounting to £1 million, and not £2 million, would have to be found. I do not see that there will be any difficulty in raising the deposits.

If we exempted goods for this purpose, we would then open a wide door to pressure for other worthwhile exemptions. In the circumstances, although the position will be kept under review, I would not advise the Committee to accept the Amendment.

Mr. Patrick Jenkin

I cannot believe that the Minister of State was happy at having to deliver that reply. It was a typical example of what is wrong with a scheme like this. For a Minister to refuse a request as reasonable and modest as this—and one which was reasonably put by my hon. Friend the Member for Gillingham (Mr. Burden)—is a condemnation of the whole of this scheme. It is entirely appropriate that my right hon. and hon. Friends should support my hon. Friend should he be disposed to press his Amendment to a Division.

Mr. Burden

We are extremely disappointed at the Minister's reply. Even at this last stage, I would ask the hon. and learned Gentleman to reconsider the matter—

Mr. Taverne indicated dissent.

Mr. Burden

He shakes his head. I think that the Government have gone as low as they possibly can on this, one of the last Amendments to be considered during Committee stage. They are saying that, before any exemptions for medical appliances and instruments necessary for the relief of human suffering can be made, it must be shown that there is a shortage, which means that the suffering must take place before they will—

Mr. Taverne indicated dissent.

Mr. Burden

Yes, that is what the hon. and learned Gentleman said—

Mr. Taverne

No, there is no likelihood of any kind that those who will be needing these instruments will be unable to raise the deposits to import them.

Mr. Burden

That is pure supposition. It may be pure supposition on my part to say that there will be suffering, but in circumstances like this it is better to avoid any possibility of suffering being caused, and remove this imposition. I must ask my right hon. and hon. Friends to join me in expressing our disgust in the Lobby.

Question put, That the Amendment be made:—

The Committee divided: Ayes 101, Noes 159.

Division No 28.] AYES [12.25 a.m.
Alison, Michael (Barkston Ash) Hall-Davis A. G. F. Page, Graham (Crosby)
Awdry, Daniel Harrison, Col. Sir Harwood (Eye) Page, John (Harrow, W.)
Bennett, Dr. Reginald (Gos. & Fhm) Hiley, Joseph Pink, R. Bonner
Biffen, John Hill, J. E. B. Powell, Rt. Hn. J. Enoch
Blaker, Peter Holland, Philip Price, David (Eastleigh)
Boardman, Tom (Leicester, S.W.) Hordern, Peter Pym, Francis
Body, Richard Hunt, John Renton, Rt. Hn. Sir David
Boyle, Rt. Hn. Sir Edward Iremonger, T. L. Rhys Williams, Sir Brandon
Braine, Bernard Irvine, Bryant Godman (Rye) Rossi, Hugh (Hornsey)
Buchanan-Smith, Alick (Angus, N & M) Jenkin, Patrick (Woodford) Royle, Anthony
Buck, Antony (Colchester) Johnson Smith, G. (E. Grinstead) Russell, Sir Ronald
Burden, F. A. Jopling, Michael Scott, Nicholas
Campbell, B. (Oldham, W.) Joseph, Rt. Hn. Sir Keith Shaw, Michael (Sc'b'gh & Whitby)
Carlisle, Mark Kershaw, Anthony Silvester, Frederick
Channon, H. P. G. Kimball, Marcus Sinclair, Sir George
Clark, Henry Kirk, Peter Smith, Dudley (W'wick & L'mington)
Cooke, Robert Kitson, Timothy Steel, David (Roxburgh)
Costain, A. P. Knight, Mrs Jill Taylor, Sir Charles (Eastbourne)
Crowder, F. P. Legge-Bourke, Sir Harry Taylor, Frank (Moss Side)
Davidson, James (Aberdeenshire, W.) Lloyd, Ian (P'tsm'th, Langstone) Tilney, John
Dean, Paul. Longden, Gilbert Turton, Rt. Hn. R. H.
Drayson, G. B. Lubbock, Eric Waddington, David
Eden, Sir John McNair-Wilson, Patrick Webster, David
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Mackenzie, Alasdair (Ross & Crom'ty) Wells, John (Maidstone)
Emery, Peter Marples, Rt. Hn. Ernest Whitelaw, Rt. Hn. William
Eyre, Reginald Mawby, Ray Williams, Donald (Dudley)
Fletcher-Cooke, Charles Maxwell-Hyslop, R. J. Winstanley, Dr. M. P.
Fraser, Rt. Hn. Hugh (St'fford & Stone) Mills, Peter (Torrington) Wolrige-Cordon, Patrick
Giles, Rear-Adm. Morgan More, Jasper Worsley, Marcus
Gilmour, Sir John (Fife, E.) Morrison, Charles (Devizes) Wright, Esmond
Glover, Sir Douglas Munro-Lucas-Tooth, Sir Hugh
Goodhart, Philip Murton, Oscar TELLERS FOR THE AYES:
Gower, Raymond Nabarro, Sir Gerald Mr Hector Moore and
Gresham Cooke, R. Noble, Rt. Hn. Michael Mr. Bernard Weatherill
Gurden, Harold Osborn, John (Hallam)
NOES
Abse, Leo Faulds, Andrew Lestor, Miss Joan
Allaun, Frank (Salford, E.) Fennyhough, E. Lever, Harold (Cheetham)
Alldritt, Walter Fitch, Alan (Wigan) Lewis, Ron (Carlisle)
Allen, Scholefield Fletcher, Ted (Darlington) Lomas, Kenneth
Anderson, Donald Foley, Maurice Macdonald, A. H.
Archer, Peter Ford, Ben McGuire, Michael
Armstrong, Ernest Forrester, John Mackie, John
Ashton, Joe (Bassetlaw) Fowler, Gerry Mackintosh, John P.
Atkins, Ronald (Preston, N.) Freeson, Reginald Maclennan, Robert
Atkinson, Norman (Tottenham) Gardner, Tony McMillan, Tom (Glasgow, C.)
Barnett, Joel Gordon Walker, Rt. Hn. P. C. McNamara, J. Kevin
Beaney, Alan Gray Dr. Hugh (Yarmouth) Mahon, Peter (Preston, S.)
Benn, Rt. Hn. Anthony Wedgwood Greenwood, Rt. Hn. Anthony Mahon, Simon (Bootle)
Bennett, James (G'gow, Bridgeton) Gregory, Arnold Mallalieu, J. P. W. (Huddersfield, E.)
Bidwell, Sydney Grey, Charles (Durham) Manuel, Archie
Bishop, E. S. Griffiths, David (Rother Valley) Mapp, Charles
Blenkinsop, Arthur Griffiths, Will (Exchange) Marks, Kenneth
Booth, Albert Hamilton, James (Bothwell) Mason, Rt. Hn. Roy
Boston, Terence Hamling, William Mikardo, Ian
Brown, Bob (N'c'tle-upon-Tyne, W.) Hannan, William Millan, Bruce
Brown, R. W. (Shoreditch & F'bury) Harper, Joseph Miller, Dr. M. S.
Buchanan, Richard (G'gow, Sp'burn) Harrison, Walter (Wakefield) Milne, Edward (Blyth)
Butler, Mrs. Joyce (Wood Green) Hart, Rt. Hn. Judith Morgan, Elystan (Cardiganshire)
Callaghan, Rt. Hn. James Haseldine, Norman Morris, Alfred (Wythenshawe)
Cant, R. B. Hazell, Bert Morris, Charles R. (Openshaw)
Carmichael, Neil Herbison, Rt. Hn. Margaret Morris, John (Aberavon)
Castle, Rt. Hn. Barbara Horner, John Moyle, Roland
Coe, Denis Houghton, Rt. Hn. Douglas Mulley, Rt. Hn. Frederick
Dalyell, Tam Howarth, Robert (Bolton, E.) Noel-Baker, Rt. Hn. Philip (Derby, S.)
Davies, Ednyfed Hudson (Conway) Howell, Denis (Small Heath) Ogden, Eric
Davies, Dr. Ernest (Stretford) Huckfield, Leslie O'Malley, Brian
Davies, Ifor (Gower) Hughes, Emrys (Ayrshire, S.) Orme, Stanley
Dewar, Donald Hughes, Roy (Newport) Oswald, Thomas
Diamond, Rt. Hn. John Jackson, Peter M. (High Peak) Owen, Dr David (Plymouth, S'tn)
Dickens, James Janner, Sir Barnett Page, Derek (King's Lynn)
Dobson, Ray Jay, Rt. Hn. Douglas Paget, R. T.
Doig, Peter Johnson, James (K'ston-on-Hull, W.) Palmer, Arthur
Dunn, James A. Jones, Dan (Bunley) Pavitt, Laurence
Eadie, Alex Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Peart, Rt. Hn. Fred
Edelman, Maurice Jones, T. Alec (Rhondda, West) Perry, George H. (Nottingham, S.)
Ellis, John Kenyon, Clifford Roberts, Albert (Normanton)
Ennals, David Lawson, George Roberts, Rt. Hn. Coronwy
Evans, Fred (Caerphilly) Leadbitter, Ted Roebuck, Roy
Evans, Ioan L. (Birm'h'm, Yardley) Lee, Rt. Hn. Jennie (Cannock) Rose, Paul
Ross, Rt. Hn. William Summerskill, Hn. Dr. Shirley Whitlock, William
Rowlands, E. (Cardiff, N.) Swain, Thomas Williams, Alan (Swansea, W.)
Shaw, Arnold (Ilford, S.) Taverne, Dick Williams, Mrs. Shirley (Hitchin)
Short, Mrs. Renée (W'hampton, N.E.) Tinn, James Wilson, William (Coventry, S.)
Silkin, Rt. Hn. John (Deptford) Urwin, T. W. Woof, Robert
Silverman, Julius Varley, Eric G.
Slater, Joseph Wainwright, Edwin (Dearne Valley) TELLERS FOR THE NOES:
Small, William Wallace, George Mr. Ernest G. Perry and
Snow, Julian Watkins, David (Consett) Mr. Neil McBride
Steele, Thomas (Dunbartonshire, W.) Wellbeloved, James
Strauss, Rt. Hn. G. R. Wells, William (Walsall, N.)
Mr. Emery

On a point of order, Mr. Brewis. May I refer you to Standing Order No. 48, which makes it clear that, in Committee or at any other stage, the procedure is such that no new Clause may be considered without notice? If that is so, what is the minimum notice that may be given so that a new Clause can be considered on Report if we proceed to that stage immediately after the Committee stage?

12.45 a.m.

The Temporary Chairman (Mr. John Brew is)

That is not a matter for me. The hon. Gentleman will have to make his point of order to Mr. Speaker.

Sir D. Glover

Further to that point of order. My hon. Friend the Member for Honiton (Mr. Emery) has raised a matter of very great importance to the Committee, and I am sure that he would like the advice of the Chair. How can he make that submission to Mr. Speaker when we are in Committee? If, by the time we cease to be in Committee and are back in the House, it is too late for him to make that submission, as is only too likely by the Ruling of the Chair, what protection is there for the rights of back benchers? We are here in very great danger of the rights of back benchers being overridden by the Ruling of the Chair.

The Temporary Chairman

I regret to say that the time has passed in which new

Goods for export
5 3.—(1) The Commissioners may remit import deposit payable in respect of any goods if satisfied—
(a) that it is intended to re-export the imported goods, or goods incorporating the imported goods, or goods manufactured or produced from the imported goods; or
(b) that the remission of import deposit would conduce to the exportation of other goods, being goods constituting or incorporating, or manufactured or produced from, equivalent articles.
10 (2) The Commissioners may repay import deposit paid in respect of any goods if satisfied that those goods, or goods incorporating the imported goods, or manufactured or produced from the imported goods, have been exported.
15 (3) Any remission or repayment of import deposit under this paragraph shall be subject to such conditions and restrictions, if any, as the Commissioners may think fit to impose for the protection of the Revenue; and if any condition or restriction so imposed is not complied with, or if, where import deposit has been remitted under paragraph

Clauses can be taken in Committee. That is as far as I can go, because I am occupying the Chair. I cannot give any ruling on behalf of Mr. Speaker.

Mr. Michael Jopling (Westmorland) rose—

The CHAIRMAN, being of the opinion that the principle of the Schedule and any matters arising thereon had been adequately discussed in the course of debate on the Amendments proposed thereto, forthwith put the Question, pursuant to Standing Order No. 47 (Debate on Clause or Schedule standing part), That this Schedule be the First Schedule to the Bill.

Schedule agreed to.

Mr. Jopling

On a point of order, Mr. Brewis. Is it not possible for us to discuss Schedule 1? I rose when you started to put the Question.

The Temporary Chairman

Order. I regret to say that it is not debateable. It is the Chairman's discretion. I have put the Question. We must move on to Amendment No. 73.

Forward to