HC Deb 26 November 1968 vol 774 cc203-60

Question again proposed.

Sir Keith Joseph (Leeds, North-East)

On a point of order, Mr. Speaker. There appears to be no representative of the Government present. Are we to assume that the Whip will answer the questions which we shall be putting?

Mr. Speaker

It is not a matter for the Chair. I imagine the Minister is coming. Mr. Leadbitter.

10.01 a.m.

Mr. Ted Leadbitter (The Hartlepools) rose

Sir Gerald Nabarro (Worcestershire, South)

Always late on parade.

Mr. Leadbitter

Now that the Minister is here, perhaps the Opposition will allow us to get on. After yesterday's hectic debate we are addressing ourselves to a Resolution. Yesterday the Minister made it quite clear that the conditions involved in the preparation of this Resolution restricted the debate in that we could not talk in terms of deductions, but that there were facilities to provide at some future point for additions to the list.

Yesterday there was a major argument during the debate on the economic position when the Leader of the Opposition, speaking about import deposits, said: On the question of import deposits, I would like to put some questions to the Chancellor of the Exchequer. We have sometimes asked him to examine this proposal and tell the House what were the pros and cons of having import deposits. I take it from that that there was, at some point, a firm conviction that import deposits were a formula to deal with the control of imports acceptable to the Opposition.

Sir G. Nabarro

The hon. Gentleman must not put words into our mouths. It is possible that during the days of a Tory Government there were machinations inside the Treasury or elsewhere as to import deposits, or similar manoeuvres, but it has never been debated in this House nor by my party, in Committee or elsewhere. I disclaim all knowledge or responsibility for it.

Mr. Leadbitter

The hon. Gentleman has not taken the point. Yesterday the right hon. Member for Barnet (Mr. Maudling) and the right hon. Member for Enfield, West (Mr. Iain Macleod) did not deny support for this form of import control. My hon. Friend made it clear that this was the lesser of a number of evils. He would not be persuaded to oppose the principle. Yesterday the Leader of the Opposition said: We have sometimes asked him to examine this proposal. The hon. Member for Worcestershire, South (Sir G. Nabarro) should try to contain himself and allow an hon. Member to pursue his speech.

But I am not persuaded that import deposits will prove to be the right answer. They involve a great deal of supposition and I doubt whether it will ease the basic malaise of the country. Because there is a six-month "carryover" requiring 50 per cent. of the cost of the goods to be deposited, it will give the Government an interest-free gift of considerable value. The real question is whether it will control the inflow of imports. I doubt whether there will be any more than a marginal advantage.

Sir Cyril Osborne (Louth)

The hon. Member spoke of a "gift" free of interest. It is not a gift, it is a loan.

Mr. Leadbitter

I think that "loan" might be better in this context. The hon. Member for Louth (Sir C. Osborne) is quite right and I am pleased that he is following my speech with his normal care.

We are basically concerned with how to solve the problem of imbalance between imports and exports. It is no good the House satisfying itself in the short term of an advantage, financial or otherwise, which does not tackle the long-term problem of establishing equilibrium between import and export trading. There were only seven occasions in the last 30 or 40 years when we had a reasonable balance on the balance of trade as distinct from the balance of payments.

I ask the Minister not to persuade us that this solution, like many others we have tried, is necessarily one in which we can have complete faith. It is wrong to mislead the country into thinking that this is the answer to the problem. One of the Government's weaknesses has been in trying to persuade people that a solution based upon orthodox economic thinking is the answer to a problem which clearly must find its solution elsewhere, not necessarily with clever Resolutions placed before the House.

I am interested in the development areas in this context and I am very much Aware that the kind of answers I receive when asking about the application of S.E.T. and the regional employment premium to these areas—which was "we cannot discriminate"—will be given when I ask questions about import deposits. In other words, if I suggest to the Minister that we want special treatment for the development areas, the answer is more than likely to be "we cannot discriminate." I take the point, but the problem is there very strongly in the development areas.

In yesterday's debates the Leader of the Opposition said: The import deposits, too, will greatly damage the smaller firms because they are the ones who are without the liquid resources of which the Government contantly talk.…" [Official Report, 25th November, 1968; Vol. 774, c. 40–1.] The House must not try to make political points on such an occasion. Is there a worry about the small or medium firm, and will that worry be any larger in development areas, where there has already been a good deal of capital investment? The answer is "Yes".

I have an instance which came to me yesterday, of a firm which some time ago ordered from Germany a machine tool which was to produce springs for the motor industry, Fords in particular. The object of the exercise was to take advantage of the need to restrict imports. Such springs are normally imported from America, and the firm thought it could develop a market in this very lucrative section of the motor trade. The firm's representatives state that the firm cannot get credit, because the tool will be delivered after 27th November—in fact, within the next fortnight.

Two questions arise. First, are we, because of the Resolution, to create difficulties which such firms could not have foreseen when they placed orders? This firm will be obliged to pay a deposit of about£3,000 on the import of this tool. Because of the Chancellor's measures, it cannot get the credit. Firms could not have foreseen this situation, and some will have their equipment impounded or returned to the exporting country. Must there be some other arrangement arrived at between buyer and seller of such a nature that the time factor will militate against the economic advantages which firms sought when placing orders?

The Minister would help the House if he could assure us that, where equipment was ordered before 27th November and is likely to be delivered within the next six months, some form of credit facility will be made available which will not destroy the Government's main objectives.

Britain has an investment in many industries, particularly medium and small-sized industries—namely, the type of investment which persuaded these industries to move from their parent anchorage to development areas. We cannot afford either the social loss which is ultimately involved in terms of employment or the economic loss if firms which do not have the liquidity to meet the restriction on credit facilities have to restrict their manufacturing capacity or close down.

On the second and more complex part of my case, will the Minister give an assurance that he will consult with the greatest of care and without prejudice? We are prone to think that once a Government have made decisions, the areas of discussion and consultation are restricted. Although the objectives behind the Resolution are acceptable in general terms, I ask the Minister to consult industry and the Economic Planning Councils so as to remove difficulties, as far as practicable, in the first six months of the operation of the scheme.

Sir C. Osborne

Is the hon. Gentleman's plea that the Minister should exempt orders already placed, especially for machine tools, which are vital, or does the hon. Gentleman want the scheme postponed for six months?

Mr. Leadbitter

It would be undesirable to add to the anomalies which will already arise in this scheme, not dissimilar to those which I and many other hon. Members foresaw in relation to S.E.T. If exemptions cannot be made—they would add to the anomalies—I ask for a holding operation. If small and medium-sized firms make it abundantly clear to the Minister that they have not got the liquid assets to meet the deposit, I ask the Minister to consult, in the interests of the nation, the relevant bodies with a view to relieving the firms from the obligation to make the deposits or with a view to their making smaller deposits. In my experience, an acceptable formula can always be worked out. The Minister said yesterday that there is an open end to the Motion. We can widen it and add to the principle of extending the list of exemptions the principle of a holding operation in cases of hardship.

Britain must not think that when politicians mouth solutions the right path has necessarily been indicated. Britain must face the need to understand the extent to which we have been restricted in our manoeuvrability to solve our economic problems. I am appalled at one of the conditions of the International Monetary Fund, which grew out of the Bretton Woods agreement, namely, that Britain, with all its peculiar and complex problems, which are different in nature and character from those afflicting the other 60 affiliated bodies to the I.M.F.—incidentally, those not affiliated include Switzerland and several Eastern bloc countries—

Mr. Speaker

Order. The hon. Gentleman has been quite on the target so far. He must not, however, widen the debate. We cannot go over yesterday's economic debate. The hon. Gentleman himself pointed out that we are debating a Resolution.

Mr. Leadbitter

I accept your ruling, Sir, which came just as I was about to conclude my point. I am appalled that we have to introduce a scheme like this when the international conditions are such that we are, by agreement, limited in terms of import quotas and export subsidies. Britain—traditionally, geographically, and in terms of population and industry—is very different from any other country. The imposition of import duties is not a solution of our own choosing. Therefore, it cannot be the best solution to our problems.

I hope that my right hon. Friend the Chancellor and my hon. Friend the Financial Secretary, who understand far better than I the implications of what I am saying within such limited terms of reference, will remember that we are anxious, not to question import deposits too much at this stage, but to convince the Government of the need to express in the international forums of trade—G.A.T.T., the E.F.T.A. countries, the I.M.F., and the International Bank—the fact that we have a special problem, the solution to which those bodies cannot and should not dictate to us. We know best how to do our own business.

Although I am not opposed to the import deposits scheme provided for here, I hope, therefore, that my hon. Friend will note the three points which I have made. First, will he consider the plea I put regarding firms which ordered before 27th November and will have their equipment delivered just after but which have limited means to meet the deposit? Second, will he bear in mind the small and medium-size firms in development areas and elsewhere which might need help because of hardship? Third, will he recognise the need to grasp the means whereby we can deal with our problems and, for once, allow Parliament to provide solutions of our own choosing, not those dictated from abroad?

10.20 a.m.

Mr. John Nott (St. Ives)

Unlike some of my hon. Friends who spoke last night, I do not wish to make any changes in the Resolution, and neither do I wish to relieve or reduce, as the hon. Member for The Hartlepools (Mr. Leadbitter) does, some of the burdens which will be put upon companies. I wish to discard the wretched Resolution altogether. It will do great damage to this country in the medium and longer term.

Import deposits are a highly complicated subject and no one can be certain what the effect of the Resolution will be, but my conclusion is that, although it will have immediate beneficial effects on the balance of payments—I do not doubt that—it will have highly adverse medium and long-term effects on the economy which will cancel out any opportunity we ever had of moving into an export-led boom. Even worse, its effect will be to shift our productive capacity in Britain away from exporting into domestic production.

As this is a narrow debate on the Motion, not the Second Reading of the Bill, I shall not concentrate on the most obvious objections to the Resolution. The hon. Member for The Hartlepools listed some of them. We are a trading nation more dependent on the growth of world trade than any other, and a scheme of this kind which in any way restricts world trade must hurt us more than it hurts practically any other country. Second, any restriction of this kind must lead to some form of retaliation from other countries. I am sure that the Financial Secretary and Ministers at the Board of Trade recognise that there will be some retaliation, though how much it is difficult to say.

There is no doubt that deposits are listed in the G.A.T.T. list of barriers which should be eliminated. There is likely io be some semantic argument about whether these deposits are to be deemed duties or "temporarily frozen funds." I believe that this is one of the gimmicks which the Government are working out in an effort to avoid their E.F.T.A. obligations. But, as one of the E.F.T.A. Ministers said the other day: Britain's introduction of special deposits is part of an international movement to exploit the small print of trade agreements, in which the only rule is that you do what you can get away with.… The Government are making much too frequent attempts to get away from, or absolve themselves from, those international agreements.

Likewise, I am told that the reason why the Japanese abandoned a similar scheme which they ran for many years was that it was against the I.M.F. rules on current transactions. Thus, although the Government may twist and turn, saying that the scheme underlying this Motion does not evade our obligations to E.F.T.A. and the I.M.F., it is a semantic argument and they must know only too well that the spirit of the E.F.T.A. agreement, the spirit of the G.A.T.T. and the spirit of our obligations to the I.M.F. are being transgressed.

In addition to those fundamental objections, there is the fact that the United States is entering a period of greater protectionism, and what the Government now propose will encourage that trend. Undoubtedly, it will do great damage to the under-developed countries and the developing nations. A good many materials not exempted in the list come from the under-developed countries, and the consequence for them, marginal, perhaps, but none the less real, will be greater instability.

Finally, the Motion lays the Government open to special pleading. Last night, we had plenty of opportunities for that from both sides of the House. It lays the Government open to one party who wants an exemption for this, another who wants exemption for that, and to discrimination between one industry and another. We shall see more and more of that pressure building up over the next few weeks for exemptions to be added to the list.

Moreover, the scheme insulates certain industries—perhaps that is the intention —from foreign competition. But this is contrary to all the Government's other policies in this connection, their policy on large mergers, for example, which is aimed at improving competitive power in international markets. Why have a policy to build up export potential and competitive potential vis-a-vis foreign nations and at the same time provide for import deposits here which mollycoddle our domestic industries?

To be set against all those disadvantages, disadvantages which I am sure the Government recognise, there could be some gains, but it is a fine matter of judgment at any given time whether import deposits as provided for in the Motion are likely to work. My contention is that the present conditions in the British economy mean that, far from the Ways and Means Motion having the effect which the Government seek, it will have the effect of cutting down our exports just as much as it reduces our imports.

Before elaborating that point, I have a technical question to put to the Financial Secretary. The hon. Gentleman is probably in a better position to answer it than the Board of Trade Ministers, who are sadly absent from the debate. In passing, one must note that, although the Motion is a Treasury responsibility, publication of the Bill is expected today and the Second Reading debate is to come on Thursday, so that one might assume that there should be at least one Minister from the Board of Trade here to listen to the arguments of the House and, one hopes, embody them—

Sir D. Glover

The President of the Board of Trade has probably gone to discuss the matter with E.F.T.A.

Mr. Nott

That is more than likely. From what one has heard, it will be a rather long discussion.

Now, my question to the Financial Secretary. A large proportion of imports coming into this country—I do not know the precise volume—come in through foreign-controlled importers, perhaps a branch or a subsidiary company of the foreign producer of, for instance, refrigerators or motor cars. The Motion will not work at all in relation to these foreign imports if the Bank of England makes life easier for the foreign-controlled importers by operating in the forward exchange market. This is a technical point but it is directly relevant to the way the import deposits scheme will operate.

The foreign-controlled importer will try to raise the finance to meet his deposit as required under the Motion by borrowing money abroad. As my hon. Friend the Member for the Cities and London and Westminster (Mr. John Smith) said last night, the scheme will impose enormous strain on the banking system in this country. Every importer will accordingly do his utmost to finance his deposits by foreign funds. Thus, the foreign importer or the importer controlled from abroad will borrow the money required under the Motion in foreign currency, will then buy sterling in the spot market, and sell it in the forward market to protect himself against exchange risks. I am sure that the Financial Secretary is aware of the point I am making.

Thus, we will get purchases of spot sterling and sales of forward sterling in the six months forward market. In this way, the money which has been borrowed abroad will have been protected against any movement in exchange rates over the six months now coming. We must, I think, expect that exchange rates could move in the next six months. Will the Bank of England support the forward market? Since devaluation, as far as we are aware, it has ceased to support the forward market in sterling. That is the evidence. If large pressure is put on the forward market to cover exchange risk, is the bank going to come back into the forward market and support sterling or will it keep out? This is a vitally important point.

Mr. Harold Lever

It may be a vital point but it does not seem to me one that is immediately for discussion on the Floor of the House.

Mr. Nott

Not for discussion?

Mr. Lever

I would have thought not. That is my immediate reaction.

Mr. Nott

I disagree with the hon. Gentleman. Are there certain matters relating to this Resolution which should not be discussed on the Floor of the House?

Mr. Lever

The hon. Gentleman is inviting me to expound on what future Bank of England forward market policy might be. He is really like Diogenese, who begged alms from the statute and practised disappointment. He is unlikely to hear me expound the Bank of England's forward market policy on the Floor of the House. It is hard to get me to talk about the past.

Mr. Nott

Certainly. I am not necessarily expecting the hon. Gentleman to answer my questions. The day I get my questions answered by the Government the sword of Damocles will fall. Nevertheless, the point I am making is relevant to the Resolution and I hope that he will take note of it. Perhaps I can leave the point there for the moment.

If the Bank of England does not support the forward market, then we shall see discount on forward sterling rising considerably, and this will reflect on the whole strength of sterling and is something which the Treasury will not wish to happen. If, on the other hand, the Bank keeps out of the forward market, it will mean that more and more people will be able to finance their deposits by borrowing the money abroad and thereby evading what I assume to be the purpose of this Resolution, which is to restrict imports to the maximum possible extent.

I believe that a system of this kind will only succeed in its objectives if there is not an excess of liquidity in the economy at the time it is introduced. I am aware that the Government have imposed one credit squeeze after another, but the recent Treasury bulletin pointed out that money supply has been rising at the rate of 6 per cent. per annum and this is far higher than the rate of growth of the economy as a whole.

It is clear that people are prepared to continue to run down their savings to maintain their standards of living and that a cut in effective demand is almost impossible to achieve in present circumstances. Consumption in this country has only fallen once since the war and, although the Chancellor's whole objective is to cut back on consumption, he has obviously signally failed to do so up to now.

If this is the situation, what will happen to demand for goods in the domestic market which previously was applied to the purchase of imported goods? The import deposits system will transfer purchases from imported goods to domestically produced goods. But it has been Government policy all along, although hon. Members opposite have been angry about to maintain a margin of spare capacity in the economy. If that demand is to be taken away from imported goods and shifted to domestically produced goods, the Government will see that spare capacity rapidly taken away. wage rates rising and unemployment falling—something which hon. Members opposite and we all desire but which is not Government policy, as is shown by the introduction of the credit restriction Measures.

The pressure upon domestically produced goods will rise as a result of these proposals. Manufacturers who now have some spare capacity and supply the export markets will take the soft and easy option, which they always do, and will supply the domestic market. If the hon. Gentleman really believes that this Resolution will succeed, in a situation where the Government are unable to restrain consumption and where consumer demand will be shifted from imported to domestically produced goods, thereby taking up capacity now available for export goods, he is mistaken.

The need to meet increased demand for hone produced goods in the market will undoubtedly lead to companies prod- ucing for the home market paying big enough wage rates, which means that, in turn, the exporting firms, in order to retain their labour, will have to raise wage rates in order to meet the increased competition in the labour market.

I believe that with the amount of liquidity in the economy now, with the evidence that consumers are not prepared to reduce their demands, and with no evidence that the Government are changing basically their fundamental policy of money supply, this Resolution will not have the effect of cutting down imports any more than it will have the effect of reducing our exports. I believe that the two will cancel out each other.

The export relief provisions embodied in the Resolution will create an appalling administrative muddle. I do not understand how they are going to work. One example has been given today in the Press. This is the Ford tractor factory at Basildon, one of the biggest exporting plants in the country. But it is very much an assembly plant. It imports parts from Antwerp and Copenhagen. How are the Government going to get over the relief provisions to some of our biggest exporting companies? There is going to be an appalling muddle. The Government are also going to upset the growing trend towards multi-national production, in which British and foreign companies have come together in the manufacture of components and various articles. The system will distort these efforts towards rationalisation of purchasing as between one country and another.

The Resolution will also put many of our home manufactures more directly into the hands of domestic monopoly producers and that cannot be to the advantage of the country. For example, basically we have only one producer of certain steel tubes. Tube Investments has at least a quasi, if not a full, monopoly of production. From my experience it is vital for a company exporting bent steel tubes—a big exporting item for Britain—to he able to say to a monopoly producer, "If you do not keep prices down we will purchase the tubes from abroad." They may not do so, but if they lose their capacity to be able to do so, it is very damaging to our export effort.

Those are the reasons why I oppose the Resolution root and branch.

10.40 a.m.

Mr. Emrys Hughes (South Ayrshire)

I listened with great interest to the speech of the hon. Member for St. Ives (Mr. Nott). I fail to understand why he has fundamental objections to these import impositions. Yesterday, the Leader of the Opposition advocated an elaborate scheme of import duties on agricultural products, and if that is to be the Opposition's programme, I fail to see why the hon. Gentleman should have fundamental objections to this Resolution.

I agree with him at least in thinking that it is a highly complicated and complex problem which the ordinary man in the street does not understand. I would welcome an announcement that the Government intend to produce a popular illustrated booklet to explain the matter. [Laughter.] It is all very well for Members to laugh, but if something is complicated, it is necessary to explain it to the ordinary citizen. I will make the effort if some hon. Member opposite will subsidise me.

I support the Resolution, because I believe that years ago the economy would have benefited if the Government had acted to prohibit unnecessary imports. By unnecessary imports I mean gaming machines, which are unnecessary in the present economic situation. I would long ago have banned the import of one-armed bandits and other gambling machines of that kind from the United States of America.

Mr. Michael Alison (Barkston Ash)

Would not the hon. Gentleman agree that on his hypothesis it would be perfectly reasonable for the United States Government to say that the import of British artificial eyelashes into the United States was likewise superfluous and unnecessary? While that may not matter to the hon. Gentleman, many people who now make artificial eyelashes would be put out of work.

Mr. Speaker

We cannot debate an American Ways and Means resolution.

Mr. Hughes

That illustrates the craziness of our international trading arrangements. The hon. Gentleman argues that we buy one-armed bandits from America which in return buys artificial eyelashes from us. That demonstrates the need to rationalise international trade.

Sir G. Nabarro

Would not the hon. Gentleman admit at once that all international trade is a two-way affair and that if we ban certain types of mechanical equipment from the United States, or anywhere else, the country concerned will reciprocate and ban the import of our M.G., Rolls-Royce, Morris, Austin and other motor cars which we export?

Mr. Hughes

That is the classic argument of the free trader and I am glad to see that the hon. Gentleman is coming out as a strong supporter of the old Liberal doctrine of unrestricted free trade, but I warn him that his argument is entirely contradictory. The other day he asked the Secretary of State for Defence why we should import American aircraft. I entirely agree with the hon. Gentleman's view about that. The country cannot afford to import American military aircraft, or American military material for aircraft.

In my constituency there is a distillery which produces, among other things, whisky, gin and vodka. The market for these is the United States.

Sir G. Nabarro

No, Bloody Marys here.

Mr. Hughes

I will not indulge in language of that kind about a commodity which is consumed in my constituency. I am glad to be carrying the hon. Gentleman with me. This is the first time that I have been able to carry him with me so far in my argument.

The argument is that we must export more whisky, more gin and more vodka to the United States and because of that, according to the hon. Gentleman, we must import goods from the United States. There is considerable feeling about this in Scotland. The price of whisky has gone up by 4s. a bottle on the argument that consumption of whisky in the home market must be restricted in order to increase exports.

Sir G. Nabarro

The hon. Gentleman has got it quite wrong. A Bloody Mary is a well known drink which has three constituents; one is vodka, the second is Worcester sauce, and the third is tomato juice. Worcester sauce and tomato juice are produced in South Worcestershire and vodka is produced in South Ayrshire, which is exactly complementary.

Mr. Hughes

I think that we will agree that his constituents can drink more that the argument is becoming rather complicated. Let me get to the main point of my argument and forget about Bloody Marys, because they tempt me to make historical analogies.

Sir G. Nabarro indicated assent.

Mr. Hughes

I am getting more agreement from the hon. Gentleman this morning than I have had from him for years and he is following the argument with great attention.

I understand the argument to be that we must decrease home consumption in order to increase exports and it is said that the Scottish consumer must consume less whisky in order that whisky may be exported, which is what the distillery in my constituency does. But then comes the argument about imports. As a result, we have to tell the Scottish consumer that he must consume less whisky in order that we can increase exports and satisfy consumer demand in the United States from which we get expensive military aircraft. I contend that the consumer is getting a bad deal. It is no good my telling my constituents in South Ayrshire that it is necessary for them to export more whisky in order that the imports of material for Polaris submarines from the United States may be increased. So I agree very much with the hon. Member that this is a discriminating sort of Ways and Means Resolution. It is discriminating in a way which is very difficult to understand, but it is absolutely necessary in the present economic situation.

The paragraph starting with line 205 refers to aircraft. Are we to put an import duty upon American aircraft which have been ordered by the Ministry of Defence? This shows that very stupid decisions have been made with the approval of hon. Members opposite for buying large quantities of American aircraft to import to this country. If this Resolution will succeed in reducing imports of American aircraft or parts of American machinery, for example for Polaris submarines, I support it.

Mr. Edward M. Taylor (Glasgow, Cathcart)

Is the burden of the hon. Member's argument that we should deprive ourselves of necessary defences so that his constituents can drink more whisky?

Mr. Speaker

Order. I am being very patient, but we can not debate defence policy on this Ways and Means Resolution.

Mr. Hughes

That was the last thing I was attempting to do, Mr. Speaker. I was talking about materials which will not be subject to import duties, presumably under paragraphs starting at line 205. I do not wish to be diverted by the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor), although in parenthesis I note that he is in favour of increased public expenditure.

There are certain paragraphs in this Resolution with which we can all agree. I have doubts whether imports of sugar, raw materials and other foodstuffs will not result in an increased cost of living. We can all object from a constituency point of view and express various doubts on parts of the Resolution.

I point out, as I have frequently done before, that we must deal with an international economic situation in which we spend too much money abroad. When I am told that the Labour Government began spending money abroad, I point out that it was the Macmillan Government which decided to import all this Polaris equipment from the United States of America. In the economic interests of this nation and its standard of living, we must stop spending abroad. I welcome these import duties because they are a step in that direction.

10.54 a.m.

Mr. Graham Page (Crosby)

Just before the Sitting was suspended last night, my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) asked by what authority the import deposits would be collected in advance of the Act authorising their collection. The reply he received was not from the Financial Secretary but from further down the Treasury Bench by a Whip moving the suspension of the Sitting. It looked very much like a deliberate escape from some very accurate shooting by my right hon. Friend, who incidentally, is an ex-Treasury Minister. He seemed to be gamekeeper turned poacher. Perhaps that is not a good simile because it rather implies that the Government are now the gamekeeper. If there is one thing that the Government are not doing, it is keeping to the rules of the game.

The Resolution states in the first two lines: That there shall be charged on all goods imported into the United Kingdom on or after 27th November 1968…". I stop there because this means that this duty is to be collected as from tomorrow, whereas the Bill authorising its collection will not be passed through Parliament for perhaps three or four weeks. We have not even seen the Bill, let alone had a Second Reading of it, so it is bound to be some weeks before it becomes an Act of this Parliament. It is a basic principle of the sovereignty of Parliament on which our constitution is founded that it is necessary to have an Act of Parliament before collecting any taxes, customs and excise.

That principle was successfully reclaimed by Parliament something over half a century ago by an Act passed in 1913, on the initiative of the late Mr. Bowles, giving limited powers to collect taxes during a period between the passing of a Resolution of this House and an Act of Parliament authorising those taxes. The 1913 provisions have been revised from time to time and were eventually amended and consolidated this year in the Provisional Collection of Taxes Act, 1968. The last thing I am qualified to do is to give the House a constitutional lecture and I do not intend to try to do so, but I call attention to the history of the 1968 Act in order that hon. Members shall not think that this is a new provision which has not been tried in the past. The 1968 Act is a consolidation of an exciting chapter of the history of this House and the extent to which it can be used is already settled by precedent.

Section 1 gives temporary statutory effect to a House of Commons Resolution for the renewal, variation or abolition of any existing tax. These import duties are not an existing tax and therefore do not come under Section 1. If they did, the Resolution would have the power of an Act of Parliament for a period of time, but I do not think the Government would claim that the import duties are an existing tax.

Section 2 is only the machinery for Section 1. I shall come back to Section 3. Section 4 relates to drawbacks and Section 5 is machinery about Motions and Resolutions. Section 6 is the title, repeals and savings. Section 3, I understand, is the Section on which the Government base their claim to collect this tax as from tomorrow, although they will not have the authority of this House to collect it for several weeks. Section 3 is the only one which can be applicable. Subsection (1) says:

The draftsman the Resolution before us has brought the Resolution within that subsection by calling an import duty "a duty of Customs". Here the Government have adopted a legal fiction stating that something shall be what it is called. Import duties are to be called "duties of Customs", and therefore are to come within this Section. I think it very doubtful whether a Resolution, as opposed to an Act of Parliament, can make something what it is not by calling it what it is not; but let us assume that that is cheat No. 1 of this Resolution and that we are to call import duties "duties of Customs". The following provisions of this section shall have effect where the House of Commons passes a resolution providing for the imposition as from a specified date of any duty of customs and excise, not being a resolution to which statutory effect can be given under section 1 of this Act. I understand that the case of the Financial Secretary is that this Section which authorises the collection of security for duty authorises the collection of the whole of that duty as security. I would call this cheat No. 2. This surely cannot be a correct interpretation of that Section.

What is meant by "security"? According to Section 292 of the Customs and Excise Act, 1952, "security" is a "bond or otherwise". I should have thought that the word "otherwise" was ejusdem generis with "bond". Everybody knows what the bond is. Everybody knows that giving security for customs is a matter of delivering perhaps one's own bond, if one is trusted enough by the customs or, if not, by payment of a small premium one hands in an insurance company bond for the payment of duty. This is not collection of the whole duty. If the Government claim that they can collect the whole duty by virtue of Section 3(2) of the 1968 Act, this is wholly wrong.

Section 3 merely provides that a security for the payment of the duty may be collected. The Government must accept merely a bond if that bond is offered and they cannot insist on the full payment of duty until they have an Act to give them that authority. If the Financial Secretary gives an assurance that the full 50 per cent. will not be demanded until authorised by Act of Parliament, I shall be happy. This is not merely a matter of Parliamentary procedure. It is not merely an academic or theoretical matter; it is very real.

The example has been given from the benches opposite of the small or medium machine tool importer. He is placed in extreme embarrassment. He may have goods in transit. He may have already sold them on credit in this country. He has to get them out of Customs and deliver them to his customer. But if the Government are to collect money on the basis of this Resolution, he must find the full 50 per cent. in order to get the goods out of Customs.

Reasonably he could have been given, three of four weeks before the Measure was passed, the breathing space of providing a bond as security. That short respite would have eased the position of a large number of small and medium importers. This worries not the big boys —they can put down the money—but the man who is importing small quantities but which represent financially a large amount to him if he must find 50 per cent. of the value of the goods. The Government have no right to collect the full amount from him until an Act is on the Statute Book authorising them to do so.

This is not the first time that the Government have tried to govern the country without the authority of Parliament. This must stop before it makes Parliament a laughing stock. Have they no pride in being elected to this historical House? If they play this sort of trick on the House again and again, the House will perish. Is that what they want? They should take back this Resolution and get it in order or give the House an undertaking that the full amount will not be collected until they have the authority of an Act to collect it.

11.5 a.m

Mr. John Pardoe (Cornwall, North)

Unfortunately, there has been some talk in the debate of "unnecessary imports". I declare my position immediately by saying that I regard unnecessary imports as those which no one here will buy, and nothing else. Unnecessary imports are certainly not imports which I do not like or those of which I do not approve or which do not happen to square with my prejudices.

Last night, the debate was in grave danger of becoming a competition in protectionism. Some of the most protectionist speeches I have heard in the House were made from the Conservative benches. They were mostly concerned with the Table of exemptions. In the first few lines of the Motion, the Government propose further massive interference in the workings of the free enterprise system, and yet hardly a cheep was heard from the Conservative benches. When we came to the list of areas where the Government do not propose to intervene, the Tory back bench Members nearly burst themselves with indignation.

Last night, the Financial Secretary said that the Ways and Means Motion was drafted in such a way that exemptions could not be deleted. This seemed to make a large number of hon. Members on this side of the House very angry. Apparently, there are many hon. Members who want more rather than less protection. As I understand the Motion—and I hope that I am right—it will permit free trade amendments but not protectionist amendments. From my point of view, that is the right way round.

I hope that the right hon. Member who winds up for the Conservative Party will make it clear why it opposes the Motion. I oppose the whole Motion, but primarily because of the imposition which it lays on imports. Some Conservative Members oppose it because certain goods have been exempted. I repudiate these vote-catching sallies, this cheap way of proceeding, when one says, "Why cannot dairy products be exempted? Why cannot eggs be exempted? What about horticultural products?". I represent an agricultural constituency, and I suppose that I could make the same case. But I do not intend to be a party to this kind of nonsense, because it is hiding one's head in the sand.

I regard the whole Motion as tragic and mistaken. It is the end of the road for all those who, eight years ago, saw the beginnings of a new spirit of free trade. When one looks at this Motion, where is that spirit today? Free trade is the only policy which makes sense for Britain. Britain is a trading nation and anything which hinders free trade—and, my goodness. this Motion does that—is our enemy and anything which encourages it is our friend. I oppose the Motion because of the first four lines in it and not because of the Table of exemptions.

I think that the Motion will do more harm than good because it will work against competition and means that our industry will become less rather than more competitive. It is always easy to argue the case for protection, but whatever the short-term advantages of protection—and they are only short-term advantages—it is always disastrous for our economy in the long term. One of the reasons why we find ourselves in our present economic plight is that we have suffered over 50 years or more from weak and flabby Governments who have always succumbed to the easy, short-term advantages of protection.

Mr. Leadbitter

Would the hon. Gentleman agree that if he takes his argument too far he might well vex the much tried and harassed fishing industry?

Mr. Pardue

Yes. I have some fishermen in my constituency and I am prepared to argue this case with them, as I have done in the past. I do not believe that grubbing round the streets with cheap, little protectionist policies wins votes or helps this country in any way.

Another point which I wish to raise is the effect which this Motion will have on small firms. I do not believe that the large firms will suffer too much, although they will to a certain extent. Many small firms simply will not have adequate finance to cover the deposits. Both major parties in the House have succumbed totally and completely to the doctrine of size in economic policy, yet it is the small firms which contribute most to the growth and general health of our economy.

There are many examples of small importing firms which will go broke very soon. One example which has been given to me today concerns a firm which has on order£34,000 worth of goods which are already in the boats on their way here. This firm will have to pay a deposit of£17,000 if the Motion goes through. To do so he will have to sell up, and I suspect that there are many other firms in the same position.

Will the Financial Secretary tell us what percentage of the value of all our imports will be affected by the deposits? There is a list of exemptions, but it is impossible to see from looking at it and at the tariff list exactly what percentage of our total imports is affected by the exemptions and what percentage is affected by the deposit.

Mr. Eric Lubbock (Orpington)

The case which the hon. Member is quoting refers to a constituent of mine. In equity, the Government ought to exempt goods which are already on the way and where the contracts are irrevocable, so that importers who are unable to get the money are not in a position to cancel the contracts.

Mr. Pardoe

If the Government did not tamper with the procedures of Parliament and waited for the introduction of the Bill, the delay would ensure that this would inevitably happen.

Will the Financial Secretary also tell us what effect this imposition will have on under-developed countries and on the world poverty problem. It appears from the list that a large number of the products which we now import from poorer nations will be subject to deposit. I strongly suspect that this Motion will negate much of the good that the Ministry of Overseas Development has done. It is no good lashing out sums of money in aid if at the same time trade with these countries is restricted. What effect will the Motion have on the one-fifth of the population of the under-developed countries who are now so poor that they are actually starving? What will be the effect on the gap between per capita income in this country and, for instance, in India?

I do not believe that we need further protection from foreign competition. We need a new and buccaneering spirit of free trade. We need to recognise that we have nothing to gain from a new bout of economic nationalism. The peoples of Germany, France and this country cannot solve their problems within their own borders. We may dislike not being masters of our fate, but we cannot escape by putting up the shutters and ceasing to trade. We cannot shut out the realities of the world economic situation, which is what this Motion attempts to do.

11.12 a.m.

Sir Harry Legge-Bourke (Isle of Ely)

I support what my hon. Friend the Member for Crosby (Mr. Graham Page) has said. It does not surprise me that these impositions are being described as a duty when they are in fact a compulsory loan. Fiddling with the wording in order to get it within the scope of the Statute is a disreputable exercise. I hope that the Financial Secretary will give a satisfactory reply to the effect that these so-called duties, or loans, will not be drawn from the importers until Parliament has given proper authority for it.

The matter I wish to raise is the philosophy underlying the selection of exemptions which has been made. I wish that these loans from importers were not being called for, but if they have to be it is important that we should know the philosophy underlying the exemptions. As far as I can see from the list of exemptions, roughly foodstuffs, books, publications and some raw materials are to be exempted. How is raw material defined? In order to carry on some business in this country it is necessary to import materials which are not in a finished state but which have undergone a process which cannot be undertaken here.

I refer to lines 195 and 196 on page 911 of the Order Paper, the headings 76.01 and 77.01, dealing with unwrought aluminium and waste and scrap, and unwrought magnesium and waste and scrap. Many raw materials are required for comparatively modern products, some of which are vital to our defence programme. I should be grateful if the Financial Secretary would listen to what I have to say. I have been told this morning that there is a type of aluminium alloy which is either a eutectic alloy or a clad-brazing alloy which cannot be obtained in the United Kingdom, but which now becoming more and more essential for hovercraft, heat exchangers, oil coolers and radiators. This is a busi- ness which is building up in this country, and one would have thought that this alloy was a raw material. Since it cannot be obtained in the required form in this country, surely it ought to be included in the exemptions.

Will the Financial Secretary give an undertaking that if propositions are put to him in the course of today's debate which convince the Government of the necessity for further exemptions, a new Ways and Means Measure will be introduced by the Government in order to enable these matters to be discussed when the Bill comes before the House.

Mr. Brian Parkyn

Does the hon. Gentleman agree that this argument, on which I closely support him, applies also to many semi-manufactured goods which themselves make finally produced goods and also to many chemicals which go to make other materials which are exported?

Sir H. Legge-Bourke

I am grateful for the hon. Gentleman's support. I was merely giving one example; I am sure that there are many others. I have a partial interest in the example which I have given in that the people who have supplied me with the information are supplying a company of which I am a director. My own company does not require this material. It is obvious that there will be many slightly processed imports which cannot be so processed except outside the United Kingdom and which are absolutely essential to United Kingdom industry. I hope, therefore, that the Financial Secretary will give attention to this matter.

My next point concerns the heading 76.01, unwrought aluminium and waste and scrap, in which I must declare a direct interest. There is material known as brush grained aluminium. Brush graining may fairly soon be capable of being done to an adequate standard in the United Kingdom, I do not know, but it has an application in which I have an interest, and that is the production of offset-lithographic plates. This metal must be very reliable from the point of view of level, and this is a most difficult process to perfect. Unwrought aluminium can be imported without the importer being obliged to provide a loan, but brush grained metal is not available in the country now to the standard required. Why then should that be caught whereas the unwrought aluminium is not? This is another example along the lines suggested by the hon. Member for Bedford (Mr. Brian Parkyn).

Will the Financial Secretary give an assurance, if applications similar to the ones which I have mentioned are made from any industry, that the Government are prepared to consider introducing another Ways and Means Measure so that when the Bill is introduced we can deal with the true problems of industry and see that industry is not damaged.

Mr. Harold Lever

I should like to be clear what the hon. Gentleman is asking. Is he asking me to consider introducing a Ways and Means Resolution which will allow hon. Members to table Amendments to the Bill which would exempt materials? I assure him that the present Ways and Means Resolution will allow such Amendments to be tabled.

Sir H. Legge-Bourke

That is a considerable reassurance, but knowing how tight the rules of order must be over Ways and Means Measures, it would be unfortunate, not only for hon. Members but for the public at large, if when the Bill is before us we find ourselves being ruled out of order. As we do not want to be in that position, I trust that the Financial Secretary and the President of the Board of Trade will consider as favourably as possible receiving representations along the lines I have been making.

11.20 a.m.

Sir John Foster (Northwich)

Like my hon. Friend the Member for Crosby (Mr. Graham Page), I do not believe that the Resolution before the House will achieve the object the Government has in mind. In his statement on Friday the Chancellor of the Exchequer outlined what he intended should happen. He said that Parliament would be asked to approve a Bill providing for a scheme of import deposits. He went on to say that the Bill would do various things and that the deposits would be repayable after 180 days. He added: The House will be asked to vote the Resolution on Monday so that deposits will be payable in respect of goods entered with the Customs on and after Wednesday, 27th November".—[Official Report, 22nd November, 1968; Vol. 773, c. 1795.] The word "payable" in that context is ambiguous because something can be payable even if it is not required to be paid until later. I imagine that the Chancellor meant to use the word in the sense that it would be payable and has to be paid on that date. If he did not mean that, then the Ways and Means Resolution has no meaning, since what he actually meant could have been provided for in the Bill, which could have stated that goods entered on and after 27th November will have to pay a deposit.

I imagine, therefore, that the intention of the Government is that goods imported on and after tomorrow will have a deposit paid on them by the importer before they can be released. I also imagine that the Government think that the Resolution will accomplish that. In this connection, I need not go through the details of the Provisional Collection of Taxes Act, 1968, apart from Section 3(1), (2) and (3). Section 3(1) of that Act provides that the House of Commons can, in effect, pass …a resolution providing for the imposition as from a specified date of any duty of customs…". The Resolution before the House does provide for the imposition, as from a specified date, of a Customs duty. The word "Customs" appears, as does a specified date—namely, 27th November—and therefore it is the imposition of a Customs duty from a specified date.

Thus far the Financial Secretary and I are no doubt in company. We probably part company when we come to consider Section 3(2) which, in my submission, departs from the Ways and Means Resolution. We can eliminate Section 3(3) of the Act, which refers to a duty of Excise. As we are dealing with what is called a "duty of Customs", that does not apply. There is also the subsidiary point about whether one can call this a duty of Customs when it will be paid back; but, with respect to my hon. Friend the Member for Crosby, that is a subsidiary point.

Section 3(2) of the Act states …the Commissioners may require any person who, on or after the specified date, imports or clears any… goods to which the resolution applies… to give security…". What better security could there be than 100 per cent.? Does this mean that the Commissioners will require 100 per cent. security from everybody? To begin with, it is not security. To require somebody to pay a debt is not securing the debt. To require somebody to pay a duty is not security for the duty. I could show that that was not the intention of Parliament at the time of the passage of the Act; and, as my hon. Friend the Member for Crosby explained, under Section 1, which applies to the continuation of taxes, provision is made for a tax to be collected.

If it is a tax, one can collect 100 per cent. of it. But in respect of a future Customs duty, it is obvious that Parliament did not mean that 100 per cent. of it should be collected. If Parliament had meant that, Section 1 of the Act would have said so and there would have been no need for Section 3. Parliament would have said, "Section 1 shall apply to continuing duties, new duties and so on." Parliament did not go so far as to say that a person shall be required to pay the full amount, or 100 per cent.

If one studies the debates, one sees that such an argument was rejected on the ground that it would be anticipating the legislativie path of Parliament. "We agree that existing taxes are likely to be continued because the Government have a majority," hon. Members said at that time, in effect. But in respect of future duties, they felt that nobody could be certain that they would be imposed. The Government of the day might have a change of heart and there might be a hundred reasons why, if a Government decided on 26th November to impose a future duty, it might be modified by 15th December. Thus, the reason for Section 3 was to provide that people need not pay the whole duty but merely provide security. For that reason Section 3 was distinguished from Section 1.

It would seem that if the Commissioners demanded 100 per cent. and somebody offered security to them, it would be possible to mandamus the Commissioners and say that they were transgressing the Act because they were demanding something which was not security. If Parliament had meant that security required 100 per cent. being paid, Section 3 would not have been included. Section 1 would have applied and in that Section Parliament would have included a provision covering future taxes.

The whole argument must turn on the fact that the Government have maintained that when the Commissioners ask for security, they will be entitled to ask for 100 per cent. security. That is not so. On Friday the Chancellor said: The House will be asked to vote the Resolution on Monday so that deposits will be payable… If, as I believe, he meant that deposits would have to be paid, that must be wrong because deposits cannot be required to be paid under this Resolution. Only security may be paid.

I have shown the non-sequitur of the right hon. Gentleman's statement because he said: The House will be asked to vote the Resolution on Monday so that deposits will be payable… He was wrong in the use of the word "deposits" in that context in connection with them being payable, and he went on: …in respect of goods entered with the Customs on and after Wednesday, 27th November".—[Official Report, 22nd November, 1968; Vol. 733, c. 1795.] That shows, I think, that the Chancellor of the Exchequer was wrong in the legal advice he got at that time. He seems to have got the advice that deposits would be payable under the Ways and Means Resolution. That is impossible, because the deposits are on duties and the duties cannot be payable under the passing of the Ways and Means Resolution.

Assuming that the Chancellor of the Exchequer is wrong, the argument is between the Financial Secretary and this side. The hon. Gentleman will maintain that there can be no better security than 100 per cent., but the fact that 100 per cent. is very good security does not make it security, because it is payment of a duty. If that is not so, what is the meaning of the word "security"? Security means something that must go on afterwards as well. If I secure or guarantee a bank account it means that some action has to be taken if I do not pay—judgment has to be entered, or something has to be sold.

In the case of£100 provided for deposit on a duty of£100 there is nothing more to be done, so that is not security. Security always involves some form of action, and, with great respect to the legal advice that the Government have been given, I submit that this Ways and Means Resolution does not accomplish what they want, because they have misinterpreted its effect in their interpretation of Section 3(2) of the 1968 Act.

11.31 a.m.

Sir K. Joseph

I rise, not in any way to seek to bring the debate to an end but rather to invite the Government to answer the key question that has been raised by a number of my right hon. and hon. Friends. Important points have been ventilated during this debate from both sides, but all are dwarfed. I think hon. Members will agree, by the absolutely basic issue raised last night by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). His interpretation of the legal rights of the Government, lucidly put last night, has been amplified this morning in a most powerful speech by my hon. Friend the Member for Crosby (Mr. Graham Page) and further amplified by my hon. and learned Friend the Member for Northwich (Sir J. Foster).

If the Financial Secretary can assure the House that the Government, contrary to the declared intention of the Chancellor of the Exchequer, intend to collect no more than security for the charge proposed under the Motion—an assurance that would be consistent with Section 3 (2) of the Provisional Collection of Taxes Act, 1968—the House will, I think, accept that assurance. If he cannot give that assurance, my right hon. and hon. Friends and I will wish to take the opinion of a Law Officer on the interpretation of the law, because the basic rights of the citizen are at stake here.

I invite the Financial Secretary to give his opinion now, but I must warn him and the Government that if his assurances are not satisfactory we shall not lightly let this matter drop.

11.34 a.m.

Mr. Harold Lever

I will at this stage deal only with the point mentioned by the right hon. Gentleman the Member for Leeds, North-East (Sir K. Joseph), but I may have to ask further indulgence to deal with other points. I am grateful to the right hon. Gentleman for allowing me, as far as it is in my power to do so, to clear up this point.

First, I assure the House that I will, 1 hope, never recommend any incursion into the rights of the House as laid down to control Government action except when the House itself shall vote further powers to the Government.

In interpreting the Section in question, I speak as a mere Financial Secretaty surrounded by astute lawyers who are arguing the details. I have not been put on notice at all on the precise point, otherwise there would have been a Law Officer present this morning-[Interruplion.] The right hon. Gentleman the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) raised a quite different point last night, but that was not his fault.

Owing to a typing error, I referred to Section 4 as the Section under which we were operating, whereupon the right hon. Gentleman very promptly pointed out that Section 4, or whatever Section I cited, was not appropriate. I made it clear last night that this was a typing error, and that it was to Section 3 I should have referred. No one put me on notice that there was any question under Section 3, but I will do my best to satisfy the House—

Mr. Boyd-Carpenter

I am grateful to the Financial Secretary for giving way. I did take the point last night—and HANSARD tomorrow will make it clear—that the Motion did not and could not legally have the effect which the Chancellor of the Exchequer had stated he intended. Surely, that was sufficient notice, a number of hours ago, to enable the Financial Secretary, with all the advice available to him, to brief himself with such arguments as he can in favour of saying that the Motion will have that effect. The fact that he himself—I am sure in perfect good faith—misled me as to the Section, does not alter the main point which went to the root of the matter last night.

Mr. Lever

All I can say is that it is as well we had this notice, such as it was, rather late last night, but it was on another point. The result was that I took advice, and I was advised that under Section 3 we have the powers required to enforce what are the purposes of the Chancellor of the Exchequer.

Let us see, first, whether there is any real disagreement between us. The Opposition, and the House generally, are quite satisfied that when the Ways and Means Motion is passed it will impose as from the specified date—that is, as from tonight—this duty of Customs upon imported goods affected. So, as from tomorrow, duty will have been imposed by the Ways and Means Motion, but will be effectively payable when the Act itself is passed which makes that money directly payable. I am sorry to use this rather ambiguous expression, which the Chancellor used, about its becoming payable. The duty becomes payable on goods as from tomorrow: it only has to be paid, as I understand it, when the Act is passed. I appear to have carried with me the hon. and learned Member for Northwich (Sir J. Foster) and the hon. Member for Crosby (Mr. Graham Page).

When we do impose the duty effectively by the Motion—as from tomorrow morning, or as from tonight—we will be entitled to operate Section 3(2), which states that the Customs commissioners are entitled to take security from an importer that he will pay, if and when the Act comes into operation. That is to say, he wants to take his goods away: the duty has been provisionally imposed by the Ways and Means Motion; if an Act of Parliament is later passed confirming that Motion the duty will have been imposed from that date.

If we allowed the man to take his goods away without paying anything or securing anything we might have a somewhat interesting exercise in collecting the tax when the Act was later passed. Subsection (2) therefore gives the Commissioners the power to demand security, before the goods are released, that when the Act of Parliament is passed they will be paid the money that is due. Under the other Act, the Commissioners are given discretion as to the kind of security they will take. Therefore, if the importer, as from tomorrow, wants his goods, he has to secure to the satisfaction in good faith of the Customs that he will pay the duty of Customs when it becomes due.

This is where I must part company with the ingenious arguments of the hon. and learned Member for Northwich. He says it can never be right to take cash to secure that a man will pay a sum of cash in future. If I want to secure that the hon. and learned Gentleman will pay Customs duty in the event of an Act of Parliament, if I have the right to take security from him, I have the right to say to him "You must satisfy me that you are able to pay on 1st January," or whenever the Act comes into force. He will ask "What security can I give you?" and I say "Offer me something." He says, "I haven't any security, all I have is cash." The duty that he has to pay is£100. He has nothing at all whereby he can satisfy me other than that. He has not good credit.

Let us suppose for the purpose of this argument only, that I have the right to insist that I am absolutely secured, that I will get£100 from him in January if the Act comes into force. He says, "I have nothing to offer except£100 in cash and you can hold that as security that on 1st January I will apply that money to the discharge of a debt."

To hold otherwise is to penalise citizens who are not in a position to offer bonds, bank securities and the like. [Interruption.] With respect, hon. Members must reflect upon this. If the law entitles me to be satisfied that I am to have£100, I am not entitled, and this is a different point. I cannot be entitled to insist exclusively on that. That is quite another matter, I was not arguing that. What I was arguing was that if no other satisfactory security is offered to me, I may say, if I am not satisfied that the security offered is in good faith, "I cannot admit these goods."

The man may then proffer to me the cash. I am saying at this point, and I am not prepared to deal with this point conclusively now, but only tentatively, until a law officer comes along—and I am doing my best to get one for the House, one who is experienced in Customs law, about which I have no pretensions—that under the Act the Customs has complete discretion as to what it will regard as security. In the absence of adequate legal advice I would tell the House candidly that I am minded to interpret the Act as meaning that the Customs must be satisfied, in good faith, of the security offered to it, and if it is not so satisfied it must not choose cash as security simply because that is the most convenient way of getting payment in advance. I would need to have more clear legal opinion on this before I commit the Customs to that.

Sir J. Foster

I understand that the hon. Gentleman leaves open the question of a man who produces a guarantee by, say, the Midland Bank for£100. It may be that it would not be good faith on the part of the Customs to say, "We will not take the£100 guarantee. We insist on cash."

Mr. Lever

I am leaving that open. I will say this about it—although I will leave it open. I will only commend to the House a refusal of that kind if I am advised by the Law Officers that the legal position is absolutely clear and that the practice, over a period of time, is absolutely clear that it has been the accepted interpretation of this duty that the Customs may refuse such a bond.

I could not pass a final pronouncement upon that. My own inclination is to suppose that the scheme in this Provisional Collection of Taxes Act is that the tax only becomes payable when the Act of Parliament is made, and the right of the Customs is to be satisfied by various securities, by any kind of security that can conveniently be taken. There must be discretion as to the security. It is no good, if one wants to secure say a£500 debt and someone comes along and says, "I have a prize cow, worth£1,000 in any open market, will you take this as security?" Obviously, the Customs is entitled to refuse that.

There is no gap between hon. Gentlemen opposite and me. I will not be satisfied that the passing of this Motion entitles the Government to insist on cash in all cases to the exclusion of other reasonable security unless the law officers so assure me. If it helps the House, I will tell it that unless I am assured by the Law Officers that this the absolute and undouted right of the Customs, to demand cash and cash alone as security, thereby using the expression "security" to enforce a payment in all cases, in advance of the passing of the Act, unless I have such an assurance I will not give it that interpretation.

Mr. Boyd-Carpenter

This matter is obviously urgent, because goods will be cleared under this provision tomorrow. Does the Financial Secretary promise to have a clear statement, and instructions, issued to Customs and Excise officers throughout the country in the next few hours? Otherwise, there will be confusion. Did I understand him to say that, as a matter of policy, the Government are prepared to accept a valid bond as security?

Mr. Lever

I am saying that before anyone will be told that those bonds will not be accepted, or a satisfactory bond is accepted, I will ensure, today, and I will be able to go into it in much greater detail personally when I am released from my duties here—although I am not complaining at all about a very important subject being discussed in close detail—that instructions will be given that an appropriate bond shall be taken unless the Law Officers advise me that there is an undoubted right to demand cash in all cases.

I cannot give the assurance from the Law Officers at this moment. That is the position, but I give the House my personal assurance that it will only be operated in accordance with the Law Officers' advice. If the Law Officers say, "Yes it is perfectly in order to demand cash in all cases, that is the effect of the various pieces of legislation, or the practice of the Customs", then I must do that.

Sir C. Osborne

How soon will the hon. Gentleman get that advice?

Mr. Lever

I have arranged that the Law Officers should be consulted as quickly as possible. With great respect to the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), I did not take his point to be one of general politics. I thought that he had been misled by the Section. If he looks at Hansard he will see—my recollection is quite clear—that the point he took was that we had not the powers we were claiming under Section 4, and I agree with him—that we have not. Section 3, on which we relied, was the Section by which, I have been advised, we have this power.

Mr. Boyd-Carpenter

This is very important and urgent. The Chancellor, on Friday, suggested that the intention was to collect the full value of the deposits as from tomorrow. The Financial Secretary now seems to be suggesting that this should he left to the discretion of the Customs. I want to know whether it is the wish of the Government to collect the full amount of the deposits as from tomorrow.

Mr. Lever

If the law, properly construed and properly enforced, allows us to collect cash as from tomorrow, we shall collect cash as from tomorrow.

Sir G. Nabarro

That cannot be correct.

Mr. Lever

Do be patient.

I take it that hon. and right hon. Gentlemen opposite do not wish to deprive the Government of duties which the law allows them to collect, properly and correctly, in cash. All I am telling them is that if, on the advice of the Law Officers, the law allows us to collect it in cash tomorrow—and I do not think that the Chancellor condescended to say how he was to collect it—then we will collect it in cash as from tomorrow. [Interruption.] It is a rather delicate point, and I am particularly hoping that hon. Members will be guided by the distinguished legal opinion which lies immediately opposite me on their own side of the House.

Sir G. Nabarro

On a point of order. Having regard to the great dubiety which now exists in the minds of my right hon. Friends would you be prepared, Mr. Deputy Speaker, to accept a Motion to report Progress and ask leave to sit again, pending the arrival of a Law Officer? In the absence of the advice of a Law Officer I am totally incapable of making up my mind as to whether I ought to vote for this Motion or against it. I must have a Law Officer here to advise me.

Mr. Deputy Speaker (Mr. Harry Gourlay)

I suggest that we continue the debate. I do not think that it is a genuine point of order at this stage.

Sir G. Nabarro

Further to that point of order, Mr. Deputy Speaker. Would you please guide me, as a private Member? What steps are within the prerogative of a private Member, as distinct from the Front Bench, to cause a Law Officer to come here and give me his advice, which is what I urgently require?

Mr. Lever rose

Sir G. Nabarro

May I have an answer to my point of order?

Mr. Deputy Speaker

It is for the Government to decide which Ministers will be on the Front Bench. I suggest that we proceed with the business. Mr. Lever.

Sir G. Nabarro

Further to that point of order. That is not the point I put to you, Mr. Deputy Speaker. I asked you, having regard to the legal dubieties which now exist, whether you would accept a Motion to report Progress and ask leave to sit again. That is the question I am asking you.

Mr. Deputy Speaker

I thought that I had made it quite clear that we were on a point of order, which was why I was not accepting the Motion to report Progress and that I had called Mr. Lever.

Sir K. Joseph

I think that it might be for the assistance of all of us, particularly the Government, if I were to move that the debate be now adjourned. Granted that the Government find a Law Officer, that Law Officer will need time to apprise himself of the arguments. He cannot come straight away, hot foot, and give an authoritative answer such as will clear the minds of the tens of thousands of business men whose interests are involved. Consequently, I hope that my hon. Friend will accept that this is the sensible thing to do; and I beg to move, That the debate be now adjourned.

Mr. Lever

Further to that point of order.

Sir K. Joseph

That was not a point of order.

Mr. Lever

I take it that the right hon. Gentleman was moving the adjournment of the debate. There is no occasion—

Mr. John Biggs-Davison (Chigwell)

On a point of order, Mr. Deputy Speaker. Is the Financial Secretary intervening to make a speech?

Mr. Deputy Speaker

I understand that the hon. Gentleman is speaking to a point of order. Mr. Lever.

Sir G. Nabarro

Is it my point of order?

Mr. Lever

I suggest that the House does not waste its own time unnecessarily by moving the Adjournment, which I know is moved in good faith.

Sir G. Nabarro

We want a Law Officer.

Mr. Lever

The hon. Gentleman's interventions in this and other debates tend to be mainly for the purpose of demonstrating his lung power. He may rest assured that this has already been demonstrated. He must be silent for a moment and listen.

Sir G. Nabarro

This is all out of order.

Mr. Lever

The hon. Gentleman must listen for a moment.

Sir H. Legge-Bourke

On a point of order.

Mr. Deputy Speaker

Order. The Minister is already speaking to a point of order.

Mr. Lever

I urge the House not to waste its own time.

Sir G. Nabarro

Is this on a point of order?

Hon. Members


Mr. Lever

I urge the House as follows. The present position is, as I understand it, that we, under this Ways and Means Motion, will be entitled to take security as from tomorrow.

Sir Frank Pearson (Clitheroe)

On a point of order.

Mr. Deputy Speaker

Order. The Minister is addressing the House on a point of order which was raised by the right hon. Member for Leeds, North-East (Sir K. Joseph).

Sir K. Joseph

With great respect, Mr. Deputy Speaker, we are not on a point of order, because I have moved a substantive Motion, That the debate be now adjourned.

Mr. Deputy Speaker

Order. The right hon. Gentleman may have sought to move the Motion, but the Chair does not accept the Motion. It is a dilatory Motion in the same form as the point of order raised by the hon. Member for Worcestershire, South (Sir G. Nabarro). The Minister is now on a point of order.

Sir G. Nabarro

Are we on my point of order?

Hon. Members


Mr. Deputy Speaker

I thought that I had made a perfectly clear statement that I had not accepted the point of order raised by the hon. Member for Worcestershire, South.

Sir G. Nabarro

What are we on?

Mr. Deputy Speaker

The right hon. Member for Leeds, North-East raised a further point of order, moving, That the debate be now adjourned. I have not accepted that Motion, and we are still on the point of order the Minister is now speaking to.

Mr. Lever

May I have your guidance, Mr. Deputy Speaker? I am raising a point of order myself. In case I am not speaking on a point of order, I am now speaking on my own point of order. So, on a point of order, Mr. Deputy Speaker. Is not the position this? The point of order raised by the hon. Member for Worcestershire, South (Sir G. Nabarro) having been rejected, like so many of his previous points of order, as not being a point of order, I was addressing the House in the ordinary way, with its leave, when the right hon. Member for Leeds, North-East (Sir K. Joseph) sought to move the adjournment of the debate. You, Mr. Deputy Speaker, refused to accept that Motion. The result is surely—

Sir G. Nabarro

This is not a point of order.

Mr. Lever

We are not on a point of order any longer.

Sir G. Nabarro

On a point of order. The occupant of the Treasury Bench has just admitted that he is not speaking to a point of order, but is addressing the House. That is in flagrant contradiction of your Ruling, Mr. Deputy Speaker. You said that you were addressing yourself to my point of order. May we have this made clear?

Mr. Deputy Speaker

Order. I have called the Minister to speak on a point of order. I understood that he was addressing the House on the point of order, and I will ask the House to try to get back to the business before it.

Sir G. Nabarro

Whose point of order is it?

Mr. Lever

I want to say solemnly to hon. Members opposite that this is a very grave matter, affecting millions of people. I think that we should call a halt to any kind of buffoonery and get down to the real problem. I have treated the criticisms with the deepest of earnestness and anxiety; and I am very anxious to satisfy the House, because I share the anxieties expressed by hon. Members that no Government, not even one that has the disadvantage of having me as a Minister, should trespass—

Mr. Biggs-Davison

On a point of order. With great respect, Mr. Deputy Speaker, did I understand you to say—forgive me, because I could not hear you very well—that you had not accepted the Motion moved by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)? In that case, why is the Financial Secretary to the Treasury addressing himself to that point?

Mr. Deputy Speaker

I did not accept the Motion. The Minister rose on a point of order, and we are discussing a point of order at the moment. I hope that the Minister will come to a rapid conclusion on the point.

Mr. Lever

The hon. Gentleman knows perfectly well that it is not a point of order to complain that I am addressing the House on any subject which is in order. I hope that the hon. Member and others will allow me to clear up the point which is, as I understand it, causing very genuine anxiety, at least among some hon. Members, if not among others. [Interruption.] I cannot address myself to this somewhat complex point if a number of wholly irrelevant points of order are made, and I have to speak—

Mr. Deputy Speaker

Order. It is not for the Minister to decide which points of order are relevant or otherwise.

Mr. Lever

—against a grumbling background. The point that is troubling hon. Members is this. As I understand, they accept that this Ways and Means Motion imposes the liability to this Customs deposit charge as from tonight. What they query is the right to demand security exclusively in the form of cash as from tomorrow morning. I have told hon. Members that, without being a Law Officer, and without having had notice of this point, but having scrutinised it anxiously, I am at present of the opinion that the Customs may demand security in good faith in its discretion for the payment of this duty —that is, this deposit—when the Bill becomes law, that it may take it in cash—

Mr. Graham Page rose

Mr. Lever

May I just finish this point?—as one of the ways in which it may often be for the convenience of importers to give security, and that it is lawful for the Customs to accept security in that form, I am abundantly satisfied.

It seems to me obvious from the terms of the Section that the Commissioners are entitled to accept it if the citizen tenders cash for the full amount and says, "I may be liable to pay£100. You want security for that£100. I tender£100". That is both for the convenience of the citizen and the security of the Revenue, and the Customs should accept it.

The open question is whether the citizen is obliged in all circumstances to tender cash. That, as I understand it, is the point, and, in my judgment, in the absence of a Law Officer, I must express an opinion to the House, although I shall have a Law Officer to confirm the exact position before the debate continues.

My suggestion is that hon. and right hon. Members act provisionally instead of wasting their own time. Let us proceed on the basis that it is my opinion, subject to correction from the Law Officers when they come, that the Customs is entitled only to demand in good faith a satisfactory and reasonable security.

Sir D. Glover

I am obliged to the hon. Gentleman for giving way. I wish only to be helpful. I do not think that anyone will be happy if one of the Law Officers is seized of the question at this moment, rushes over to the House, and gives an off-the-cuff decision. Will the Financial Secretary at least assure the House that we shall continue the debate —there are many other matters which we can discuss on the Motion apart from this particular problem—and that we shall have an adjourned debate tomorrow, at the beginning of business, after the Law Officers have had a chance to study the matter? Otherwise, the House will still feel that it has been dragooned.

Mr. Lever

This is a relatively short point. At the moment, I am inclined to think that, to the extent which the hon. and learned Member for Northwich and his hon. Friend the Member for Crosby, who also is learned in the law, press the point, we are all in agreement. As I understand it—I hope that I shall be corrected if I am wrong—what we are all saying is that the Government, if they get this Motion, impose the charge as from tonight, that it becomes payable as from when they get the Bill, if ever, that in the meantime they are entitled to take security, and that, if the security is in reasonable form and to an adequate amount, that ought to satisfy them. That is what is said, and, if someone cannot produce security in that satisfactory and convenient form, say by bank bond, he may tender cash and the Customs will then be obliged to accept the cash.

That is very much in favour of the citizen. One cannot force a man to produce a banker's bond if he says he will give security in cash. We all agree on that at the moment, and that is how I interpret the matter at this point of time. I am recommending hon. and right hon. Members to continue the debate in an orderly way, as we have done so far, on the assumption that I agree with right hon. and hon. Members opposite learned in the law who have spoken about what is required to conform with the law. In the meantime, the matter is being studied by the Law Officers, and I undertake to the House that, unless it is given adequate opportunity to hear a Law Officer, this is how the Motion will be applied by the Government.

If hon. and right hon. Members will continue the debate, they will do so on the assurance which I have given, which completely accords with the points made by the hon. and learned Gentleman and his right hon. and hon. Friends, and, should there be a change in that respect, it will be when the Law Officer comes along and modifies it. I hope that he will not modify it, and I hope also that we may continue the debate.

Sir K. Joseph

We are most grateful to the Financial Secretary, who has honourably and in straightforward fashion met the point at issue. But there is still one problem which remains. I understand that the House must adjourn in two hours. If a Law Officer has not been reached and has not been able to address his mind to the problem in sufficient time to support the hon. Gentleman's present conclusion, the debate will have been adjourned and citizens will be in doubt about their obligations. We ask the Financial Secretary to give an assurance that the House will later today, if not this morning, have a clear answer, and, if it is not in line with the hon. Gentleman's own views, an opportunity to debate that answer.

We ask for one further assurance, that the Customs authorities will be given clear instructions in the sense of the Financial Secretary's interpretation of the law unless the Government, supported by the Law Officers, convince the House that that is wrong.

Mr. Harold Lever

I give an assurance to that effect. Since I have asked the House to debate the matter on the basis of my assurance, I must proceed on the basis of that assurance and in the manner indicated unless I give the House an opportunity of debating a Law Officer's contrary opinion. That I must undertake to do.

Sir J. Foster

It may be a little too hard to ask the hon. Gentleman to pronounce further on the law, but is it not clear that, whatever the Law Officers may say, the Chancellor of the Exchequer was wrong in saying that deposits are payable, because the deposits are called Customs duties and Customs duties, by his own statement, are not payable until the Bill is passed? The Chancellor must have been wrong.

Mr. Lever

With respect, if the deposit is a Customs duty, the Customs duty is payable from 27th November. If a Customs duty is a deposit, then the deposit is payable from 27th November. [Interruption.] The hon. and learned Gentleman may underestimate the legal perspicuity of the Chancellor of the Exchequer.

12.6 p.m.

Sir D. Glover

May we now bring the debate back to some form of order? It seems that a good many of us have been addressing the House several times when we were entitled to address it only once and getting away with it, rather as, I think, the Government were hoping to get away with this Motion.

The controversy over this Motion is most unfortunate. The feature which disturbs me is the Government's treatment of E.F.T.A. in their manner of producing the import deposit scheme. We fell out with E.F.T.A. when the Government put on the 10 or 15 per cent. surcharge, and we were, in my view rightly charged with "fast dealing". The President of the Board of Trade told the House yesterday, in an unfortunate intervention from the Government's point of view, that this matter was discussed all Friday afternoon with E.F.T.A. at the very time when the Chancellor was making an announcement in this place and saying that the scheme would be brought in.

I cannot imagine that E.F.T.A. will look upon that sort of procedure as proper discussion and consultation. Moreover, the members of E.F.T.A. will read this debate, and they will realise that the Chancellor last Friday was trying to collect a duty by a dubious method before the House of Commons had given him sanction for it. This is all most unfortunate, and it is not surprising that the United Kingdom's reputation overseas stands today at a lower ebb than it has been for generations.

The cause is clear enough—the repeated appearance by the Government of trying to work a fast deal over or round the rules and regulations which are supposed to bind and guard us. It is regrettable that the Government continue to do these things for only minor advantage, thereby losing far more in good will and trust than they may gain in concrete form in our international dealings. That point should be firmly made in this debate as well.

I find myself in some difficulty inasmuch as I am not as hostile to this measure as a good many of my hon. Friends are. I am sure that, if he had not left the Chamber at this moment, the Financial Secretary to the Treasury would have drawn my attention to a speech which I made last July in which I said that it was obvious that devaluation was taking a much longer time to bite and produce the hoped-for result than the Government had expected, and that for a period we should have an excess of imports over our slowly growing exports.

I made it clear then that, when a country devalues, it does not automatically increase exports at once because, first, people have to go out and get the orders which must then go through the factories. One cannot expect real benefit from devaluation in under nine or 12 months. The benefit of devaluation is now just beginning to permeate our economy.

But that situation does not, of course, apply to imports. If we run down our cash savings because we have lost confidence in the value of money, our importers will provide us with the goods we want immediately, and that is what we have seen happening during the last 12 months. Our imports have gone up steeply. We are now importing about about£8,000 million worth of goods a year, and the Government, rightly, want to check immediately the import bill. I hope and believe that this is only a temporary measure. There is no doubt that the fewer duties there are in the world the better for all concerned.

I do not think, however, that these proposals will do very much except embarrass an enormous number of importers who have to find a lot of cash, because the protective element in the Motion is 2 per cent. I cannot see that there will be a vast swing over to import substitution because of a 2 per cent. protective element. It may create a difficulty for an importer if he is not able to find the finance to lodge with the Customs and Excise for six months and is, therefore, unable to import the goods. But if those goods are not already made in this country, I cannot see a manufacturer producing them here because of this 2 per cent. advantage.

Sir G. Nabarro

I am absolutely opposed to what my hon. Friend is saying. Will he justify the figure of 2 per cent.?

Sir D. Glover

The 2 per cent. arises from the 50 per cent. of the value of the import borrowed at the usual rate—say, 8 per cent.—from the bank for six months. The 50 per cent. of the value of the import brings the borrowing from the bank down to 4 per cent., because the deposit is for six months and not for 12 months. It is halved again, therefore, giving a net 2 per cent.

Sir G. Nabarro

That might be arithmetically correct, but the import deposit could not be financed in that way due to the cessation of special loans from the banks to finance it. But I accept the fact that many of the goods concerned cannot be obtained from alternative sources in this country.

Sir D. Glover

That is exactly what I was saying about alternative sources. I was pointing out that, as a result of this measure, we shall not automatically see anyone starting a plant for import substitution because of the difference of 2 per cent. If it was not competitive to manufacture these goods before, it is not likely to be competitive in the future. I accept—and this is where the whole thing breaks down—that, whilst we must put a brake on the import of goods, the way the Government propose to do it is the most dangerous and difficult they could have chosen. It will damage just the sort of firms we do not want to damage—the small or medium-sized active and growing units working to the limit of their capacity with very small borrowing powers. As a result of this measure, they will not be in a position to finance a great deal of their trade.

The measure will apply to a very wide range of goods. Certain firms trading to the limit of their resources are almost entirely importers. Unless the Bill contains more protection for them, such firms are likely to go out of business altogether. They are not like I.C.I., for example. Such big firms can get money from other sources even if the banks are in difficulty. Big powerful organisations will always succeed in obtaining finance. But many import merchants are able to trade because they give fairly long customer credit in this country. That credit is already out on previous sales and now they are suddenly presented with the fact that they must pay 50 per cent. deposit on succeeding imports. They will not have the capacity to solve the difficulty. Therefore, unless the Gov- ernment do something in the Bill to safeguard such people, many of our most active medium-sized firms will go out of business.

But if there is anything in the idea that the Bill will bring about import substitution, the Government have chosen a most extraordinary list of exemptions. The list contains an enormous number of articles which the ordinary, non-expert person considers we could very well do without. Yesterday, my right hon. Friend the Leader of the Opposition made a powerful plea for the alteration of our system of agricultural support. Nearly all the items that our farmers could grow or produce to give additional help towards import substitution are in the exempted list. Yet the Minister of Agriculture, last week, was talking about import saving over the next four years of£160 million. Under the system we propose, we reckon that we could save£250 million a year. But when, with this measure, the Government have an opportunity to do something, nearly every commodity which our farmers could produce more of is on the list. This is not a sensible way to bring about import substitution.

It is difficult to come down to individual cases. I can understand sugar being exempted. But surely, if our international position is as parlous as it is supposed to be, we could manage with a little less sugar confectionery. Perhaps we could eat Clarnico instead of Lindt, from Switzerland. I would not have thought that sugar confectionery was vital to the future of the nation. It is not machinery, upon which we depend for export production. It is not something essential to the well being of the people. Yet it is on the exemption list.

I note, also, that preparations of meat, fish and crustaceans are exempted. Perhaps the Prime Minister, who is so fond of luxurious feeding—one sees pictures of him with his sauce bottle—is desparately anxious to continue to import caviare. The only time I have even eaten caviare—and I paid for it myself—was when I travelled the Atlantic on the "Queen Mary". I do not think that the nation would collapse if, for a couple of years, we did not have so much caviare. All these things are to be exempted, yet the whole purpose, if there is any purpose, is import substitution.

The hon. Member for Bedford (Mr. Brian Parkyn) referred to chemicals which are vital to a particular process and which are not produced in this country. They are not exempt. My hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) pointed out that some chemicals which are essential to a certain production which goes for export on completion are not exempt. Machinery for use by plants producing goods for export is not essential. But the list of exemptions includes things which are not essential to the well being of the nation, not essential to our export effort and not even essential to keeping the Labour Party on the right side of the consumer.

Many of the exempted items are those which the man in the street would regard as unnecessary and whose import he would inhibit. By import substitution the man in the street does not mean having to work inferior machines when competing against the Germans, the French and the Americans in world markets. He does not mean not insisting on getting the latest machinery and having to buy an inferior British machine merely because there is a 50 per cent. deposit on the import of a superior foreign machine. Yet that is exactly what will happen under this half-baked Motion.

The Financial Secretary has told us that the Motion is so drafted that, although we may be able to add to the list of exemptions—and by the time we reach the Bill we shall have had many letters from our constituencies adding to the pressure to add more items to the list of exemptions. thus making the operation even less worth while—there will be no power to remove items. Any hon. Member who takes the trouble to read the list will find that it includes items which people would normally expect to be able to do without, or to replace by home produced products. I am surprised that the Financial Secretary's hon. Friends have not asked him to withdraw the Motion and to alter it so that we can both add to and subtract from the list of exemptions. The Motion has all been rushed. The Chancellor of the Exchequer himself was very woolly when, on Friday he announced his measures, and surely the list would be better balanced if hon. Members were able to add to and subtract from it.

I began by saying that in July I made a speech to say that imports were growing very fast and that exports were not growing as fast as we should like and that we were facing a financial crisis again. I regret to say that I have been proved right. I then said that some action should be taken to try to reduce the quantity of imports, particularly of nonessential items. I want to make it clear that I was then dealing, as I am now dealing, with the problems confronting the country.

The problem is that, as a result of the last four years, everybody overseas is as jittery as anything about the British currency and the way in which we manage our affairs, and we therefore have to be even stronger than we would need to be if there were confidence in our management at home. There is, therefore, a strong case for a temporary but firm reduction of imports while our exports grow to take a larger share of world markets.

I understand that the Opposition are to vote against the whole Bill, but in any case it ought to operate for a limited period. It should be only an expedient to do something towards solving a problem which, if the affairs of the nation are properly managed, ought to have disappeared inside 12 months. We want to make certain that we do not build into the economy a cumbersome, unjust and unworkable piece of machinery. The Bill should be passed for two years at the most and then be renewed only after full debate, because by that time it should no longer be necessary.

The Government have lost all the confidence of the nations and at home they have lost the confidence of the people. The difficulty is that we are discussing suggestions which would work in a climate of confidence, but which will not work in the present atmosphere. This is the Government's worry. Although I do not expect anybody to believe me, I say in a non-partisan spirit that the Government have now completely exhausted their credibility. When this happens, I do not believe that the nation can prosper with a continuation of the same management. I do not suggest that we should introduce a new system of "golden bowlers". I am glad to see the right hon. Member for Bermondsey (Mr. Mellish) in his place; he is one of the few in the present Administration to whom I would give a "golden bowler". But we shall not solve our problems by the new measures which the Chancellor announced on Friday. We shall begin to solve them only by a complete change of Administration and a new look for Britain all over the world.

12.29 p.m.

Mr. John Biggs-Davison (Chigwell)

This has been an extraordinary debate. My hon. Friend the Member for Ormskirk (Sir D. Glover) said that people were jittery both at home and abroad and that confidence had been lost in this country and overseas because of the mismanagement of our affairs by the Government. One has only to take the example of the management of this debate to know that this is an Administration which is incapable of managing anything. Today. it has put the House in a confused and intolerable position.

Once again, the House has been treated contemptuously. Many of my hon. Friends and I have sat through the entire debate both last night and this morning. It was only quite late in the progress of the debate that any representative of the Board of Trade attended on the Treasury Bench. We are very glad to see the Minister of State there now. This Money Resolution and the Bill to follow will affect exports as well as imports, as was brought out by my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) and others.

The House has been placed in an impossible position. So, I think, has one of the Ministers for whom my hon. Friends and I have a great regard—the Financial Secretary to the Treasury. He said that he was satisfied with the constitutional and legal propriety of what is being done under this Motion. He said that he is satisfied subject to what the Law Officers of the Crown may say. it is a curious aspect of this debate that we have a complicated legal point and we are deprived of the services of the Law Officers. If their services are needed, as I believe they are, and the Financial Secretary needed to be briefed on the constitutional and legal aspects of the Motion, why was he not briefed before the debate began?

This is a considerable innovation in our economic policy. One would have thought that all the constitutional and legal implications would have been thought out beforehand. The Financial Secretary is not even with us now. Perhaps he is in legal consultation somewhere.

Sir G. Nabarro

With the Law Officers?

Mr. Biggs-Davison

One would have thought that such a distinguished and talented member of this Administration would manage to be briefed before instead of after my hon. Friends, particularly my hon. and learned Friend the Member for Northwich (Sir J. Foster) and my hon. Friend the Member for Crosby (Mr. Graham Page), had drawn attention to the possible constitutional and legal defects in the Motion.

Unlike my hon. Friend the Member for St. Ives (Mr. Nott), I am not a root-and-branch man against what the Motion is trying to do. I am not a free trader. There is nothing in my political philosophy which makes me hostile to import regulation itself. It is no good intoning the anthem, as the sole speaker from the Liberal benches who has now disappeared did, "Britain is a trading nation", and disregarding the fact that our balance may be dangerously in the red. The Liberal hon. Member said that he was all in favour of the buccaneering spirit in our export trade. So am I, but national policy has to assist the buccaneer in the reign of Elizabeth II just as it did in the reign of Elizabeth I.

When exchange rates remain fixed the Government are faced with a choice between extreme deflation or some form of import regulation. That becomes inevitable, but, if we are to pursue a policy of import control, we should try to devise means to discriminate—that for me is not necessarily a dirty word—in favour of good trading partners—Her Majesty's Government have outraged their preferential partners in E.F.T.A.— and against those countries with whom we have an adverse balance.

I am rather surprised, the country being in the mess it is in under the present Government, that they have not got to imports regulation before now. I knew that they would get there in the end when they consistently denied from the Treasury Bench that they contemplated import regulation. When I asked Questions they always said that this would invite retaliation. When the Financial Secretary returns from his confabulations with the Law Officers I should like to ask him what is the Government's estimate of the retaliation which will be invited as a result of the Motion.

I turn to the unfair hardship that will be immediately laid on a number of companies, in particularly small firms. I believe that there is a considerable number of such enterprises which are now threatened by unmerited bankruptcy. It may be more proper that this should be asked on Second Reading of the Bill, but I should like to have an estimate from the Government of how many bankruptcies they think will result from this system of import deposits. The hon. Member for South Ayrshire (Mr. Emrys Hughes) suggested that the Government should produce a popular pamphlet about this scheme. I can think of a title for it, "You, too, can go bankrupt."

I bring to the notice of the House the plight of a firm in which a constituent of mine is concerned, but in which I have no financial or personal interest. The firm has been engaged, as have other small companies, in importing foreign boats for the International Boat Show in this country. If the House adopts this Motion that firm will have to provide duty to the extent of£2,000 to be deposited with the Customs for six months interest-free. The firm is not unique in finding it extremely difficult with the present tightness of credit to obtain that extra capital at short notice.

Someone may say that this is an inessential import and ask why should a British firm want to import a foreign boat? That may be so. Perhaps we cannot afford it, but the first has obtained foreign currency for the purpose according to the prescribed procedure and so far as I know the International Boat Show is not disapproved of by Her Majesty's Government. The firm would now like to withdraw from the engagement to import the foreign boat. The point my constituent makes, and which I advance, is that companies in this position surely should not be expected to have the duty charged at the time when the goods are entered for warehousing— as provided by paragraph (a) in the Motion—but the regulation should apply to the date of sailing.

Unfortunately, the Financial Secretary is not here. I am sure that he would be the first to appreciate the point about the hardship and possible bankruptcy which may be imposed on small enterprises in this country. The national economy depends as much on small firms as on any other undertakings. The Financial Secretary would be the first to appreciate this problem and to regard it sympathetically. There was some confusion in the answers which were given to questions asked from this side of the House about when the money has to be deposited. I draw some hope from that confusion. I hope that I may have some sympathetic response on this point before the debate is over, or at any rate when we get the Bill and discuss it on Second Reading.

12.40 p.m.

Mr Cyril Bence (Dunbartonsh ire, East)

I must admire, because I have seen it so often in the past, the very able way in which the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) put forward his points. It was an excellent debating exercise and was very skilled. I remember three of my hon. Friends, who used to be referred to as "the three midnight hags", doing the same thing.

The hon. Member for Chigwell (Mr. Biggs-Davison) said that he was not a free trader and that he accepted some form of protection. This is a further restriction on the movement of goods across the frontiers of nation States; this is an import control. I recognise that the Government must do something like this. We must exercise some import control in this situation, very much in the way that other nation States will have to exercise import control, because of a world crisis in the monetary mechanism.

Throughout my life, the crises in the world have been the failure, not of businessmen, industrialists or politicians, but of those who work the monetary machine. It is the monetary mechanism which has let us down every time. The scientists, engineers and technicians all over the world are producing more real wealth. The breakdown comes not in the production machine, not even in the distributing machine, but in the monetary mechanism. But no one seems to bother.

We put this imposition on traders, importers and manufacturers. They have to bear more and more burdens. I know that there is a huge list of exemptions, but the purpose of these import controls is to try to help those who work the monetary machine to solve our monetary problems. It is on the politicians that the problem of solving this terrible recurring crisis of liquidity in the monetary mechanism falls.

Politicians. too, are at fault. There must be in the world thousands of millions of pound in real wealth circulating in building up huge armament resources. Yet politicians, bankers and financiers in all countries state time and again that in the foreseeable future war on a scale that we have had in the past is impossible and would not achieve its ends and that it is impossible to make economic or political decisions by war. Yet every nation—Russia, China and America included—insists on using about 10 per cent. of the world's resources on creating symbols of nationalism which are no longer justified and which cannot be justified because they would solve nothing.

We must accept this Motion in this situation. Again, we have an international crisis. It has been caused not by industrialists or trade unions—it is not the failure of the trade unions or of the workers of France, Germany, Britain or America—but by bankers and speculators and people who deal in money. There has been a breakdown of the monetary mechanism. It would be a good thing if politicians of all parties, industrialists and trade unions got together to discover why it is that, although we can produce more real wealth, the faster we do it the more often we are faced with a money crisis.

The trouble is the failure, not of Western civilisation or of its productive machine, but of its monetary mechanism. We are asking the people of this country, President de Gaulle will have asked the people of France and it may be that in five years the German Government will ask the German people to make sacrifices. Why?—Because of the friction in the monetary machine.

What is required is a European inquiry—indeed a Western inquiry—into the workings of what is known as international finance. Why is it that it can throw nations into such chaos? Since long before the war, since I was a youth, every crisis in Europe has been a crisis of money and not a crisis of production. The world can produce and distribute tremendous wealth. Engineers, scientists and technicians can abolish poverty—

Mr. Speaker

Order. I hope that the hon. Gentleman will come to the Motion.

Mr Bence

Very well, Mr. Speaker. I am sorry that I have strayed from the Motion. However, I feel that, once again, we are not getting at the roots of the troubles of the Western international monetary system. We need a radical solution rather than tinkering by various nation States with individual problems.

12.46 p.m.

Sir Gerald Nabarro (Worcestershire, South)

I am greatly opposed to this Motion. I have sat throughout the proceedings since 10 o'clock this morning, endeavouring to catch your eye, Mr. Speaker, and to explain why grave dislocation of trade in Britain will occur as a result of the proposals in this Measure. I shall not address myself at any stage to the controversy about the legalities associated with the Motion. That matter is better dealt with by my right hon. and learned Friends, who have put the point well. I hope that we shall have some clarification from the Law Officers before the Motion becomes effective.

Summarising my objections, they are threefold: first, that the Motion will be detrimental to our export trade, a point which has not been mentioned from this side of the House; secondly, that it will be highly inflationary; and, thirdly, as a consequence of the first two points, it will lead to grave dislocation of trade.

Mr. Biggs-Davison

This point has been raised in the debate. I raised it when referring to what my hon. Friend the Member for Bristol, West (Mr. Robert Cooke) said.

Sir G. Nabarro

I apologise. I did not hear the early stages of the debate last evening. If the point was raised then, I apologise. I said that it had not been raised this morning.

Mr. Biggs-Davison

It was raised by me.

Sir G. Nabarro

The Treasury is blind to the fact that trade is a two-way affair and that any attempt to diminish the entry of manufactured goods into Britain will lead to reciprocal measures by countries all over the world which buy substantial quantities of British exports.

I wish to deal with a case which has been referred to me this morning by my right hon. Friend the Member for Harrogate (Mr. Ramsden) on behalf of the Yorkshire branch in Leeds of the Engineering Industries Association and which illustrates the point I am seeking to make. This concern says that a diminution in its export trade will be inevitable as a result of the Motion. Airedale Springs, of Keighley, placed an order with a West German machine tool manufacturer for delivery of a machine tool valued at£6,000 which is due in this country within 14 days.

The purpose of that machine tool is to manufacture, more cheaply and more expeditiously, springs for the Ford Motor Co. in Detroit. It is a machine tool which will be used solely for the export of British components for American cars, British components made from steel produced in this country. The importer has applied to his bank for 50 per cent. of the ad valorem landed price of the machine tool, namely,£3,000.

The bank has refused to lend the money because its interpretation of the Chancellor's statement on import deposits is that such deposits should not be financed by the banks. But that statement made by the Chancellor last Friday is directly contradictory to his earlier statements, which are that money should always be available to the banks to finance and promote the export trade.

Mr. James Ramsden (Harrogate)

I am grateful to my hon. Friend for making the point. Will he agree that it is essential for Treasury Ministers to give clearer guidance to banks on this matter than was given by the Chancellor in his statement on Friday last?

Sir G. Nabarro

I am grateful to my right hon. Friend for giving me this case as an example of what I have in mind.

I pass on to the Chancellor's adjudication, what he really means. If I had to adjudicate as a bank manager in this case I should say that this machine tool was required for the production of goods for export, and I would, therefore, lend the£3,000 to finance the import deposit. But the bank manager takes the contrary view. This is within the ambit of the Financial Secretary; he need not consult a Law Officer; he should be able to make up his own mind. Will he this morning confirm that this tool is for the purpose of promoting export trade and therefore the deposit should be available as a loan from a bank?

But, much worse, the motor trade in Birmingham will be gravely prejudiced by the import deposits scheme. The Times this morning in its Business News section, on the front page, draws attention in two contributions, only one of which I shall call in aid, to the fears of steel shortages. Although we are a great steel-producing nation, we do not universally and ubiquitously produce every class and type of steel which is used in every kind of engineering export product. We import quite a lot. No facilities are available in this country to replace those imports of steel.

My hon. Friend the Member for Ormskirk (Sir D. Glover) spoke of setting up plants to manufacture import substitution materials. Such a plant could not be set up at short notice to manufacture classes of steel that we habitually bring in from continental and other sources.

Is it known that steel stockists in this country work on a margin of only 1 to 2 per cent.? They cannot possibly finance a 50 per cent. import deposit now demanded by the Government since steel is not an exempted item. I should have been a far happier man in making my speech had one of the items been rolled and re-rolled steel products, the nature of which, I fancy, the Financial Secretary would be able to identify; bars, rounds, rods and a vast range of products of that kind used at every stage of engineering production, be it mechanical, electrical or civil engineering.

Let us see what The Times says this morning, and all credit to the newspaper for reporting it on the front page of its Business News section: A warning that the 50 per cent. imports deposit scheme could lead to shortages of some types of steel and make necessary rescheduling of production in the car industry, was given yesterday by the Association of Exporters and Importers of Iron and Steel in the United Kingdom. Alexander Shenkman, chairman of the association, said it was ludicrous that steel, a raw material for British industry, should be subject to the deposit, particularly as it was used in the manufacture of products which were exported, or which were import savers. Even if it is accepted that these goods should come in to the scheme, in many cases the British Steel Corporation would probably not be able to make good the supply in time to avoid shortages. He pointed out that if orders already placed for deliveries up to the end of February had to be cancelled because of the deposit scheme, in many cases the British Steel Corporation would probably not be able to make good the supply in time to avoid shortages. He said the scheme could be ruinous for the association's members who were working on profit margins of 1–2 per cent. Therefore, I ask the Financial Secretary to answer the point made by my hon. Friend the Member for Ormskirk (Sir D. Glover). Is this list of exempted products a final list? Can it be added to during the passage of the Bill and, if it can be added to, will the Financial Secretary make certain that rolled and re-rolled steel products are high on the list, in view of their valuable potential for promoting the export of British goods?

Further, and I must labour this point—I am delighted to have the support of the hon. Member for Rotherham (Mr. O'Malley), which he has shown by his nodded assent to what I am saying. He sits for a steel manufacturing constituency and he ought to support me. There is no greater industry in Rotherham than engineering. He should be acclaiming loudly "Hear, hear" everything that is emanating from South Worcestershire which is valid, important and valuable to the engineering exports of Rotherham. I gladly give way to the hon. Gentleman.

Mr. Brian O'Malley (Rotherham)

I was not nodding at the hon. Gentleman. Nevertheless, as he knows, I would look after the interests of the steel industry.

Sir G. Nabarro

If the hon. Member for Rotherham was not nodding assent, he is guilty of dereliction of duty and deserves to lose his seat at the next General Election.

Further, in The Times Business News today is this passage:

Back to