CUSTOMS DUTIES AND AGRICULTURAL LEVIES (Hansard, 14 June 1977)

§ The Financial Secretary to the Treasury (Mr. Robert Sheldon)
I beg to move, That provision may be made for giving effect to Community obligations requiring customs duties or agricultural levies to be charged in certain circumstances on goods which have been imported into the United Kingdom from another member State. This Ways and Means Resolution stems from the changes in the Community rules due to take place on 1st July. At present if goods are brought into a Community country for processing and re-export and are then brought into the United Kingdom, duty is charged upon the goods themselves. After 1st July duty will be chargeable only on the goods which formed the basis of the processing and re-export, which in most cases will be the raw material. It will be chargeable generally on the raw material brought into the first Community country for processing.
We have to make these changes in our collection arrangements to take account of changes in the Community rules. This resolution will become necessary before a clause can be introduced into the Finance Bill, which will in due course be debated in the House.

§ Mr. Neil Marten (Banbury)
I regard the Minister's statement as totally inadequate. It was clear to any observer from the comings and goings on the Government Front Bench that they hoped to get this motion on the nod. The Minister was sent for and was briefed——

§ Mr. Robert Sheldon
Because of the complex organisation of the House, I was in a Standing Committee on the Finance Bill, where an amendment in which I was particularly interested was due for discussion. I therefore had the problem, which the hon. Gentleman will understand, of trying to be in two places at once.

§ Mr. Marten
I understand that, but if the Minister had been here, he would have understood the other side of the story, which is that the Government hoped 316 to get this resolution on the nod. He may have been doing his duty elsewhere, but the Government were relying simply on the nod of a Whip for this little item. That is a poor way to conduct business and the Minister's explanation is totally inadequate.
What is the "provision" which has to be made? Is it a sum of money or a power? There may be papers to back up this resolution, but I have not been able to trace any, so we are in the dark about its meaning. What are the "Community obligations" which are referred to? We are to impose duties on imported goods from member States, which I thought was contrary to the Community spirit.

§ Mr. Marten
The Minister is shaking his head to all the questions that I am asking. Perhaps he would like to intervene and explain. However, apparently he would not like to do so.
What are the "certain circumstances" in which these duties have to be charged? The resolution refers to goods "which have been imported". Does that mean goods which are to be imported in future or goods which were imported in the past? We need much more explanation.
I repeat that it is poor behaviour to try to sneak this matter through—it might have come up much later in the evening—without prior information and explanation to hon. Members.

§ Mr. Max Madden (Sowerby)
I feel compelled to join the protest of the hon. Member for Banbury (Mr. Marten). This House is often criticised for its incapacity to deal properly with Community business. That is one of our problems in our relations with the Community and this is a classic example of our difficulties.
This resolution appeared on the Order Paper without notice. None of us knew that it was to be moved until we saw today's Order Paper. Most of our Common Market business here takes place at dead of night, when only a handful of hon. Members take part. That unfortunate cynicism is created by this sort of manoeuvre—and "manoeuvre" is the only possible description of slipping on the Order Paper in this way a motion 317 which may be important, with no explanatory documents available beforehand.
This appears to be a significant motion. What are the "certain circumstances" in which these obligations could be brought into force?
I protest about the manner in which the resolution has been brought before us. The Minister has explained the need for it, which does not seem pressing. In view of the protests made tonight—they have also been made privately to me by colleagues—it would be appropriate to withdraw it and reintroduce it when we have had time to consider it. Perhaps we could then have some background papers on the significance of the motion.

§ Mr. Roger Moate (Faversham)
It was not easy to follow the Minister's explanation without some opportunity for closer study. The method of the introduction of the motion seems rather casual and the wording requires more elucidation. It may not be a matter of great importance, but that is for the House to judge and we cannot do so without more information.
Expressed as it is, the motion is wide open to many interpretations. What are the "Community obligations" for which provision may be made? Presumably such obligations must be evident in some form and there must be some regulations or directives for the House to see. But the motion makes no reference to any such documents.
I agree that it would be better to withdraw the resolution until we have the extra evidence which is necessary. Then the House can judge whether the resolution is as innocuous as the Minister seemed to imply or whether it has significant implications. If it cannot be withdrawn, perhaps the Minister will give us a lengthier explanation of what it involves.

§ Mr. Robert Sheldon
I am happy to respond. I had assumed that the House wanted only an indication of the purpose of the motion, knowing full well that if it was passed it would become a clause in the Finance Bill, which will have proper scrutiny on Second Reading, detailed discussion in Standing Committee upstairs, and subsequently, if required, on the Floor of the House. A Ways and 318 Means resolution is to pave the way for that kind of examination, but I am delighted to respond to the requests for a fuller explanation.
The hon. Member for Banbury (Mr. Marten) asked why this provision needed to be made. The reason is that without it after 1st July there would no longer be power to collect the duty. Because of Directives 69/73 and 75/681, implemented by the Inward Processing Relief Regulations 1977, which are currently before the House and are to take effect from 1st July, there would be a gap of which importers could make use.
At present, anybody who imports goods into this country for processing and re-export and then fails to re-export them is liable to the import duty on those goods. Raw materials might be brought into a member country of the Community for processing and re-export and subsequently come to this country in their processed form—perhaps because of a cancelled order—instead of being reexported outside the Community. Let us take pencils as an example. The wood for their manufacture might go to Germany——

§ Mr. Marten
Where from?

§ Mr. Sheldon
From a country outside the Community. If it came from inside the Community no duty would be payable. If it is made clear to the authorities in Germany that the goods are for processing and re-export, the duty is waived temporarily. If the pencils are diverted to the United Kingdom, at present we charge duty upon them as they come into this country. After 1st July we shall charge only the duty on the wood that went to Germany in the first place. We do that because Germany did not charge the duty, as the wood was expected to be processed and re-exported. The new clause to the Finance Bill will close the gap. We shall be able to charge the United Kingdom importer on the value of the wood and obtain the duty from him.
My hon. Friend the Member for Sowerby (Mr. Madden) asked me why there was a pressing need. The first reason is the date. Secondly, the Finance Bill is in Committee and is expected to reach new clauses next week. It would be very convenient if the matter could be 319 thoroughly examined in Committee rather than on Report.
The provision is not earth-shattering, but there is a gap that should be closed.

§ Mr. Moate
What is the significance of 1st July? Where does that date come from in this context?
The motion also refers to agricultural levies. May we assume that if the gap existed from 1st July levies would not be applied on certain agricultural commodities and therefore the consumer might buy foodstuffs a little cheaper?

§ Mr. Sheldon
The date comes from the directives that I mentioned. We are concerned not to lose a power that we now possess and that we shall lose if we do not make these changes.

§ Mr. Marten
When the right hon. Gentleman collects the duty on the pencils that he gave as an example, who receives the duty? Does it go to the British Treasury or the Community? Secondly, why do we have to tax food unnecessarily? We need a thorough explanation of that.

§ Mr. Madden
To avoid further inconvenience, may I add to the list of questions? Is this a deficiency that the United Kingdom alone must make good by 1st July, or is it one that other member States of the Community are all required to make good to enable them to collect duties from 1st July in the way my right hon. Friend has described?

§ Mr. Sheldon
The answer to the first question is that this is part of the common external tariff. The resolution will cover duties payable on the importation of goods brought into the Community as a whole from countries outside. The money goes to the Community. It is available in the same way as all common external tariffs are.
My hon. Friend the Member for Sowerby is right to assume that other countries will be in the same position as we are, but I cannot say whether their legislation already meets the point of the directives. We just noted that there was a gap in our legislation because of our way of dealing with the matter. All countries will have to make provision of the same kind as a result of the directives.

§ Mr. Marten
The right hon. Gentleman answered my first question, for 320 which I am grateful, but will he also answer the second? Can he give an example of how the provision works with agricultural products and say why we have to tax food in this way? I should have thought that this was an excellent opportunity not to tax food.

§ Mr. Sheldon
A number of articles that come into this country are due to be taxed because of our own import duties. We are now concerned with articles whose point of importation is a country other than the United Kingdom and which subsequently come here. The agricultural levies are Community duties applying in the same way as duties on the imported wood that I cited as an example.

§ Mr. Marten
Maybe they are Community duties, but why do we in Britain have to collect them? Why cannot we just not collect them and therefore make the food cheaper?

§ Mr. Sheldon
If the hon. Gentleman seeks to change the basis of our Community policies in these matters, it is up to him to make that claim, but it does not arise under the resolution.