Clause 16. — (Suspension of Initial Allowances.)

Part of Clause 15. — (Alterations in Personal Reliefs, etc.) – in the House of Commons at 12:00 am on 7 June 1951.

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Photo of Sir Arthur Salter Sir Arthur Salter , Ormskirk 12:00, 7 June 1951

I beg to move, as an Amendment to the proposed Amendment, in line 1, to leave out from "that," to the end and to insert: nothing in this subsection shall apply to expenditure incurred in pursuance of a contract for the sale of a ship. The effect of this Amendment, if adopted, will be to exclude altogether from shipping the operation of this Clause withdrawing the initial allowances. After the rather lively interchanges we have had, I am glad we are now discussing a subject which is politically non-controversial and on which we are not divided by any question of principle, as has been made clear by the fact that the Government have proposed an Amendment which goes some way, although I regret to say a very little way—certainly not far enough—to meet the case which we raised in the Budget debate. At the same time, I am sorry that a subject which will I hope excite neither levity nor angry emotion should come before the Committee at an hour with which levity and anger are both frequently associated.

By the Amendment they have proposed, the Government have clearly recognised that the full application of the Clause as it stands to shipping would be against the national interest. As the Chancellor has stated clearly—and the Economic Secretary repeated it today—the object of the Clause is not to get revenue at all; it is to effect a certain economic purpose—namely, to reduce the pressure of home demand on the engineering industry for plant and equipment for civilian purposes.

If that is the object of this Clause, the first consideration that must occur to one's mind is whether or not a Clause applying to all industries would really have that effect. One would have thought there would have been a distinction between the application of the Clause to industries which in time of national stress should not be encouraged to extend and its application to others which the very defensive preparations themselves make it desirable should have some extension. The Chancellor recognises this. In his Budget speech he said: 'The production Departments will, of course, take whatever measures are necessary to ensure that the suspension of these allowances does not result, in the case of undertakings engaged on the re-armament programme, in difficulty in providing any necessary addition to their equipment.—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 842–3.] That may be a sufficient measure of countering the evils to some of the munition industries that would otherwise result from Clause 16, but it is quite clear that it has no application at all to shipping. If the shipowners cancel their contracts for new ships now, the Minister of Transport can do nothing to secure that addition to the Mercantile Marine that would otherwise have resulted. The Government have given some recognition to that, but I think it is a very inadequate recognition.

The reason I am proposing this Amendment which goes so much further is that I think the Government's proposal is in some respects both ambiguous and inadequate. It is ambiguous because it limits the concession to shipping that is "already under construction." I do not know whether the Government know what "under construction" means. Does it mean a ship whose keel has already been laid? If it means that, then it certainly does not really cover construction in the full sense.

A few years ago I was in another country where I have seen the interval between the laying of the keel and the launching of a ship to be only three days, because the greater part of the construction was pre-fabricated. We have not got to that stage yet in this country, but we have got to the point where, although the keel has not been laid, the essential parts of the ship, such as the engines, have been begun in pursuance of an order. I do not know whether under the Government's Amendment, if passed in its present form, the ship which had been partly pre-fabricated outside in the yard, as in the example I have just quoted, would be counted as a ship under construction, but I should imagine that probably it would not.

There are, however, much more serious objections to the Clause. It is completely inadequate in its scope. It applies only to ships that are in some sense or another under construction. That concession would doubtless have the effect of enabling some of the orders that have been placed not to be cancelled. But other orders where the keels have not actually been laid, but which are waiting for their turn on the slips, would be cancelled. When those orders were placed the shipowners had in mind the financial situation of their respective companies. One of the factors was the expectation of the 40 per cent. allowance, and they had no knowledge that this was going to be withdrawn suddenly this year. It is inevitable—and the Government appear to have recognised this—that some of these contracts will have to be cancelled.

What is the result of that? The places vacant on the slips which would have been occupied by ships constructed for British shipowners will be used to meet orders from shipowners of foreign nations, who may, if war comes, be allies or not. They may be neutrals. Do the Government really want at the present time to have slips which should be occupied by British ships occupied by foreign orders to the exclusion of British orders that have already been given?

3.15 a.m.

I can hardly believe that this Amendment proposed by the Government is their last word on this subject. I am proposing my Amendment, which goes so much further, not only from an intellectual conviction that the national interest will be served. It so happens that in each of the two great wars of this century I have been associated with the control of shipping. I have been in a position where I have seen directly, and not merely learned as I otherwise should have done, that the fate of this country at a time when the fate of the free world and its security against aggression depended upon the adequacy of our Mercantile Marine in the face of a serious and dangerous submarine attack.

In each of those two wars I have had the responsibility at some time or another of actually finding and allotting ships to the different Departments—to the Munitions Department and to the Supply Departments of our Forces overseas— and I have been through months of wearing anxiety as to whether an inability to find and allot the ships might not fatally impair the success of our Armies abroad, or fatally injure the economic life of our country at home.