Clause 4. — (Goods Exempted from Duty.)

Part of Orders of the Day — Finance Bill – in the House of Commons at 12:00 am on 7 December 1964.

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Photo of Mr Niall MacDermot Mr Niall MacDermot , Derby North 12:00, 7 December 1964

The majority of the headings relate to chemicals which for the most part are used in the pharmaceutical industry. I do not accept the hon. Member's argument, but I am not in a position to give a categorical answer one way or the other. My advice is that there are many of these chemicals which are partly used for pharmaceutical purposes but of which a much greater bulk is used in industry. It is because of these difficulties that we are unable to provide by way of straight exemption for the chemicals in Chapter 29.

It may partly answer the hon. Member to be told that the value of imports of organic chemicals under Chapter 29 in 1963 was about £55 million and the value of inorganic chemical imports was about £20 million. To exempt all those would have had a major effect on import savings and would have affected many other industries as well as pharmaceutical manufacture. To exempt only the particular headings in which most of the goods are know to go to the pharmaceutical industry would fail to cover much of the intended field, although it would arbitrarily benefit a number of users outside it. Thus to exempt throughout the Chapter those chemicals which are of a kind used in pharmaceutical manufacture would cover items whose pharmaceutical use is quite negligible.

An alternative could be to set up a vast administrative machine to try to follow through the chemicals and to repay the charge to pharmaceutical manufacturers where it was established that the chemicals they were using had borne the charge. It is unnecessary for me to go into this because hon. Members will appreciate the impracticability of setting up a bureaucratic machine of that kind for what is, after all, a purely temporary charge.

The question of the effectiveness of drawback on the export trade was again repeated with force. Hon. Members expressed their views based on their experience of the operation of drawback and expressed the fear that the drawback would be an empty offer. As I sought to explain in Committee, the Customs and Excise is proposing to devise a far more flexible scheme for drawback for this temporary charge and appreciates that there are rigidities in the scheme devised for the purpose of drawback of the protective duty.

Where there is an established right to drawback it is simpler to apply that machinry. That will be done because it has already been worked out. In other cases, if an exporter thinks that any material he is using to make export goods has borne the charge, he should take this up with his supplier. I appreciate the point made in debate a number of times that because the supplier is sometimes reluctant to supply this information to his purchasers, it is not easy for the exporter to obtain detailed information about exactly how much of his material has borne the surcharge, and the amount of charge made.

However, if exporters check to see if a charge has been made and then report that matter to their local Customs officer, the intention is that the matter will be taken up with the supplier who will often be more ready to disclose the information, which does not involve the commercial difficulties which might be involved if he supplied it to this purchasers. In that way the Customs officer will be able to assist exporters to obtain the drawback to which the are entitled.

These matters will be covered by regulations and I ask hon. Members and manufacturers to accept the assurance that it is our intention to apply this scheme very flexibly and to give every assistance to manufacturers to obtain the drawback to which they are properly entitled.

I hope that what I have said is sufficient to convince the House that it is in no spirit of obstinacy that we have felt unable to bring forward the Amendment which hon. Members would like. I repeat that when we come to consider modifications of the imposition of the charge it may be easier for us to meet such points, that we will give early consideration to this matter and that we will treat it with the greatest degree of sympathy.