I wish to concentrate my remarks on the arguments adduced by the hon. Member for Barkston Ash (Mr. Alison) in his interesting and thoughtful speech. I do not intend to be bipartisan, because this is such an important matter that we would be wise to keep as low a temperature as possible and consider it objectively.
The hon. Member for Barkston Ash made a number of telling points, the most important of which was that the surcharge is not having a great effect on the import of capital equipment—that we still require this sort of machinery because we are not able to produce such machinery of the required quality. We should take note of that important point, because in my constituency I have had experience, from visiting factories, of this and have seen how some large concerns have been forced to import machinery which, quality apart, just was not available or was not being manufactured in Britain.
When I visited a factory of the Dunlop Rubber Company I was intrigued by one piece of machinery which, I was told, the company had attempted to purchase in Britain but had found that it was not being manufactured here. It had the choice of purchasing the machinery from either Italy or Germany. It eventually settled on the German machine. The Company imported it because it was absolutely essential for the development of their new production processes. But that important point is not an argument for reducing the surcharge but for undertaking a very close investigation into our own industries that failed to produce a type of machinery they should have produced. It is a sad commentary on British industry, but it is not an argument for bringing down the surcharge.
There is no question at all that the surcharge had serious political repercussions. It was unfortunate that the British Government were forced to introduce it when they did, and it certainly had an unfortunate effect on our E.F.T.A. partners. Many of us in this House want to see a wider Europe, and closer ties, not only between Britain and her E.F.T.A. partners, but equally between E.F.T.A., including Britain, and the Common Market countries.
Anything that creates difficulties in the achievement of a wider Europe is regrettable, and something that we want to see ended as soon as possible. Nevertheless, we must remember that the original surcharge was one of 15 per cent., and that at the earliest possible moment the Government reduced it by 5 per cent., so that we are now talking in terms of 10 per cent. It is true that this Order continues the 10 per cent. rate, but if the situation gets better and there is a further improvement in our balance of payments, is it not possible—and possible within a reasonably short time—to have a further reduction of the surcharge?
When he introduced the surcharge last November, my right hon. Friend said:
We believe that the import charges are the least objectionable—the Committee will notice the terms I use—of all the methods that lay open to us. To have imposed quotas would have been more rigid, required more elaborate machinery, would have interfered more with the normal flow and pattern of trade and might well have been construed as being more of a permanent feature."—[OFFICIAL REPORT, 11th November, 1964; Vol. 701, c. 1027.]
The point to emphasise there is that certain objectionable steps had to be taken to solve the problem, and the surcharge was the least objectionable. It is true that it had an unfortunate effect on our E.F.T.A. partners, but no matter what we had done it would have had an effect them. The surcharge was not entered into lightly, but because the Government had no real alternative unless they were to solve the problem in the traditional way.
My hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Rhodes) made the very clear point that the way in which such a problem had been solved in the past had been to increase unemployment, but added at the present moment the unemployment figure in his constituency was the lowest since 1951. That is not only true of the North-East Coast. Before I became a Member of Parliament I came on demonstrations to this House to discuss with Liverpool Members the rise and fall in unemployment that we had had over the years. Increased unemployment occurred whenever there was an economic crisis, because of the methods adopted by Governments then.
On Merseyside, too, we now have less unemployment than at any time since 1951. We have maintained full employment, and although our position is not as good as that on the North-East Coast, we are now reaching a position in which only the unemployables are likely to remain unemployed. That is a very important factor, because the Government were faced with the choice of either introducing a surcharge or pursuing a policy leading to unemployment throughout the country——