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Exemptions and Reliefs

Clause 2 – in the House of Commons at 12:00 am on 4th December 1968.

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Photo of Sir Peter Emery Sir Peter Emery , Honiton 12:00 am, 4th December 1968

I beg to move, in page 3, line 17, at end insert: (2) No import deposit shall be payable in respect of any goods which qualify for duty drawback. I move the Amendment

Photo of Mr Roy Roebuck Mr Roy Roebuck , Harrow East

Mr. Roebuck rose

Photo of Sir Peter Emery Sir Peter Emery , Honiton

The hon. Gentleman has been making a number of interjections from his seat. He has played no part in these proceedings and does not deserve to be considered in any way by anyone in the House at this stage. I do not intend to give way to him.

Photo of Mr Roy Roebuck Mr Roy Roebuck , Harrow East

Will the hon. Gentleman give way?

Photo of Sir Peter Emery Sir Peter Emery , Honiton

No.

I move this Amendment because I have received, from a number of management organisations concerned with the administration of the Bill on behalf of industry, requests for information, mainly because there is growing up within industry the concept that if anything qualfies already for duty drawback then, as a rule of thumb, this means that no import deposit need be paid.

I have suggested to those who have approached me on the matter that, as a rule of thumb, this must be incorrect, because duty drawback in many instances cannot always be known until later on. Indeed, there are often long and protracted negotiations. However, where duty drawback is already being paid, it is being argued by many people that the Bill will ensure that no import deposit need be paid.

It would be helpful both to industry and to the Government if we could have a clear statement tonight which could be publicised, and the easiest way to get that statement was to put down the Amendment.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I am grateful to the hon. Member for Honiton (Mr. Emery) for giving me the opportunity to make the situation crystal clear. First, I give a general assurance that there are no goods which qualify for drawback when exported that are not covered by the Amendment made in Committee. There are two meanings to duty drawback. If the hon. Gentleman means by drawback that it is intended to cover remission of duty at the time of importation, I assure him and the interests concerned that goods which qualify for remission of duty on entry will automatically qualify for remission of import deposit also. I think that this is the point he is after.

As the hon. Gentleman recognises, if one uses the term "duty drawback" in the strict sense of repayment of duty at the time of importation, it is hardly practicable to secure that an import deposit should not be repayable on goods which qualify for drawback, but where it is not established at the time of importation whether re-export is to take place. These goods would automatically qualify for repayment of import deposit in the same way as they qualify for repayment of duty; always provided, of course, that the export takes place within 180 days before the import duty deposit has been repaid in the normal course. I do not want to reiterate the provisions we have made which widen that in respect of exports.

In the second sense of a duty drawback there is a fall back position. There are other opportunities to exporters to establish a right to exemption from the payment of deposit. I hope that I have made the position clear to the hon. Member, I am sure that, if widely known, it is a very valuable point.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I thank the Financial Secretary for his reply. I am sure that certain paragraphs of that reply will give the sort of assurance that industry wants. I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.25 a.m.

Photo of Mr Harold Lever Mr Harold Lever , Manchester Cheetham

I beg to move, That the Bill be now read the Third time.

I speak in all sincerity when I say that if I speak briefly it is because, apart from the anxieties on constitutional matters which seemed to me to lead perhaps to an unnecessarily extended debate, the Committee debate and the Second Reading debate were very rewarding, and the two sides can say that between us we have thoroughly examined principles and the detail of the Bill. In those circumstances, I should have thought that there was little to add, except to say, once again, as my hon. and learned Friend the Minister of State made clear, and as I think I myself made clear on Second Reading, that we brought in the Bill with reluctance, and only because it was required to speed up the move into surplus while the general strategy worked, but that bringing it in in no way must be taken to indicate any departure at all from the Government's adherence to G.A.T.T., E.F.T.A. and the liberalisation of trade on which we believe the future prosperity of the world and of this country will depend. I am sorry that it distresses my hon. Friend the Member for Harrow, East (Mr. Roebuck). but I urge the House to give a Third Reading to the Bill, it being a necessary, temporary and valuable assistance to the move into surplus, which is the urgent need of the country at the present lime.

5.27 a.m.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

We have had such a rushed concentration on the Bill that it would be: useful to spend a few minutes on a summary of how this side feels about it. First, we would like to repeat to the Ministers who have handled the Bill our appreciation of their personal courtesy. Secondly, we must regret that despite the time and trouble taken, there are very few changes and improvements in the Bill. One such improvement is entirely to the credit of my hon. Friend the Member for Crosby (Mr. Graham Page), because it was as a result of his comments that the Government introduced a number of Amendments to make sure that Orders on delegated legislation under the Bill came before Parliament.

The other improvement to the Bill is the welcome Amendment made by the Chancellor of the Exchequer allowing a remission of import deposit on exports. For that, we are and all concerned are grateful. But, at the end of two long days, we on this side are left with the question in our minds: is it all worth the trouble? On the one hand, we have to accept that there will be a marginal reduction in imports, and on the other we have to accept that that for the whole country there will be a severe increase in the credit squeeze. But at what cost?

The Bill is marginally protective and thus makes us marginally less efficient. It will marginally reduce exports as well as reducing imports, and hon. Members have developed a number of instances to show the link between any cut in imports and a consequential cut in exports. [Interruption.] The hon. Member for Harrow, East (Mr. Roebuck) is full of muttering this evening. He has not taken the trouble to master the Bill as far as I know, and I wish that he would let those of us who have tried to master it briefly summarise it.

I was saying that the Bill is marginally protective, that it will marginally cut exports. It will distort trade, and I will give an example which I believe the Financial Secretary will have seen in the Press. The Press carries stories of several substantial supermarket chains which, as a result of the Bill, are switching some of their imports from non-exempt to exempt goods. The Bill will distort the trading pattern of all sorts of businessmen. It will damage the less sophisticated importers, perhaps cruelly and even fatally in some cases. It will divert cash in the hands of the larger importers, cash which in many cases might have been reserved and earmarked for investment, into sterile import deposits, and on top of all those handicaps it will distract business men from their proper job of making their businesses more efficient.

At the end of the day, the whole operation of a temporary palliative benefit to the liquidity and balance of payments of the country may be nullified by a surge in imports which is likely to follow the end of the period during which the Bill is operative. We think that it is a very nice balance whether the Bill is more damaging than beneficial. We cannot give it a welcome, but we repeat our appreciation of the courtesy which has been shown to us.

5.32 a.m.

Photo of Dr Michael Winstanley Dr Michael Winstanley , Cheadle

Having sat up with the Bill all night and all last night, I do not feel inclined to let it disappear in silence. I shall not keep the House for more than a few moments, but there are one or two comments which I should like to make.

My right hon. and hon. Friends and I are not happy with the Bill in many ways, as we have already made clear. We are not happy about its possible effect on small firms, nor about other aspects which we have mentioned. Not unnaturally, we believe that free trade is perhaps one of the answers to the problems of the moment, and it would be difficult to regard this as free trade, and we are frightened of any move in the world which could lead to an escalation of protectionism.

I am happy to say that in the course of our discussions the Financial Secretary has done what he can to liberalise things, particularly for exports, and I should like to place on record our appreciation of what he has done, especially in what has come to be known as the liberalising Amendment which we discussed for so long this evening. For reasons which I fully understand—and I hope that he will not misunderstand me—the introduction of this liberalising Amendment has brought about a degree of delegation unparalleled in this context.

We are placing immense responsibilities on Customs and Excise officials. When I made this point earlier, the hon. Gentleman seemed to think that I was being critical of those officials. I hope that he will acquit me of that charge if I say that some of my best friends are Customs and Excise officials, and I hope that I shall not be misunderstood when I say that, for some of them are. Customs and Excise officials already enjoy considerable powers, but they are of a different kind from these enormous responsibilities. They will now be able to make up their minds on very important matters on very little evidence and without any kind of check procedure, as the Financial Secretary will admit. We ought not to allow to pass without comment the fact that, perhaps for good reason, we have introduced into these matters a highly unusual degree of delegation.

We wish the Bill all possible success, and we wish all possible success to the officials of the Customs and Excise. We have given them a lot of extra work. If the Bill is successful, much of the credit must go to the Financial Secretary to the Treasury for the manner in which he has approached it and for the way he has told us he will operate it at later stages.

5.36 a.m.

Photo of Mr Hugh Fraser Mr Hugh Fraser , Stafford and Stone

As my Amendment was not called, I shall put the point about the abrasive industry—rather appropriate at this point, perhaps—to the Financial Secretary after the debate.

I, too, thank Ministers for the way in which they have conducted their affairs and for their politeness to the House. I thank the Financial Secretary also for the helpful Amendment which he introduced. None the less, this Measure is a leap in the dark. No one knows how it will work. We hope that it will succeed, but there are inherent dangers.

Although, initially, it may improve our balance of payments, through money lent here from overseas in the short period, the long-term effect must be to put up the foreign exchange price of many of our imports by about 2½ per cent. Second, when the money which has been lent comes to be recalled—the Bill has been called a moneylender's charter, and so it will be, with absolute certainty for one's money at 8 per cent.—we may well find, at the end of six or 12 months, that we have another problem on our hands even more tough than some of the foreign exchange problems we have had to contend with up to now. Finally, there is the danger to our own interest rate structure and even the gilt-edged market, which is in such terrible disarray now.

Those by-products of the Bill may be more damaging than the slight fall in unnecessary imports is worth. From the national point of view, one must wish the Bill success. Nevertheless, one can understand why it has been bitterly opposed for so long by those in the Treasury who think they know better.

Question put and agreed to.

Bill accordingly read the Third time and passed.