Orders of the Day — Customs (Import Deposits) Bill

Part of the debate – in the House of Commons at 12:00 am on 17th November 1969.

Alert me about debates like this

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing 12:00 am, 17th November 1969

This is a net increase in debt, over a time, and it is doubtful whether there has been any increase in corresponding real assets.

I have two main points to put forward. First, the Government are concerned about the present situation and are determined to introduce this Bill because they have been irresponsible in the public sector, in wage claims. The Government have now given up any pretence that they are really maintaining any coherent prices and incomes policy. True, the latest economic estimates of the Treasury seek to put a brave face on this but the Economist for 15th November says: Nevertheless, the Treasury has to admit that the index of average earnings in July and August, taken together, was already 3 per cent. about its level in January-March and less six months before. In the period October-December, the number of inflationary settlements is likely to rise considerably. It goes on to say that we could well have a very rapid increase indeed in the coming months.

If we look at the individual wage claims generally, whether of the miners, or the dustmen, with an increase of 16 per cent., exhibition stand-fitters, 16·3 per cent., British Leyland—spreading into the other sector—up into the 14·4 per cent. figure, it is abundantly clear that all pretext of the norm has been totally abandoned and that the Government are right to be concerned.

It has been sought to justify this in terms of productivity, but in almost every case the increase in wages has taken place, on ground of productivity, before the increase in productivity has taken place in the specific industry. This has undermined the entire Government policy. Now we hear that the right hon. Lady, at the D.E.P., is planning pay rises for another 900,000 workers. We are entirely in favour of a high-wage, high-efficiency economy, but we do not believe that Government's present measures are likely to bring that about. We do believe that the claims and the pace being set by the public sector is likely to be inflationary and, therefore, the Government will be unable to take measures in other areas which on grounds of encouraging investment they ought to take.

We do not know what the position will be when the brakes are taken off. In essence, my right hon. Friend the Leader of the Opposition, in the debate on the Address, compared the Chancellor —I thought it was a singularly accurate metaphor—to a juggler with five plates, one full employment, another controlling inflation, another collective bargaining, the fourth economic growth and, finally, balance of payments. He pointed out that the balance of payments was the only plate which the Chancellor had in the air at the moment. If I may presume to extend the metaphor it seems that the crucial question is what happens when the Chancellor seeks to pick up the other four plates? This is really the point at issue.

Once this is attempted, what happens to the balance of payments? So far, we have no real evidence to support the view that there will be other than a repetition of previous circumstances. The danger here is to investment, because if one looks at the present situation, with the credit squeeze, it will be seen that it is adversely affecting investment. The effects of this can only be resolved either by allowing profit margins to rise in the present squeeze, which will inevitably mean an increase in prices and a further inflationary spiral, or, alternatively, the Government will have to take the kind of line which the Minister is suggesting, to have a continuation of the credit squeeze, which, in turn, will shrink investment.

Either way, the Government are in a difficult situation and we do not accept that the Bill will do anything significant to help them out of their dilemma. The main objections to this Measure can be listed easily. It is important not to say that this is something which, given the picture we have been discussing, is necessary, but rather to ask whether it is the right Measure in the present circumstances. It is clear that it has a number of grave disadvantages, internationally and nationally.

If we look at the international position we must refer again to the grave doubts expressed in the debates last year with regard to whether this Measure is consistent with our legal obligations under the G.A.T.T. or European Free Trade Area proposals. This was debated on 3rd December last year at great length. My right hon. and learned Friend the Member for Epsom (Sir P. Rawlinson) pointed out that the Government were apparently applying a duty, as they are in the Bill, and it was abundantly clear that this was a duty charged upon commodities on their importation into the country and that this was inconsistent with the European Free Trade Area convention which said quite clearly that member States shall reduce and ultimately eliminate, in accordance with the Article, Customs duties and other charges. He went on to say that the Article pointed out that member States should not apply import duty on any products at various levels and that the member States shall not apply, directly or indirectly, to imported articles any fiscal charges in excess of those applied indirectly to like domestic goods.

There is grave doubt about the legality of this Measure. When I challenged the Financial Secretary on this in the debate on the Ways and Means Resolution last week we were told that this was really not a problem, that it was discussed in the debates in E.F.T.A. last year and as a result the E.F.T.A. Council effectively agreed to defer the matter and to take no action upon it. When it came up in the present context the Minister told us that it was decided not to mention it. I do not think that it enhances the international prestige of this country or confidence in its economic situation if the Government can get round doubt about the legality of these measures only by ensuring that they are not discussed, and by pushing them under the carpet.