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.

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

My feeling was that I was convinced by the argument that it was not. It is now becoming abundantly clear that the Government are not prepared to put the matter to the test. They have avoided doing so.

That this is clearly contrary to the spirit of the E.F.T.A. convention cannot be seriously disputed. That being so, it is clear that actions of this kind—in particular, repetitions of actions of this kind —are likely to result in an adverse effect on treaties with the E.F.T.A., the I.M.F. and the G.A.T.T. Yet we in this country have more to gain than anyone from a rapid expansion of world trade. This kind of action inevitably tends to encourage restrictionism rather than encouragement of further free trade and inevitably protectionist elements at a time when we are anxious that they should not succeed.

On the more detailed domestic points, we have some difficulty in recognising the picture painted by the Financial Secretary as it concerns the credit squeeze. Travelling around the country, particularly in the East Midlands and Yorkshire, I have been very much struck by the severe effect the credit squeeze is having on a number of otherwise extremely viable concerns. This will no doubt be seen in the coming winter in the effect of bankruptcies, liquidity and the level of activity of ordinary viable commercial concerns.

The Bill is very unfair and discriminatory against a particular group of people—importers. The Government last year sought to suggest that it was purely temporary. In such circumstances it might be that this group could bear this kind of impost, but if one looks at the kind of profit margin normally achieved by those in the import industries it becomes abundantly clear that it is very little, if anything, greater than the extra cost they will incur as a result of this scheme.

Instead of the normal system by which they borrow money to finance activities, pay the interest and make a profit, they now have to borrow roughly half their additional capital, pay a rate of interest on it which may rise as high as 14 or 15 per cent., and then lend it to the Government free of interest. The amount they will incur by this kind of transaction is likely to be roughly the same as the profit which they would normally make.

A number of firms in a perfectly viable position—some of which have been operating for 60 years or more—suddenly find their whole livelihood taken from them. This the House should bear in mind when deciding whether to perpetuate a proposal of this kind. It is objectionable even in the short run, but if it is perpetuated it will put out people who have viable businesses meeting the needs of their customers, by an arbitrary act. I hope that we shall have an opportunity of returning to specific cases on later stages of the Bill.

At the moment, there are a number of examples of cases which are not exempt under the present provision which we should seriously consider. The imposition on paper and board for packaging must make it more difficult for firms which package goods for export. For plywood, there are no adequate substitutes. The total United Kingdom supply of plywood is about 4 per cent. of overall consumption. The imposition of the surcharge on plywood must increase total costs of production. I understand that although the import duty has been removed by a special provision by the Board of Trade from certain types of steel needed for exports, the import deposit will still be charged. This is an absurd situation which we should discuss in detail in later stages on the Bill.

I invite my hon. and right hon. Friends to join me in opposing the Second Reading of the Bill. First, because it perpetuates a device which was originally introduced in last year's crisis. It was objectionable then, but it is a great deal more objectionable now. Secondly, it is contrary both to the letter and spirit of the law. The Government are not prepared to meet the first point and put it to the test, and on the second it can have only an adverse effect on international relations and the prospect of encouraging world trade. Thirdly, it is quite clear that the Measure further accentuates the credit squeeze at the beginning of a winter which is likely to be very difficult for many sectors of in- dustry and discriminates against a small part of the business community in an arbitrary way.

This is not to say that we believe the balance of payments to be in a satisfactory situation. On the contrary, we still have grave doubts about whether the Government will succeed in maintaining the surplus once they take the brakes off. Although further measures are needed to achieve a solution to our economic problems—particularly trade union reform and reform of the tax structure so that the principle is not that the Government collects all the money and then decides who shall have some back rather than leaving it to industry to decide what to do with it—this Bill is a very objectionable device. I hope that the House will reject it.