No, I believe that that is what the hon. and learned Gentleman said. My own researches into some sort of pattern in trade would indicate that that is the case. This change in the relationship between exempted and non-exempted goods is statistically insignificant.
But there are many other questions to which I should like an answer. First, how much money has been put up by foreign suppliers? How much will our reserves be hit when the scheme is withdrawn? Second, what proportion of imports are now covered by extended payments?
The Treasury Minister may ask "How can we be expected to know this?", but if we are being asked to extend the scheme for a further year we ought to have an answer to these questions, because the case for an import deposit scheme has yet to be made. The only evidence I have come across that the scheme is effective was a statement from the Spanish Foreign Trade Ministry last week when the Spanish Foreign Trade Minister said that the import deposit scheme had affected Spanish exports to this country. I give that to the Government for what support they can get from it. I suspect that even that opinion was distorted and owes more to the influence of the Gibraltar situation than to the import deposit scheme.
On this evidence we should be reluctant to approve an extension of the scheme. The Government are acting from two motives in bringing in the Bill. One is inorance, because they simply do not know the effect of the scheme, and the other is fear, because they are rather apprehensive of what would happen if the scheme were scrapped today. These twin motives of ignorance and fear seem to have been the constant companions of most Socialist legislation over the last five years. Quite apart from not believing that the scheme has been effective, I believe that it has had three very unfortunate side effects.
The first of these concerns the price of imported goods. A year ago we were told that the import deposit scheme would give a little inflationary push, it was thought as much as 2 per cent., on imported goods. The Government got to the strange figure of 2 per cent. by saying that the prevailing interest rate a year ago was 8 per cent. and as one had to put up import deposits for only six months it was therefore cut in half to 4 per cent., and as one only pays 50 per cent. of the amount of the goods it is cut to 2 per cent.
Let us do this strange sum in the figures of today. Take a rate which many importers have to bear, of 15 per cent. Halve that to 7½ per cent. and halve that again to 3·75 per cent. That seems to be the minimum inflationary result on these imported goods. There is a price increase in the region of 4 per cent., I suspect slightly higher. This is entirely gratuitous inflation. It is not inflation due to any act other than the import deposit scheme It is totally unnecessary.
The second unfortunate side effect has to do with the point raised by my hon. Friend the Member for Worthing (Mr. Higgins); namely, the legality of this measure. I quite accept what the minister says, that we are, strictly, acting within the legal framework of E.F.T.A. and G.A.T.T. Loopholes in both these arrangements allow certain countries to bring in measures of this sort, but were mainly intended for the small countries which get into difficulties. They were never intended, particularly with E.F.T.A., for the richest and most powerful country in the Association; namely, the United Kingdom. To use them once last year was bad enough, but to do it a second time is humiliating.
The third effect is the effect of the scheme upon liquidity of companies in our economy. There is no doubt that business throughout the country is under considerable pressure because of the cash flow situation. This is not surprising when we realise that only a month ago businesses had to meet extra S.E.T. charges totalling annually £120 million, extra National Insurance charges payable this month totalling annually £150 million and extra corporation tax charges payable next January which come to £120 million.
In addition there is the whole force of the import deposit scheme, which comes to £558 million. Companies throughout the country are strained, and in my business experience and the experience of many companies in my constituency, investment programmes are being cut. The Financial Secretary virtually admitted this when he said that there is an improvement in investment and hon. Members opposite could argue that it would be even better without this scheme. It would be substantially better without it. Money is so tight that we have seen the growth of a subterranean money market to finance import deposits. Hon. Members can see advertisements in the financial press and in various magazines by people who are prepared to put up money to finance import deposits. The starting rate for this is usually 15 per cent. or more. The money-lenders are doing well under Socialism. There is plenty of life and soul for those engaged in usury. This is a further example of how Socialist controls create the conditions in which "spivs" survive.
Because there are these unfortunate side effects I would not support the scheme, because I do not believe that a case has been made out for extending it. I do not believe that overall it is effective. It has harmful effects on the liquidity of companies, particularly small companies, and I hope that the House will reject it.