The hon. Gentleman has left out semi-manufactures, which are very important. I will illustrate the point by taking a specific commodity—fractional horse power electric a.c. motors, a stage ahead from the Prime Minister's famous subject of fractional horsepower steam engines, when he sought to link Socialism to steam and steam to Socialism. Unfortunately, he forgot to look into the question of fractional horsepower electric motors. In this vital category we find that in 1969 the import of these motors rose at a rate of 20 per cent. over what it was in the full year before import deposits came into effect.
The explanation from the trade is that that was due almost entirely to the fact that before import deposits were introduced manufacturers and users of fractional horsepower electric motors were not carrying stocks. The chairman of one of the manufacturing companies concerned with the British production of these motors said:
that is, Brook Motors—
feels part of the increased demand "—
which has entirely reached the end of the capacity of British manufacturers—
might be the result of client companies not carrying stocks, then finding demand picking up and so going in for rushed over-stocking.
That is what happened. Towards the end of 1968 the Chancellor announced a
scheme affecting the import of a type of machinery of which people did not carry large stocks but which they had hitherto used in fairly large quantities and bought British. If someone thinks—and the psychological effect is crucial—that there will be a run on the home stocks of fractional horsepower electric motors because imports will be squeezed, he stocks up. The British manufacturer runs out of stocks, and delivery dates then become a long way ahead for these motors-30 weeks in most cases compared with 12 weeks for the Swedish equivalent—so he promptly imports materials in the categories which import deposits are meant to keep out. This is perverse, and we see this quite unmistakably from the figures which are available.
But that is not all. The Chancellor went on to say:
The scheme is not one which can or should be kept in being for more than a limited period, but it will have powerful effects over the few months when we most need its benefit."—[OFFICIAL REPORT, 26th November, 1968; Vol. 774, c. 1796.]
There is the second strand of the Chancellor's argument—not a marginal increase, but a positive reduction in imports resulting from this deposit scheme, and a positive reduction occurring in the early months of the scheme.
Again what do we find if we look at the actual figures? I pass over the throwaway line about the temporary nature of the scheme, and it not being one which should or could be kept in being for more than a limited period, and come to the question of the early months of imports.
Believe it or not—and I do not know whether the Financial Secretary will believe it since he digested his own Treasury figures—in those very early months which the Chancellor singled out as being strategic we find not only an increase in the volume of imports, but an increase concentrated substantially on those very categories which the scheme was meant to exclude.
The Financial Secretary slightly misled the House—I am sure unwittingly—by trying to make the comparison over a period of five years from 1964 onwards. That will not do, because we know that the rate of economic growth since 1964 has dropped by about three-quarters,
from about 4 per cent. or 5 per cent. per annum of G.N.P. to the anticipated growth this year of 1·9 per cent. This is the forecast of the National Institute. One would really expect stocks of manufactured articles and semi-manufactures of this kind to drop. But what happened in the few months before the end of 1968, when the scheme was announced, and the first part of 1969? I shall quote here from the Board of Trade Journal, taking an extract from the issue of 6th August, 1969, the time when the Board of Trade reviewed the progress of trade in the first six months of this year:
By volume, imports in the first half of 1969 averaged 144 "—
on an index number with a base of 100 at 1961—
the same as in the second half of 1968, and little more than the average of 143 in the first half of last year.
Then, says the Board of Trade Journal—I hope that the Minister of State will note this concluding quotation—
The Imports Deposit Scheme has probably helped to restrain imports this year. Arrivals of goods subject to the Scheme in the first half year were only slightly higher than in the second half of last year…
Not a positive reduction—" only slightly higher ". In fact, one ands that overall, by volume, imports have not gone up between the second half of 1968 and the first half of 1969, but some have gone down, and the category specified here by the Board of Trade Journal as relating to the import deposit scheme has positively risen. Clearly, therefore, the scheme is not having the sort of effect which the Financial Secretary alleged.