§ Order for Second Reading read.
§ 3.36 p.m.
§ The President of the Board of Trade (Sir David Eccles)
I beg to move, That the Bill be now read a Second time.
Last week, the House assented to three Ways and Means Resolutions and thus gave us the authority to bring forward this Bill, which is useful rather than exciting. Much hard labour has gone into its preparation. It brings all our tariff legislation together into one instrument so that the structure of our tariff can be revised in modern form.
We also ask for new machinery to assist the Government in considering changes in import duties. The Bill does not alter the existing rates of duty, nor would the initial Order, bringing in the revised tariff, alter rates except where a very few small changes are unavoidable in order to recast the present unsatisfactory classification of goods. If Parliament gave us the Bill, the United Kingdom would be neither more protectionist nor more liberal in tariff policy than it has been in the last ten years, but we should have the great advantage of a tariff set out in a form which our own business people and those with whom they trade would understand. Only those who have to thread their way through the jungle of our present legislation know what the difficulties can be that we now propose to remove.
I can best describe this jungle by giving the House one example. Suppose that my hon. Friend the Member for Woolwich, West (Sir W. Steward), finding that for some reason he could not obtain in this country the chocolate creams which he thought hon. Members would like to eat, decided to import chocolates direct from a foreign country. He would soon discover that chocolates, in addition to being liable for revenue duty in respect of the sugar and cocoa in them, may also be liable to an Ottawa duty in respect of any milk powder, to a key industry duty in respect of any synthetic flavours and to an ad valorem duty under the Import Duties Act, 1932.
In the new tariff schedules provided for under the Bill all those duties would be 36 lumped together in one place, so that the Chairman of the Kitchen Committee, if he were so minded, would have far less trouble in providing us with imported chocolates for sale in the Tea Room.
Although the Government's tariff policy, that is, whether we put on or take off a duty, is not in any way altered by the Bill, the new structure and the new procedure for changing duties raise questions of principle. I hope that I shall be in order in saying a few words of a general character.
A quarter of a century has gone since the House last considered the tariff as an instrument of policy. Much has happened in those crowded twenty-five years, and, precisely because the changes have been so great, we are departing in the Bill to some extent from the pattern of the 1932 Import Duties Act.
That Measure was a landmark in our commercial history. For the first time the United Kingdom faced the world with a general protective tariff. We went protectionist—and why? Because two thoughts were then uppermost in people's minds: first, the crippling unemployment at home; and, secondly, the willingness of the Commonwealth, also hard-hit by the world slump, to join us in a system of Imperial Preference.
The form of the 1932 tariff reflected the depression in world trade. Our domestic object was to get men off the streets and back into the workshops and to create jobs where none existed, and so the 1932 Act imposed a general tariff of 10 per cent. ad valorem on all goods, on top of which were added many protectionist duties, some of them stiff. Though the purpose was defensive, we took a broad swipe at all foreigners and were thus able to make a good bargain with the Commonwealth, whose products were to be admitted to the United Kingdom duty-free, with certain exceptions such as goods subject to the McKenna duties and the silk and artificial silk duties.
In return for those concessions in our market, the Commonwealth gave us preferences in theirs. We were then taking this broad swipe right across the board, and it was not necessary to specify any duties in detail unless they exceeded the general tariff. Any article not mentioned in the schedule attracted a duty of 10 per cent.
37 This rough method of setting out a tariff will not do today, when we have to compare our import duties minutely with the duties of other countries with whom we are in commercial negotiations. Clearly, it would be useful if all countries described their tariffs on a common nomenclature of goods.
Such a method of classifying goods was agreed in 1950 and is known as the Brussels Nomenclature. The representatives of British industry confirmed to me last week that they wish to see our tariff rewritten in this form. My Department has consulted the producers and other interests concerned on the few marginal changes in rates of duty which are necessary when the tariff is recast in the Brussels form.
As a result, apart from one or two special cases which we are still discussing, there is agreement on the detail of the new tariff. If the Bill becomes law, an Order introducing the tariff will be made as soon as possible afterwards and will be subject to the affirmative Resolution procedure. The Order will provide that the revised tariff comes into force on 1st January, 1959.
There would be very strong grounds for adopting the Brussels classification whether or not we were negotiating a European Free Trade Area, but when we contemplate reducing our tariffs in step with a number of other countries, then it becomes essential to have a common tariff language if the job is to be done intelligibly and efficiently. In short, we must do something about the form of our tariff because it is out of date; but so, too, is the pre-war machinery for considering changes in the duties.
Under the 1932 Act, applications for changes in duty had to be made to the Import Duties Advisory Committee. This Committee, known as I.D.A.C., did valuable work up to the outbreak of the war, when its functions had to be suspended. When I.D.A.C. was operating in those pre-war days the main criterion for changing a duty was the case for protecting employment in the particular industry concerned. The Committee, therefore, had a straightforward job to examine the facts and to draw a conclusion. I.D.A.C. was not expected to concern itself with our commercial agreements with other countries.
38 As the House knows, both the internal and external economic situations have changed very much since the war. Those who signed the Charter of the United Nations believed that serious recessions in world trade could be prevented by the new monetary and economic techniques discovered by Lord Keynes and others. It is true that not all their hopes have been fulfilled, that there have been occasional patches of bad trade and that some countries who, according to the rules of international expansion, clearly ought to admit imports more freely still maintain restrictions.
By and large, however, the industrial nations have enjoyed for ten years a high and stable level of employment and have benefited greatly from the policy of liberalising trade by multilateral concessions. No country has had more reason to be thankful for this reversal of pre-war experience than the United Kingdom. When peace came we had a flying start in international trade. Our old customers were short of everything and our old competitors were out of the market. The scarcity of American dollars protected us from competition from the United States.
But such advantages could not last for ever, and I hope that the House will agree that since the war Governments have been right in opening up markets for our goods whenever this could be done by mutual agreement to get rid of protective quotas or by negotiations over tariffs. This policy has achieved results and because of it we have been better fitted to cope with the return of our pre-war competitors to the markets of the world. To have gone back to the bilateralism of Dr. Schacht would have distorted and restricted the flow of trade and brought very disagreeable political consequences. One cannot escape the conclusion that the more dependent a country is on exports the more advantage it gains from a set of international rules for fair trade and a low level of world tariffs.
It is here that I part company with the Liberal Party. As I understand, they believe in free trade for its own sake. One is given to believe that they would like us to dismantle our tariff because the free entry of foreign products would be good for our souls no matter what happened to the stability of our industry. That 39 is not the Conservative view. Our view is that we need a protective tariff as a bargaining weapon to secure as large markets for our exports as can be secured on the basis of fair give and take. I can assure the House that there will be no reductions in our import duties—not one—unless a clear and adequate benefit is obtained for the country as a whole.
It seems to me a very remarkable coincidence that at the same time in history that science has robbed every single country of the power to defend itself without allies, the new monetary techniques and the articulate aspirations of all free people to develop their resources have made it sheer common sense to use economic policy, and the tariff in particular, as an instrument not of contracting out of the world's troubles, as we tried to do before the war, but of sharing in and stimulating the expansion of world markets and of doing this without running the risks of violent fluctuations in one's own natural level of employment and prosperity.
This modern international use of the tariff compels us to reconsider the method we should adopt for changing a particular rate of duty. A body independent of the Government, such as I.D.A.C. was, should not now be asked to take on the responsibility for recommending when a rate of duty should be changed. Our membership of G.A.T.T. alone would bring us to that conclusion for, under the General Agreement, we have bound half our tariff rates, with the result that we cannot raise them without paying for the alteration by some form of compensation in some other tariff rate. But, as right hon. Gentlemen opposite know, not one of these tariff rates is being bound by us except in return for a comparable obligation on the part of other Governments. We have made a series of bargains which, on balance, are of definite advantage to this country.
It follows that only the Government can tell nowadays what will be the consequential effects of an alteration in a rate of duty. Therefore, though the facts of the case for a change may properly be examined by an independent body whose reports would normally be published, it would not now be appropriate, as it was before the war, for this body to make positive recommendations.
40 In Part II of the Bill, however, we are providing that in the particular case of duty-free licensing and drawback the recommendations should be made by the Import Duties Board. Since 1939, for the whole of the last eighteen years, the Board of Trade has made these decisions inside the Department. In these two matters of duty-free licensing and drawback, however, we have no international commitments. The essential thing is to determine the facts and, within the framework of policy laid down by the Government, to reach decisions upon those facts. I hope, therefore, that there will be agreement that the Import Duties Board should do this work.
This definition of the Board's duties—that is, fact finding on applications for changes in tariff rates, and fact finding and recommendations in the case of drawback and duty-free licensing—has shaped our proposals for the Board's composition. In the Second Schedule we propose a full-time chairman and part-time members to handle the great variety of applications. These part-time members would have a wide range of experience, and would be available to form committees to deal with groups of applications as they come before the Board.
Although the maximum number of part-time members provided for by the Bill is 29, to begin with I will appoint either the minimum or something very near it—and for this reason. We cannot tell what the volume of work would be. Certainly, it would fluctuate very much and, if post-war experience is a guide, it might at times be very light on tariff applications. This expected rise and fall in the volume of such work is an obvious ground for the part-time composition of the Board we are proposing. The Board would, naturally, be served by a staff of expert officials.
I now turn to the provisions of the Bill. The main effect of Clause 1, together with Clause 4 and the Eighth Schedule, is to clear away the "jungle" of our present protective tariff legislation and to replace it by comprehensive provisions enabling the existing tariff to be recast, and to give us power to impose and vary protective duties by Treasury Order made on the recommendation of the Board of Trade.
41 A number of principles are laid down to guide the two Departments in deciding whether a duty should be varied. In addition to the need to protect our industries, the Government…shall have regard to the desirability of maintaining and promoting the external trade of the United Kingdom, to the desirability of maintaining and promoting efficiency of production in the United Kingdom and to the interests of consumers in the United Kingdom.These are the principles upon which the Board of Trade has acted since the war, and they reflect the altered conditions of today as compared with those of 1932—
§ Major H. Legge-Bourke (Isle of Ely)
May I ask my right hon. Friend whether he conceives that list of obligations as including the need to conserve foreign exchange?
§ Sir D. Eccles
I think that…the desirability of maintaining and promoting the external trade…comprises the need to have a healthy balance of payments.
§ Mr. R. Rhodes (Ashton-under-Lyne)
Would the right hon. Gentleman accept recommendations on those particular items?
§ Sir D. Eccles
If the hon. Gentleman is asking whether, in Committee, we would consider looking at any Amendments that he or his hon. Friends wished to table, the answer is, of course, that we would.
In Clause 2 we ask for powers to reproduce the existing Commonwealth Preference on goods entering the United Kingdom. The system of Commonwealth preferences benefits both parties, and we shall always—as a matter of policy which goes beyond trade—strive to preserve it. Indeed, questions of tariffs and quotas are certain to be discussed afresh at the forthcoming Commonwealth Trade and Economic Conference. We have always treated the Commonwealth as a single area for tariff purposes, and the present Measure makes clear that we cannot give a preference on goods coming from some countries within the preferential area but not from others.
The Bill does, however, differ from the 1932 Act in an important particular. We are not repeating the complex and sometimes inconsistent statutory provisions for duty-free entry of goods from any Commonwealth country or Colonial Territory.
42 This omission of what has been called a "statutory bar" is made largely for technical reasons. Since the tariff will now be set out in full, as can be seen from the example on the last page in the White Paper, with two columns against each category of goods, one showing the general rate of duty and the other the preferential rate, it will, in future, be possible to see at a glance what are the duties, if any, on any and every product. There will be no need for a general provision according duty exemptions to Commonwealth goods. The goods exempt will be shown as "Free" in the tariff—
§ Mr. James Harrison (Nottingham, North)
In view of the Minister's interpretation of the Commonwealth Trade Agreement and general understanding—with which, to a considerable extent, we agree—what has he to say about the Prime Minister's offer of free trade to the Canadians alone? That seems to cut right across the interpretation which the right hon. Gentleman is now putting on the Commonwealth Trade Agreement.
§ Sir D. Eccles
If we could have a free trade area with the Canadians that would be extremely good. The only possible difference would be under the McKenna duties and the artificial silk duties, which would be matters to be discussed with other Commonwealth countries as and when we got into serious talks about this.
Most independent Commonwealth countries have trade agreements with the United Kingdom under which their products are specifically granted by us duty-free entry into this country. This shows that they do not rely upon a statutory bar in our legislation. What affects the trade of the Commonwealth countries and Colonial Territories is not the consolidation of our tariff legislation which we are discussing today, but the tariff policy which we pursue in charging existing duties; and we have given them assurances that no change in policy is contemplated.
I explained to the conference of Commonwealth Finance Ministers at Mont Tremblant why we did not think it necessary to include a statutory bar in this legislation and why we did not wish to do so. For example, I pointed out that in respect of goods in which no Commonwealth country has any interest, the United Kingdom is today prevented from putting on a duty because we are caught 43 between the statutory bar in the 1932 Act and the no-new-preference rule in G.A.T.T. Having heard what I had to say, the Commonwealth Governments raised no objection to our proposal not to include a statutory bar in this Bill.
I come now to the Colonies. The Colonies are not in the same position as the independent Commonwealth countries to negotiate trade agreements with the United Kingdom. We have special responsibilities towards them which go beyond the considerations that would apply in a commercial negotiation between countries each having full international sovereignty. It would be inconceivable that the United Kingdom should discriminate in tariff policy against the goods of any Colony in favour of the goods of the independent Commonwealth countries. Therefore, although the Colonies could not have any contractual guarantees, the United Kingdom Government have given Colonial Governments an undertaking that we do not intend to make any change in the present tariff treatment of colonial goods which are now duty free.
Clause 3 provides for the establishment of the Import Duties Board on the lines which I have already described.
§ Major Legge-Bourke
May I interrupt once again? In the selection which my right hon. Friend said that he will be making of people to serve on the Board, can he say whether he has in mind any proportion to represent producers as distinct from distributors, and so forth?
§ Sir D. Eccles
I think we shall need a wide representation of interests, and that is why I have come down in favour of rather a large number of part-time members, to cover just such interests as my hon. and gallant Friend has mentioned.
I should like to refer for a moment to the steel industry. We recognise that the Iron and Steel Board has special statutory responsibilities and unique knowledge and experience in this field. We shall, naturally, wish to draw on this knowledge in considering tariff applications relating to iron and steel. Nevertheless, it would be wrong, in the Government's opinion, to exclude these products from the scope of the proposed Import Duties Board.
I have told the Iron and Steel Board that we will consult the Board before 44 deciding to make any reference to the Import Duties Board on an iron and steel product. Furthermore, before deciding what action should be taken as a result of any report by the Import Duties Board, we shall consult the Iron and Steel Board and I shall ask the Chairman of the Import Duties Board to bear in mind the special statutory position of the Iron and Steel Board and to deal with it on the same basis as with a Government Department.
Most of the other provisions in the Bill, in effect, consolidate existing legislation. Part II—that is, Clauses 5 to 10—to which I have already referred, provides for exemptions or relief from duty for particular consignments of goods in special cases.
I should like to mention Clause 11. This mainly reproduces existing legislation under which we may impose retaliatory duties against the goods of a country which discriminates against our commerce. I cannot tell whether I shall have to use this power often—I hope not—but I think the House will agree that we ought to have this safeguard in reserve. Like the anti-dumping legislation which the House approved earlier this year, these provisions are essential if we are to get both freer trade and fair trade.
So much for the main provisions of the Bill. Essentially, it is a consolidation Measure which replaces in one instrument five Acts of Parliament and some 70 provisions in Finance Acts. This is a piece of tidying up on the grand scale and very many months of detailed study have been put into it. If the Bill becomes law, traders will save time and money in the conduct of their business and the Government will be better equipped for commercial negotiations with other countries.
The Bill represents the kind of unspectacular reform which it is one of the functions of the Board of Trade to bring before this House. Last year, copyright; this year, tariff structure; next year, maybe weights and measures. Such is the pedestrian road along which the Board of Trade advances cheerfully.
In conclusion, I would remind the House that this afternoon we are debating a Measure designed to fit this country for the economic future as we can foresee it. All over the field of industry and 45 agriculture there is progress in methods, machines, materials and the management of men. Sometimes the pace is unbelievably swift, sometimes it is disappointingly slow, but one cannot doubt that the output of industry and agriculture as a whole must increase very rapidly all over the world. Facing such frequent and disturbing changes in the supply and demand of goods, we, who depend so much on foreign trade, require a modern and flexible tariff, and under the provisions of the Bill we should get just this. I therefore commend the Bill as a useful and, I hope, non-controversial Measure.
§ 4.8 p.m.
§ Mr. Douglas Jay (Battersea, North)
The President of the Board of Trade described the Bill as an unexciting Measure, and I think experience shows that the less exciting the Measures introduced by this Government the less objectionable they are. Indeed, it is a real and rather rare pleasure to be able to give a general welcome to any proposal brought forward by the present Government.
As I understood the President of the Board of Trade today, the Bill really has two practical purposes: first, to simplify the law under which import duties are imposed and altered; and, secondly, to simplify the language by which they are described. I cannot imagine that the House, not even the Liberal Party, will quarrel with those two apparently laudable aims.
I think that, in passing, we should utter a word of thanks and congratulations to the officials, draftsmen, experts and others who have evidently performed a colossal task in Brussels and in London, and no doubt elsewhere, in simplifying all this nomenclature, as I would call it, and crystallising the legal framework into a Bill of, I would say, more than usual intelligibility and not more than moderate size. Though the Bill before us has only 30 pages, including the Schedules and everything else, traders outside might well spare a thought for the enormous labour which must have gone to reducing it within this compass.
I note, for instance, from the White Paper that the Brussels Nomenclature in simplified form contains 21 sections, 99 chapters, and over 1,000 headings. It is something, I suppose, in an imperfect world that 14 or more countries should 46 be able to agree, at least, on this. If we cannot control hydrogen bombs, at least we can agree to call our imports and exports by the same names. If it helps towards easier trade and even, perhaps, European unity, that we should call a spade a "miscellaneous manufactured article," and if a rose smells as sweet by the name of "ornamental foliage," we should put up with it, whatever Sir Ernest Gowers, Dr. Johnson, or Shakespeare might say.
I think I am right in saying that this is largely a procedural Bill. As I understood it—and this is important—the right hon. Gentleman said that no actual duty or tariff will be altered by the Bill as such, even though we needed a Ways and Means Resolution to bring it in. What will happen is that Orders will later be introduced and those will, in the first instance, make certain changes of a detailed kind in actual duties so far as necessitated by the change in nomenclature. Perhaps the Minister of State will confirm that later.
We are not, therefore, today principally concerned, or, indeed, concerned at all, I think, with tariff policy as it affects individual industries. On the other hand, we are, in effect, deciding that protective import duties in some form are to continue as part of the permanent economic policy of this country. Therefore, like the President of the Board of Trade, and, since we have such a large proportion of the Liberal Party with us—50 per cent., perhaps, I think—
§ Mr. Jay
—I will just say this about the historical free trade and protection controversy, in the light of twenty-five years' experience since the Import Duties Act, 1932.
We have learned that, provided full employment is maintained, in modern conditions the case for permanently limiting imports to protect an individual industry by tariffs is not a very strong one, apart from special cases. That, if I may say so, is the truth in the classical free trade argument. We have learnt also, I think, that the case for temporarily limiting imports on balance of payments grounds is very strong; and that really is the truth of the criticism of that classical argument.
47 I also agree with what I think the President of the Board of Trade said, that we do need an international code of fair trade to cover both tariffs on the one hand and quotas on the other. But it follows—and experience shows—that the latter, that is, the reinforcement of one's balance of payments by quota limitation, should be essentially temporary and not permanent.
It is, therefore, rather ironical, looking back to the 1932 Act, that it stemmed largely, apart from the historical protectionism of the Tory Party, from Lord Keynes' belief at that time that we must limit imports for balance of payments reasons. Yet it provided for protective tariffs which really had very little relevance to our balance of payments problems either then or since. I imagine that the President of the Board of Trade will agree, after all these years, that it was not the import duties introduced in 1932 but the devaluation of the £ which corrected our balance of payments situation and checked the rise in unemployment then. In another passage of his speech he described that Act as contracting out of the world's troubles. So far as it was an introduction of protective tariffs, that is a much more accurate description of it than is the pretence that it had much to do with the correction of unemployment in those years.
The Bill before us provides machinery for continuing Commonwealth Preference. Again with the Liberal Party in mind, I will add that experience has shown that the classical free trade theory in objecting to all preferences—if that was, or perhaps, is, the attitude—did not allow enough for the fact that our trade today with the Commonwealth is really less liable to political or currency risks than is our trade with the rest of the world, such as that with North America, or South America, on the one hand, or with the Communist countries on the other.
Since our Commonwealth trade is, therefore, subject to less risks, it is prudent in our own interests to give Commonwealth trade deliberate help. It is, as it were, a sort of insurance in our favour. In that sense, one may say that the Commonwealth Preference idea is really a precursor of the European free 48 trade system which is now being worked out.
In his general remarks about what one might call the philosophy of the present Government's attitude to protective tariffs and why they propose to have them in one case but not in another, the President of the Board of Trade left a number of questions unanswered, which we shall, perhaps, pursue at a later stage of the Bill. He mentioned steel in another connection. Do the Government consider that a British manufactured product like steel, or, for that matter, machine tools or motor cars, imports of all of which carry a protective duty, ought to be protected whenever imports would seriously compete with home industry? Is that their basic view now? Or do they think that the main purpose of protective duty nowadays should be to lever down other countres' tariffs by negotiation, or, in some cases, perhaps by retaliation? What really is their view about the main justification for an individual protective tariff?
I notice that Clause I of the Bill provides that the Treasury and the Board of Tradeshall have regard to the desirability of maintaining and promoting the external trade of the United Kingdom, to the desirability of maintaining and promoting efficiency of production in the United Kingdom and to the interests of consumers in the United Kingdom.Why did the Government decide to leave out the preservation of full employment from that general definition? After all, what would be the use of having an efficient industry if 50 per cent. of our labour force were unemployed?
§ Mr. William Shepherd (Cheadle)
Why does the right hon. Gentleman stress this point? He has just told us that he believes that the pre-war tariffs did not do anything at all to correct unemployment.
§ Mr. Jay
There are, notably in particular areas heavily dependent on one industry, cases where one might certainly justify, on economic grounds, a protective tariff to help maintain employment. We shall give some examples when we come to later stages of the Bill. 49 Since the whole basis for a lower level of protective tariffs generally is that we have full employment, I do not understand why it should be justifiable to leave it out of the main definition of the Bill in that fashion.
§ Sir D. Eccles
The right hon. Gentleman has possibly not seen that in Clause 1 (1) we begin by saying:…with a view to affording protection to goods produced in the United Kingdom…That is really designed to cover it.
§ Mr. Jay
Yes, I noticed that; but it does not seem to us that protection for goods is necessarily the same thing as the preservation of full employment, and I still do not see why, if we have phrases such as "the interests of consumers", it is necessary, or, from the Minister's point of view, desirable, to refrain from inserting a reference to full employment in the other Clause.
The Bill proposes that these duties shall continue to be altered by Order, as, of course, they were under the 1932 Act, not in the Finance Bill. We note with interest that the party opposite now believes that delegated legislation ought still to be used on a quite considerable scale even in such matters as taxation. The President of the Board of Trade was one of those who, in opposition, used to denounce delegated legislation as a rather dictatorial and wicked method of legislating. But I should like him or the Minister of State to enlighten us on one point. I notice that the White Paper, in paragraph 9, in referring to the revenue duties—the ones we all know so well such as those on petrol, beer, tobacco, and so on—says that they can be administered within the framework of a Brussels Nomenclature tariff. It states:legislation imposing these duties"—that is, the revenue duties—is not materially affected by the Bill.What does "materially" mean in this respect? Does it mean, as I presume, not that the tobacco, beer or petrol duties are now to be affected by the Bill in such a way that they could be varied by Order, but, on the other hand, that some detailed changes will have to be made in the rates of those duties to bring them into conformity with the Brussels code? That is what, I presume, must be meant.
If that is so, I presume that the legal position—it is a rather curious one in a 50 way—is that in future, all these import duties and Purchase Tax can be altered at any time by an Order laid before this House, but that all other direct and indirect taxes can only be altered by the full paraphernalia of the Finance Bill. I do not say that that is an illogical or unwarrantable arrangement, but as the Government are introducing this Bill they might give us their justification for making this arrangement of things permanent.
If I understand it aright, the position is that no actual duty will be altered by the passage of the Bill as such but that soon after the passage of the Bill, I think the President of the Board of Trade said, one comprehensive Order will be laid before the House to establish the whole of the Brussels code of nomenclature. After that—I was not aware until the right hon. Gentleman said this that there would be one major Order of this kind—I presume that we shall have a series of individual Orders introducing detailed changes in individual import duties.
Finally, I come to the Import Duties Board. I was not wholly persuaded by the right hon. Gentleman that a new separate authority is necessary and must be set up. Under the Bill, the Board of Trade and the Treasury will both make the changes in duty as, of course, they must, and decide in all cases what changes are to be made. Back in 1932, we had a Government which rather liked taking all sorts of power out of the hands of Parliament. The great idea was to have individual bodies which were not subject to political interference and all that sort of thing. Indeed, there has always been an old Board of Trade official doctrine to that effect. One of its convenient results, sometimes, is that it becomes impossible to ask Parliamentary Questions about what these quasi-independent or hybrid bodies are doing.
That doctrine popped out in the case of the Restrictive Trade Practices Act, when a Registrar was set up who was not wholly under the control of the Board of Trade. In that case, and in others, this has had two consequences: first, that parliamentary accountability tends to be blurred and frustrated; and, secondly, certainly in the case of the Restrictive Trade Practices Act, that nothing tends to happen at all. In these cases—we are not dealing here with an industrial or trading organisation, but with an administrative 51 and regulatory one—unless a strong case is made out the other way, I prefer plain honest, ministerial responsibility.
It is the fact, is it not, that the Treasury and the Board of Trade have been dealing with the whole of this job since 1939—that is to say, for eighteen years? I wonder why it is not possible for them to go on doing the whole job in the way they have done during that time. I know that the new Board—and here it differs from some of the other cases—is to be both appointed and removable by the Board of Trade. I take it from that—we would like to have this confirmed—that the President of the Board of Trade will, therefore be responsible to Parliament for all its actions, just as much as if it were a Department of the Board and that, therefore, Questions can be asked in the House about its activities. If that is so, I am a little doubtful of the value of having a separate organisation at all. Perhaps we could be told whether it is to be fully accountable to the President of the Board of Trade and to the House and, if so, why the Government think that there must be a separate organisation.
There is another thing that the President of the Board of Trade did not make entirely clear. Is it the function of the Board both to report what Clause 3 calls "findings on facts" on the main changes in import duties but not to make actual recommendations, but, on various other jobs which are specified in later Clauses, to make recommendations as well as to issue findings on fact? That is what the Bill appears to say. If that is so, can the Board then only make recommendations where the Bill specifically says that it can and not elsewhere? Are these recommendations by the Board to the Board of Trade and the Treasury to be made public? If so, shall we then have cases—[HON. MEMBERS: "It is in the Bill."] I think that is true, but I want it confirmed. If that is true, are we then to have cases in which the recommendations will be made in public and the Board of Trade will subsequently turn them down? Is that really an advantageous or desirable procedure? I cannot quite see the purpose of creating an outside body, inviting it to make public recommendations, and then publicly turning them down.
These are the sort of questions on which the House would wish to be clear 52 before we part with the Bill. However the Liberal Party may be feeling, I would not myself quarrel with the main framework of the Bill's proposals, or advise my hon. Friends to vote against its Second Reading.
§ 4.28 p.m.
§ Mr. Geoffrey Hirst (Shipley)
Very seldom have I agreed with quite so much of a speech by the right hon. Member for Battersea, North (Mr. Jay). I do not, however, want him to run away with the fact that that necessarily means that I agree with the greater part of what he said; but I have, indeed, agreed with him quite a bit.
Since I shall be a little critical on one or two points, I should briefly like to add my praise to the Board of Trade and to all those who have been concerned with the legislation itself for this major piece of work. There are one or two unfortunate things about it, but, on balance, there is not a shadow of doubt that it will be a great help to industry. Everything that the right hon. Gentleman said on that score will be echoed, I am sure, by all hon. Members on this side of the House.
I should not like the right hon. Gentleman to include me in the section of my party that likes delegated legislation. I should like to be relieved of that bouquet from the right hon. Gentleman.
My right hon. Friend the President of the Board of Trade said that there would be no lowering of tariffs that was not to the benefit of this country. That is one of the things which over the years we have heard often from the Dispatch Box. I well remember it long before I came to this House, when, as a member of the Grand Council of the F.B.I., twenty-five years ago, I was concerned with certain tariff discussions. The same thing was said then, but I cannot say that it was true or that industry and commerce were sufficiently consulted before the decisions were taken.
I think that Clause 11, to which the President of the Board of Trade drew attention, is wholly sound. I am greatly gratified that Britain is to take such action of a defensive character, which we hope, like all other defensive measures, will not have to be used, but which, none the less, should be there against times when we are unfairly treated in relation to our trade with 53 other countries. This is the kind of legislation which, however benignly meant or however well or smoothly it is introduced to the House, is the type which must be examined carefully.
At the present time Customs Duties are imposed by an Act of Parliament, as the right hon. Gentleman the Member for Battersea, North has said. At the present time Custom Duties are imposed by Acts of Parliament, such as Safeguarding of Industries Act, Imports Duties Act, 1932, Ottowa Agreements Act, 1932, and in the annual Finance Acts. Under the Import Duties Bill, it is proposed that the application of protective duties should become an administrative act by the Treasury on the recommendation of the Board of Trade as appears to be expedient in the national interest. I am not altogether happy about that. It may be, if I understood my right hon. Friend correctly, that that has to be by Statutory Instrument requiring an affirmative Resolution of this House. But it is a departure, and I hope that that point will be gone into a little more fully when my hon. Friend the Parliamentary Secretary winds up the debate. It is a departure, and industry is concerned that some of the dangers which have been seen in the past will be repeated.
It can be taken up if the order has to come to this House for affirmative Resolution. That is said to be the same thing as putting it in an Act. That is not the way that some of us recognise these things, and it is not the way we like things done in industry. There is the danger of a fait accompli and everybody having to line up in the Lobbies to save the face of the Government, otherwise the Resolution is lost, and that is viewed as a terrible thing. I should like an assurance, because every section of organised industry which I have come across—I have been concerned with many—is concerned on that score. I am also concerned that neither the Treasury nor the Board of Trade, so far as I can see from the Bill—I would like to be proved wrong—is required to pay sufficient attention to the views of industry before action is taken. Am I right in believing, as I think I am, that it is left to the Treasury and the Board of Trade to deal with Commonwealth Preference on a similar basis? I am not fully assured by what has been said 54 this afternoon. I hope that the position will be made clearer than it is now, because these are the points of concern.
The second major point is that the Import Duties Board which is to be set up is to give assistance to the Treasury and the Board of Trade in connection with the discharge of their functions under the Act. That does not appear to be intended to be a very effective body. I do not know whether we shall hear more about that. It has no semblance to the present I.D.A.C., which at least appeared to be more independent. Other hon. Members may have more to say about that. We do not feel that the way the Board is to be set up will give that degree of independence which major functions require. It is not only the main functions which are of concern; the minor ones are equally important.
This Bill is rather sweeping. This will be a new body to investigate matters which are referred to it by the Board of Trade. It does it in accordance with instructions given by the Board of Trade. It makes a report to the Board of Trade, which may or may not be published at the discretion of the Board of Trade, and may or may not be acted upon. It is a lovely blank cheque, and it is not altogether a sound idea to make the right hon. Gentleman on the Government Front Bench at the time the sole signatory to that cheque.
There is, of course, specific provision for consultation with industry, but it is not clear that industry has the right of direct approach. That has not been mentioned, and it will be very helpful if it could be cleared up. My first requirement is that Parliament should not be asked to surrender vital powers which it has unless assurances are given of a very definite, solid and quotable character. My second requirement is that the Board should be independent and be seen to be independent in all regards.
Finally, may I put three, if I may use the phrase, "quickies" to the Minister? First, the power of the Treasury to require payment of fees by persons applying for relief from import duties or for registrations of persons and premises connected thereto should be reconsidered. At the moment, relief from import duties is only granted when in the national interest. People should not have to pay fees in instances where quite clearly the national 55 interest is the sole arbiter of whether that action is right or wrong.
The Import Duties Board, in addition to general relief questions, is asked to deal with specific questions. I put it as a question, but I know that it includes the very important sphere of duty-free import of machinery, a subject on which my right hon. Friend and I have had a good deal of discussion. It is a most unsuitable body for this purpose. The subject is one of great technicality and one of considerable urgency and should not be lost as an item upon an agenda—which looks as if it will be extremely long—of the Board.
I would not quarrel if the body were used as an appeal tribunal. Respecting some of the decisions, an appeal is required. It does not exist at the moment, but it is not the right body for this matter which is heavily technical. The Board of Trade must be the first to admit that they have had to go to the industry concerned to get the technical knowledge to answer certain questions. Therefore, it has to be sectionalised within the various spheres of industry that have got the necessary technical information.
Further consideration should be given to the restriction in paragraph 2 (b) of the Sixth Schedule, which reads:the drawback shall not be allowed on an exportation by a person other than the importer of the imported articles or some person who has taken delivery of those articles or of goods incorporating them directly from him.Does that have regard to certain needs in, for instance, the wool textile industry where commission work is performed? I do not know that it does. It has been a snag up to now. I do not expect an answer tonight, but perhaps the Minister might make a note of that for reply by correspondence. It will be known in the Board of Trade whether it does meet a requirement where work is imported on a commission basis and may be within the words I have read out, changed in nature but is really the same material in a further degree of process.
I humbly speak for quite a few people outside this House and in accord with many Members on these benches. I should like an assurance on the points I have mentioned.
§ 4.39 p.m.
§ Mr. H. Rhodes (Ashton-under-Lyne)
I do not quarrel with the main provisions of the Bill, except one, and I think that the consolidation that the Bill makes is a good thing.
The President of the Board of Trade made some remarks about the situation in 1932 and the imposition of the duties through the May Committee of that year, and remarked upon the state of industry since the war. Business is easy when buoyancy and expansion is the rule. Come a time, however, when things are not quite as good, then the difficulties of an industry which is affected are enormous. It is easy to expand when there is trade; it is easy to expand when one has the money. It is when one has to contract, or just "hold one's horses" for a while, that the difficulties begin.
For illustration, I need refer only to the present state of the aircraft industry in this country. That industry, everybody will know, is going through a very difficult time indeed, and it should have the sympathy of hon. Members on both sides of the House. A White Paper was brought to the House but no more indication was given of what policy should be pursued, and the industry is left to its own devices.
Before the war, the time of expansion after the war, and the new era we are going into now are three identifiable times in the history of our industries. I shall have something more to say about that in a minute or two, but may I come to my main criticism of the Bill as it stands? It relates to the Import Duties Board. The Board, as it is proposed to be constituted, is a puppet of the Board of Trade. Make no mistake about it. That is the case.
Hon. Members will have observed this year's sequence of events, starting with the Finance Act, and continuing with the Customs Duties (Dumping and Subsidies) Act, and in this Bill there emerges a pattern of Government policy leading to the European Free Trade Area idea. That is significant, and it is alarming to me that the Board which it is intended to set up by the Bill should be hamstrung from the start.
Its function is permissive only: the Board of Trade may seek its assistance. It may ask for relevant facts to be considered. The Board of Trade can object 57 to the personnel on the Board. The Chairman of the Board cannot do the same. He has to do exactly what he is told—with this exception, that under Part II, the Chairman is to be so overloaded with pettifogging detail that it will prevent much real consideration of important facts.
It seems to me that this undermines the functions of the Board. The President of the Board of Trade is perfectly right in setting it up, but my own personal view is that this undermining of the functions of the Board is out of line with the experience which has developed elsewhere, namely, in the Dominions, and also in the United States of America, where they know the value of independent tribunals when considering tariff questions.
§ Mr. Rhodes
Certainly not. Take the experience of Australia. If the hon. Gentleman has studied the problem he will remember that the Australians, some years ago, were very keen on putting on tariffs to protect their smaller industries. The time has come in Australia when those protective tariffs are not as easy to get. The independent tribunal in that case is going against the manufacturers and giving strength to the Minister in the Australian Government who is in charge of trade. I think that that answers the hon. Gentleman's question.
The question of tariffs and duties at a time of expansion does not arouse many passions and emotions, but when there is a serious inroad into the trade of an industry, do we then see passions and emotions? Of course we do. I am of the opinion that during this next decade we shall be facing some of the most important, burning issues in this field that have ever been presented to this country.
I will name one or two. First, there is the Asiatic competition throughout the whole range of consumer goods. Secondly, there is the periphery of the European Free Trade Area or Common Market. These will be tremendous problems. There is the question of the duty-free entry of Commonwealth manufactured goods to consider.
58 I am thinking not only of the problems of this Government. I am thinking of the implications for the next Government as well. I say that if the Government saddle this responsibility on permanent officials, it will be unfair to them. The Government cannot always expect to justify the measure of confidence which is expressed at present. I believe that, because of overwork, they will not be able to do it. These are questions which affect overseas countries, foreign policy and internal politics. These issues can affect relationships with other European Free Trade Area partners as well as with the United States, Japan and the Commonwealth.
Tariff decisions affect people more profoundly than a great many important legal decisions. Emotion is aroused and there is very quick reaction if people fall out of employment in industries as a result. We have had experience of that in the past. As I know from past experience, the officials of the Board of Trade are first-class people, but on this question of responsibility the Government would be wise to adopt the old maxim of not merely doing justice but allowing justice to be seen to be done, and give more responsibility to the Board.
I spoke earlier about Australia. The value of the tribunals in Australia has been that they are independent. Searching questions are asked of all parties in public hearings. A tribunal is considered to be impervious to party political considerations of any kind. That could be a very important matter for industry, especially after a change of Government.
The Explanatory Memorandum which accompanies the Bill states that Clause 3 (2)empowers the Board of Trade to refer tariff applications and any other questions affecting their functions under the Bill to the Import Duties Board for a report on the relevant facts.The Customs Duties (Dumping and Subsidies) Act. 1957, however, is expressly excluded, and it looks as though the Board of Trade is trying to prevent investigation by independent persons of dumping. I should like to know whether that is so or not. It might be better that the President of the Board of Trade should ask for enabling power from the House to enable questions of dumping to be put to the Import Duties Board. There is a strong 59 case for the transfer of the functions and powers under the 1957 Act to the new Board, lock, stock and barrel.
There is one further problem with which we shall be faced overseas which I should like to mention. The European Free Trade Area can succeed or fail according to the motives we have for entering it. A factor which may cause the eventual failure of the European Free Trade Area is the exclusion of the Iron Curtain countries from consultation, negotiation or in the exchange of views between them and the proposed members of the European Free Trade Area. I give this warning because this Measure is part of the build-up to fit into the structure of the European Free Trade Area.
There is historical precedent for this. In 1947, an effort was made to embrace everybody in Europe in a European economic commission under the United Nations, at Geneva. In April, 1948, there was another attempt—a joint effort by America, ourselves and other European countries on the basis of O.E.E.C. It included everybody in Europe except Russia. It was then that the cold war really began in earnest. If we think now that we are to have a kind of economic N.A.T.O. in the European Free Trade Area we shall precipitate one of the most gigantic trade wars that the world has ever known.
The Soviet Union has the ability to wage that war and we have no protection under the Customs Duties (Dumping and Subsidies) Act, because, as we on this side of the House pointed out when we debated the Bill, the safeguards in it are not adequate. I hope that the Government will bear in mind the warning that I give.
I should like to ask the President of the Board of Trade why the May Committee of 1932 should be superseded. There is no real reason for that unless it is to make a puppet of the proposed Board. I hope that there will be second thoughts on this point and that there will be an opportunity in Committee to discuss the matter further. I appreciate that nothing could be written into the Bill to limit the Government's prerogative powers under G.A.T.T. to alter treaties by negotiation, but I think that if the proposed Board were a tribunal with more powers, or at least with the 60 opportunity to listen to the views of industry and to make recommendations to the Board of Trade, it would help in bringing about desirable changes in duties under the General Agreement on Tariffs and Trade.
The Chairman of the proposed Board will have a dual rôle, for he will also be chairman of the standing committee which is to deal with Part II of the Bill and all the detailed matters of drawback and duty-free licences, known as Treasury licences, and so on. He will be swamped with detail. If this Board is to work we should give it the opportunity to do so in the best possible way.
In my experience, the Board of Trade has always conducted first-rate consultations with industry. It has always been prepared to listen to representations made by men of common sense engaged in any industry about their problems and difficulties. All these men are not looking to their own selfish interests. There are statesmen in business as well as in other spheres. Perhaps it would be a good thing to give further consideration to the nature of this proposed Board and to alter its structure in Committee.
§ 4.59 p.m.
§ Major H. Legge-Bourke (Isle of Ely)
In addressing the House, I would, if I may, try to follow the same procedure as did my right hon. Friend the President of the Board of Trade in making one or two general observations and then coming to one or two more detailed points in the Bill. My right hon. Friend expatiated for a little on the benefit which we have derived from the General Agreement on Tariffs and Trade. He made it very clear that his attitude was that in a time when there was need for expansion we had benefited very greatly from that Agreement. There are opinions about that, and my right hon. Friend knows very well that I do not share all the views that he has expressed.
It is often the case that in approaching these problems of trade relations one finds that by starting as individuals dealing with other individuals we discover some equivalent on an international plane. We are all too ready to assume that relationships between individuals are and must be entirely different from those which prevail between nations. Looking back to 1945, when we came out of the war heavily indebted to the Americans, it is, 61 of course, true to say that without G.A.T.T. we should have been in a very difficult position so long as America remained, as she still is, the great creditor nation. Just as an individual finds himself indebted to another individual and would probably discriminate as much as possible and make sure that he did deals as highly beneficial to himself as possible without their necessarily being injurious to the other person, so, I think, the same thing must apply among nations.
It may be true that the American Administration has, as a result of G.A.T.T. been able to say to its very high pressure lobby representing particular interests—oil or other interests—that it cannot comply with their desires because it is bound under the general agreements. It may be true that the Americans could say that. If we were bound by the terms of the general agreements as they are today, we should be in a very disadvantageous position indeed.
I have often felt that if certain interests in common are prepared to discriminate very violently in a protective way without regard to what effect that is going to have on the world, the surest way of dealing with that position would be to have the power to retaliate should one wish to do so. I have never felt that having the right to discriminate in trade means that one should necessarily have to discriminate. It is the possession of the power to discriminate which is of value, and it is that about which I have always felt most doubtful in approaching the whole problem raised by the general agreements.
One can at least say of the Bill now before us that it does nothing further to whittle away the power to discriminate which we have managed to retain since the war, although I must say that there are some parts of the Bill which make me wonder just where we should be heading if all the powers now given to the Board of Trade and the Treasury were used in one direction.
For once, I found myself in agreement with the right hon. Member for Battersea, North (Mr. Jay) when he criticised the President of the Board of Trade for introducing a piece of legislation literally stiff with powers of delegation. It is certainly true that the 1932 Act involved many elements of delegated legislation. I would not say that the present Bill is likely to reduce that in any way, and I rather 62 regret that. There certainly seems to be immense repetition of the word "may." Either the Treasury or the Board of Trade "may" do this, that or the other. The only unfortunate body which "shall" do anything is the new Import Duties Board.
Incidentally, while we are on that matter, may I say that I feel it is rather unfortunate that the Import Duties Board should, so far as my constituency is concerned, have been the title chosen for that body, because I.D.B. has a very special meaning in the Fens. It stands for Internal Drainage Board, which is a very important body in that part of the world. I am not sure that the horticultural growers will feel disposed to be as friendly towards the Import Duties Board because they may feel that the drainage which will take place through that Board is the last sort of drainage that they will want, that is, of their own prosperity.
It seems to me that the powers now being taken under the Bill by the Treasury and by the Board of Trade are powers which, even if the Import Duties Board were to have a predominance of agricultural producers upon it, are so dominant that if it happened to suit the Government of the day to take a particular line it would wreck the horticultural industry as a whole. Fortunately, we have in power today a party which is firmly pledged to protect the horticultural and agricultural industries. But there have been anxieties expressed in the past.
For instance, only recently the quota on apples has suddenly been increased, purely for political reasons, to allow £100,000 worth of apples to come in from the Lebanon. That has been done for good political reasons. I fully understand those reasons, and I would certainly not at this stage say that it is something which the industry cannot bear. But if a practice were made of that sort of thing, as could happen under the Bill—because quotas as well as other things appear to be covered in the Schedules—then it would be very disturbing to the industry. It is anxious enough as it is.
There is in Part III of the Bill a description of the various types of duty. Section 11 (6) states:A duty…may be made chargeable by reference to value or to weight or other measure of quantity.63 I should like to know whether "other measure of quantity" could possibly include fixed prices, because, as I see it, it could be employed in the following way. If, say, the price of a commodity in the exporting nation were such that by the operation of a fixed price for the import when it arrived in this country one could limit the quantity, one could perhaps say that that method was being employed to restrict the quantity of imports. I do not like the sound of that, because there are quite a lot of people at the moment, in view of the European Free Trade Area being set up, who are thinking that they would like very much to have a special arrangement for agriculture. Personally, I am highly suspicious of any form of fixed price at all, but I should like to know whether a duty could be so operated that it would be possible to have, as part of its provision, a fixed price which would have the effect of limiting the quantity imported. That is important from the point of view of agriculture in this country.
As a result of the measures which the Government propose taking under the Bill, there are many people who are beginning to wonder, as free trade is not in question at all as far as agriculture is concerned—free trade is non-existent in Europe as far as foodstuffs are concerned—whether they want a rigidly managed market on Socialist lines with a monolithic structure at the centre controlling everything and having a common policy—transport charges, and so on—or whether we are to have some fixed price system coupled with that which would ensure that the fixed price for food in Europe is the same as in this country.
There are people in this country who are arguing that case. It is not a case that I would argue, but I am very anxious to know to what extent, if at all—and I hope it is to no extent whatever—fixed prices could be made part of the operation of the Bill so far as retaliation is concerned.
§ Sir D. Eccles indicated dissent.
§ Major Legge-Bourke
I am very glad to see that the President of the Board of Trade shakes his head. I hope that everyone will be forthcoming in the matter because it is something which could very easily make the position of the Government and of the House extremely 64 embarrassing in so far as the agricultural industry is concerned, to which both sides of the House are heavily pledged.
I am a little concerned as to what exactly the Import Duties Board is going to do. Will the Board be composed of persons selected regardless of their background and merely because of their ability? Will they be selected on the basis of their knowledge of production in this country, their knowledge of importation into this country, or their knowledge of distribution in this country? Or are we to have a Board comprising all these kinds of people?
The President of the Board of Trade indicated that he wanted a fairly wide interest in the men he puts on the Board. Here we are up against the problem of numbers at once. From the point of view of the producer here, especially producers of those commodities or manufactures which will be most subject to lack of protection, I would have thought it highly important that their representation is at least equal on the Board. In other words, if we are to have that kind of division between producer and importer or between producer and distributor or between producer and consumer, I would have thought it important to have an adequate representation of the producer.
Otherwise there will be no confidence in the Board on the part of the producer, and my right hon. Friend needs no telling from me that of all the producers who become anxious on the subject of tariffs, there is no more vociferous body than the horticulturists, whose interests I try sometimes to protect. Already their feeling is being fanned against this project, and so it is important that we should have more indication than the Bill gives us of whom my right hon. Friend will ask, and what sections of the community he expects to have represented on the Board. After all, my right hon. Friend is free to appoint whom he likes under this Bill.
§ Mr. J. Harrison
When the hon. and gallant Gentleman is viewing the character of the representation on the Board, does he visualise the one appointed being representative of a certain producing or consuming interest?
§ Major Legge-Bourke
The President of the Board of Trade told us today that he was hoping to limit the numbers—
§ Major Legge-Bourke
The smaller the number, the more difficult it will be to have representatives of all interests. I am anxious lest if there were to be a representative of the producers, he might be either a manufacturing or an agricultural producer. Probably he could not be both; indeed, we would be fortunate if he were. It is important, however, that both interests should be represented if the board is to be composed of the various interests.
That was why I felt there might be something to be said for having the minimum representation for industry as a whole and the maximum representation of people who are there purely because of their ability to decide the rights and wrongs of things. Again, experience is essential, and it will be difficult for the President of the Board of Trade to decide who it shall be. All I am asking is that we shall be told the way in which my right hon. Friend's mind is working, because the Bill merely gives him power to appoint whoever he may wish. It tells us nothing.
I asked my right hon. Friend in the course of his speech whether the matters to which the Treasury and the Board of Trade should have regard in considering what import duty, if any, ought to be charged on goods of any description, are meant to include the conservation of foreign exchange. I asked that question particularly because the biggest case for giving the tremendous support to agriculture which we have given since the war has been the fact that agriculture is helping us to save foreign exchange as perhaps no other single industry has been doing. It is important to make sure that this is borne in mind when arriving at a decision as to whether or not import duty should be raised.
I am still uncertain, even after what my right hon. Friend said, whether the procedure now is that, under the General Agreement on Tariffs and Trade, if it is desired to raise a tariff the first approach of, say, the National Farmers' Union is to the Board of Trade, which then asks the Import Duties Board to look into the case, ask for the facts of it, and then makes up its mind what to do in conjunction with the Treasury. Or is the procedure that the National Farmers' Union goes first to the Import Duties Board and asks whether an application can be put in for increasing the 66 tariff under G.A.T.T.? As I see it at present, the Minister is trying to distinguish between the various headings under which the Board can or cannot make recommendations in addition to mere fact finding. I hope that the Import Duties Board is given the maximum amount of power to make the recommendation, and is restricted as little as possible in saying what it would advise should happen.
At the same time I fully take the point made by other hon. Members of having, as it were, a government within a government even more remote, from the point of view of this House, than is a Government Department, It is important, therefore, that we should try to hold a happy balance between letting the Board feet that it can really make recommendations, objectively on the one hand and, on the other hand, making sure that we are not setting up a kind of star chamber which can come to great decisions without Parliament having any say in the matter. The problem is rather the same as that of the nationalised industries, namely, whether the day-to-day administration can be carried on successfully if Parliament is poking its nose in every minute of the day. Obviously we do not want that, but it is important that the decisions when published should be published in full whenever possible.
Under Clause 3 (3)—Any report of the Import Duties Board under subsection (2) of this section shall be published by the Board of Trade in such manner as they think most suitable…In other words, the Board will decide the proper way of doing it. Then there are two provisos. The first is:…where it appears to the Board of Trade that publication of any matter contained in the report would be contrary to the public interest…Secondly—…the Board of Trade may, after consultation with the chairman of the Import Duties Board, refrain from publishing any report, or any part of a report, where in their opinion the publication would disclose information about a particular undertaking.Obviously that would be unfair to the trade or traders concerned, and I can well see the point of it.
There is one stage, I think under the drawback Clause, where the Board has to give its reasons. I hope that at the time of publication the Government Department concerned will have to give 67 its reasons too, if it disagrees with the Board, especially the Treasury. The powers of the Treasury are vast. We know that when the Treasury is attacked in this House it is generally regarded as the one Department that can safely look after itself. There will be a great impact on many traders, large and small, so I hope that when a recommendation is made against the Import Duties Board, unless those two provisos come into force, the reasons for the Government decision—whether it be taken by the Treasury or by the Board of Trade—will be given in the report.
This follows the Report of the Oliver Franks Committee on Administrative Tribunals and Enquiries, and it is much the same. Where a decision is taken by a Government Department, dealing either with the exchange of property or goods, there should be proper protection for the individual. So where his interests have to be overruled, the reason for the decision should be given.
There are many other matters which no doubt are more suitable to Committee, but there is one that I must take up which refers to the horticultural side. If hon. Members will look at the Fourth Schedule to the Bill, they will find various items which can be held to qualify for exemption. The Fourth Schedule is headed "Conditional Reliefs under Treasury Order", and paragraph 6 says:Apples may be relieved from import duties, if imported for use in making cider.That may apply at the moment—presumably it does, because the President of the Board of Trade has assured us that the Bill does not change the law at all—but I assure my right hon. Friend that apple growers are far from happy about the present situation and would not resent a change in their favour. Indeed, we had a lively debate on the subject in this House not many years ago.
It should be realised that of all the industries which rely on Government protection in one form or another, none is more important than agriculture, but there is a Cinderella end of it, which is the horticultural industry, in which some of the smallest men take part. For that industry a decision under the provision to which I have referred can make all the difference between ruin and prosperity. Even if the difference is only 6d. 68 in the £, it can make all the difference in one year between a prosperous year and a ruinous one. Consequently, the closest possible attention should be paid to such matters.
I would return to the more general issue by saying that if we look at the duties that we apply at the moment and compare them with those of other countries we find some rather surprising figures. If we take the average tariff rates on imports, including those entering duty-free but excluding those subject to Revenue duties, then our rate of duty is only 4.3 per cent. However, if we express the total revenue from customs duty as a percentage of the total value of imports, the figure is 29.7 per cent., and that includes Revenue duty.
The tragic thing about this is that our figures are often quoted in an attempt to make out that we have too high a tariff barrier. For instance, the Americans often claim that they have reduced their tariffs more than we have since the war. But if we take into account the enormous percentage of the alleged protection that we give our industries, our Revenue duties are not protective duties at all. One can then see that our record is as good as that of anybody else.
If we look at the other Commonwealth countries—I ought to say that these figures are based on 1953–56 average figures—and express the total Revenue from Custom Duties as a percentage of the total value of imports over those three years inclusive, one finds that the figures are as follows: Canada 9.8 per cent., Australia 12.2 per cent., New Zealand 14.9 per cent., the Union of South Africa 8.1 per cent., India 19.7 per cent., Pakistan 26.4 per cent., Ceylon 17.8 per cent., Ghana 17.2 per cent., and the Republic of Ireland, which still gets the benefit, 19.6 per cent., I think that all the figures I have given must include the Revenue duties. Certainly, we know that India has the largest measure of duty on her imports in the form of Revenue duty.
Turning to Europe, we find these figures: France 3.5 per cent., West Germany 7.5 per cent., Holland 4.8 per cent., Belgium 3.7 per cent., Denmark 2.6 per cent., Sweden 5.5 per cent., Norway 4.4 per cent., Switzerland 9.8 per cent., Italy 7.5 per cent., and Turkey 39.4 per cent. Those figures are of some 69 significance when we think where we are heading in the future. The figures for France. Belgium and Denmark already appear to be well below our figure of 4.3 per cent., if that figure is comparable with the Continental figures.
We have now reached a position where the level of protective duties is so small as almost to be less important than what it is worth protecting or which countries we are discriminating against. I am inclined to think that the Brussels list, which the Minister has said will be the list adopted under the Bill, is in itself too complicated to solve the problem which faces us. I should much prefer a list as short as that produced in January, 1954, by the contracting parties to G.A.T.T., which had ten sections. I think it would be possible even to cut that down and to have the following four categories, which I should much prefer: industrial commodies—raw materials—industrial commodities—semi-manufactures—industrial commodities—finished manufactures—and agricultural products. If one could cut the list down to that, it would be a much simpler arrangement. Industry, already apparently pleased with the simplification promised under the Bill, would he even more pleased. It is, of course, essential—I should agree with my right hon. Friend if he put it to me—that, whatever system we adopt, it must if possible be the system which everybody else is adopting.
I still feel that the Brussels list is rather complicated, although it is an improvement on what we had previously. It still has 21 sections, 91 headings and more than 1,000 items. I should like there to be further reductions so that we got down to simple things, perhaps finishing with primary products and secondary products, so that the whole system would become very much simpler.
I believe that our chances of ultimately ever again becoming a creditor nation depend on whether or not we are ever to have the right again to discriminate in trade. It is true, as my right hon. Friend said, that without G.A.T.T. and American creditorship we might have been in a very difficult position, especially if we had been bound to the rates of tariff and preference that we were in 1932. Nevertheless, I believe that if we were to have the power to discriminate again we should be avoiding something which has arisen 70 since 1945, which is our vast indebtedness to the United States. There seems very little likelihood of our getting free from that enormous responsibility, and I do not believe we shall until we ourselves become a creditor nation. The only way we can do that is by being able to discriminate where it is beneficial for us to do so.
I hope my right hon. Friend will realise that, while I appreciate that the Bill makes no change in the rates of preference or tariff, he will be under continuing pressure, certainly from me, and, I believe, from others, to change these rates as soon as they can be changed to ensure that our list of tariffs and preferences is brought up to date in value, quantity or whatever criterion on which they are judged. What is absurd about the present situation, and what I shall continue to impress upon my right hon. Friend, is that so long as we are bound to a system devised in 1932, when the Commonwealth was primarily a primary-producing Commonwealth, although the Commonwealth has now become a great manufacturing Commonwealth as well, our chances of having any realism in our economy are very small. It is for that reason that I give but guarded support to the Bill, because I realise that it makes no change—certainly none for the worse, I hope—and it is in the hope that the Bill may make it simpler to improve things in the future that I am prepared to support it on this occasion.
§ 5.30 p.m.
§ Mr. James Harrison (Nottingham, North)
I rise only to ask the Minister of State to say a little more about some of the things which were only mentioned by the President of the Board of Trade when he opened the debate. The right hon. Gentleman said that the Bill was a preliminary Measure before entering the European Free Trade Area. That view is amplified in the Explanatory Memorandum to the Bill, which says that the Bill isto enable the existing tariff to be recast in the form of internationally-agreed classification.…That appears to be one of the main purposes of the Bill, yet the right hon. Gentleman said very little about how the proposals for a European Free Trade Area will affect its provisions.
71 I should like the Minister of State to say something about that and also about the possible effect of the Free Trade Area proposals on G.A.T.T. Not to give further detailed explanations about how the European Free Trade proposals will affect the Bill and our future attitude towards tariffs in general is to ignore one of the main themes of the Bill.
I do not believe that we can legislate in this form and reclassify our present tariff regulations unless we do something about the immediate future of our tariff arrangements within Europe. Taking an interest in individual trades, such as agriculture and horticulture, will be of no avail unless we know from the Government their attitude towards the general tariff problem.
The President of the Board of Trade seemed to contradict himself when explaining the Government's attitude on these matters. He said that we were anchored to the multilateral tariff agreement of G.A.T.T. which would be the central theme of our tariff policy, but he also said that we had not the slightest intention of reviewing any particular tariff unless to do so would react to the advantage of the country as a whole, or of one industry. If we adhere to our present attitude towards tariffs, how can we possibly support the European Free Trade Area at the same time? Those are contradictory positions.
I hope that when he winds up the debate the Minister of State will tell us how the European Free Trade Area proposals will affect the Bill, our position in G.A.T.T. and our tariff and fiscal policy. If he fails to do that, we shall be left with only a limited idea of what the country's attitude towards tariffs is to be in the future. Our friends in the Liberal Party have been mentioned several times this afternoon and I hope that they, too, will ask for a more detailed explanation of the Government's policy.
The President of the Board of Trade said that the Bill was merely to re-catalogue the provisions of the Brussels Agreement, but there is far more behind the Bill than that. If I am wrong in that assertion, then, in view of the imminence of the European Free Trade Area arrangements, it is difficult to understand the purpose of the Bill. Merely to recatalogue our various tariff arrangements in order to bring them into line 72 matter compared with those important matters, such as the complete reorganisation of our trade relationships with the Commonwealth, which are envisaged in the Bill.
Many manufacturers, not only those in agriculture and horticulture, have pleaded for more information on these subjects. They do not know exactly what is to happen, and not to give a more detailed explanation is to keep them in suspense still longer. Many industries are organised in small units which are highly vulnerable—for instance, agriculture and horticulture—to any changes in tariff structure, but the President of the Board of Trade simply assumed that the Bill was a preliminary to entering into something far more important to trade and industry generally. He will be neglecting a vital duty if he does not give us details of what the Government propose in those major changes which are about to take place.
§ 5.39 p.m.
§ Mr. Alan Green (Preston, South)
I shall not follow the hon. Member for Nottingham, North (Mr. J. Harrison) because, as I understand it, the Bill is concerned with machinery, with the implementation of policy, rather than with that policy itself; therefore, I shall try to keep away from those matters which might be ruled out of order, namely, what we might do in the future vis-à-vis free trade in Europe.
There are one or two matters in the Bill of a special interest. The first concerns the Import Duties Board—I.D.B.—which has already been confused with Illicit Diamond Buying. If I have understood the Bill aright, the Board will not have any executive functions to pursue, although from what certain hon. Members have already said today one might have got the impression that it was going to exercise the powers of Government. I understand that that is not its function. According to the Bill, the Board's function is to seek to establish the relevant facts and to report them to the Board of Trade. I have no quarrel with that purpose, but I would invite my hon. Friend to bear in mind one extremely important fact.
The present relations between the Ministers and industry are fairly good. Since the war industry has developed a considerable confidence in the officials 73 and Ministers—of varying political characteristics—of the Board of Trade, because it has been able to go directly to them and talk directly with them about its problems. It is a matter of very great importance, if the Board is to succeed, that, after the Bill becomes law industry should be left in no doubt that it will continue to have at least no less direct access to the Board of Trade than it now has.
My hon. Friend the Minister of State may say that there is nothing in the Bill to prevent that from happening, and, indeed, that the Bill is worded in such a way as to ensure that the relations between industry and the Board of Trade are not in the least disturbed. But it is extremely important for him to prove that when he winds up the debate, because I do not want to see any fall in the present degree of confidence which exists between industry and the Board of Trade.
I do not join with some hon. Members—including the right hon. Member for Battersea, North (Mr. Jay)—who wanted the Board to be an independent tribunal or arbitrator. If the right hon. Gentleman did not say that, he must forgive me from gathering it from what he did say. His arguments were a little involved and difficult to follow. Certainly the hon. Member for Ashton-under-Lyne (Mr. Rhodes) left the House with the impression that the tribunal should be independent of Government policy. I do not want that at all. I want Governments to be clearly stuck with the consequences of their own actions. Let us have no mistake about it. We have already far too many boards and committees which appear to detract from the power of Government to govern. We want Governments clearly to govern and to be seen to be governing.
I welcome the fact that the Board will not have executive powers or functions but only advisory powers and investigatory functions. I hope to high heaven that it will record in public every one of its findings, and its reasons for arriving at those findings. Only under the most remarkable conditions, involving questions of high secrecy, should a report be kept secret, even in part, from those interested in it.
My right hon. Friend quite properly said that a protective tariff is a bargaining weapon. It is a bargaining and a tactical weapon. Those of my constituents who are in the textile trade agree 74 with him, but they point out, as I must, that they have not got that bargaining weapon vis-à-vis many of their so-called friends in Asia. It is fine to have a bargaining weapon, but not so fine not to have one. I am not so sure that the retaliatory Clause of the Bill is strong enough or wide enough.
Quite apart from the hoary question of the entry of Commonwealth textiles, there is another aspect of trade in consumer goods, particularly textiles, which does not seem to me to be covered either by the Bill, with its retaliatory powers, or the anti-dumping Act. I refer to the trade done by Iron Curtain countries, where prices are manipulated by an artificial rate of exchange or by some curious political-cum-military-cum-economic bargain driven by an Iron Curtain country with a producer with a prime raw material.
Some striking illustrations are now coming out. There is, for example, the purchase of Egyptian cotton by Czechoslovakia, with Czechoslovakia supplying in return what for it is scrap metal in the shape of obsolete armaments. By getting good quality cotton out of a country like Egypt in exchange for obsolescent arms Czechoslovakia is getting better than scrap value for its arms, and it can then, perhaps, afford to sell something a little more desirable to somebody else on its side of the Iron Curtain, or afford to sell the cotton thus cheaply acquired at less than cost price, and so disturb the whole pattern of pricing in that raw material.
I do not believe that we have got powers—I should like to know what they are if we do have them—to deal with the case of Western European countries acquiring cotton from Egypt cheaper than at world prices, making it up into cloth and selling it here. Under the provisions of the Bill I am sure that we are powerless to retaliate, and I doubt whether we have power to put on a dumping duty in such a case. Between the retaliatory powers of the Bill and the anti-dumping Act there seems to be quite a wide gate through which dumped goods—almost second-hand goods—can be put on the market here. I should like my hon. Friend to look into that matter. If he cannot answer my point tonight, I hope that he will find an early opportunity of doing so.
With those qualifications I welcome the Bill, because I see its value. I am sure 75 that industry also does. It will really be a splendid change. As far as I can make out, forty-one Acts are repealed, in whole or in part. I call that a perfectly magnificent achievement, and I hope that we shall see some more action on those lines. Forty-one Acts, in whole or in part, will be reduced into a much smaller and clearer compass. I am certain that those who manufacture, import and export will be absolutely delighted to have these provisions—not on a single sheet of paper, but in a single document—regarding the duties that affect them and also the particular rates of duty.
§ 5.48 p.m.
§ Mr. John Cronin (Loughborough)
The hon. Member for Preston, South (Mr. Green) has shown admirable restraint in confining himself largely to the Bill. I propose to follow his example. I have no doubt that the hon. Member for Bolton, West (Mr. Holt) will give us a wider philosophical dissertation about the whole policy of tariffs. It is very pleasant to be able to express a considerable measure of approval for a Government Bill in these days. I think that most of my hon. Friends will agree that the Bill is very welcome. It will make life easier for importers, the legal profession and exporters, and it will have, in general, considerable approbation.
The President of the Board of Trade made a very admirable and lucid speech, but I was a little surprised to hear him suggest that trade conditions immediately after the last war were easy. A number of hon. Members on this side of the House recollect that there was great difficulty about getting raw materials. The terms of trade were against us, and there was a rise in world prices. Industries were completely disorganised. In fact, I have some doubts that any Government but the one which followed immediately after the war would have been able to cope with such a difficult situation—but perhaps that is a point of view sufficiently contentious to justify my leaving it at present.
This Bill is an admirable Measure, but it is a small one and we must keep a sense of proportion. Nevertheless, it is well thought out and reflects considerable credit on the President of the Board of Trade and his Department and all the 76 institutions which helped to frame it. One regrets that the Government cannot cope with the general economic situation in the same way as they have dealt with this rather minor piece of legislation. In the context of our somewhat gloomy economic position this Bill causes me to recollect the French admiral at Trafalgar who, when the fleets were approaching each other, made arrangements for the welfare of his ship's goats. However, small and minor as it is, the Bill is very welcome.
There are certain points of dubiety about it to which I hope that the Minister of State will direct his attention. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) and my right hon. Friend the Member for Battersea, North (Mr. Jay) expressed some doubt and disquiet about the Import Duties Board. I share these misgivings. It is not at all clear what really are the functions of this Board and we might perhaps have a clearer exposition of them.
The last sentence of the Memorandum on the Ways and Means Resolution states that the Board will have power to recommend relief from duty under special circumstances. We have had no indication so far what are these circumstances. If we look at Clause 3 (2) we get the impression that the Import Duties Board is a purely fact-finding organisation. This Board is so dependent on the Board of Trade, it is so restricted, that I must ask the Minister of State whether it is really necessary at all. In what way would this Bill be impaired were there not an Import Duties Board at all? What is to prevent the Board of Trade continuing as it is without this advisory body?
This Bill constructs some very useful machinery, but I think the House should know, or, at any rate, should have some idea, of the speed at which it will work. At present, if representations are made to the Board of Trade for some modification of tariff policy, they are given careful and detailed study. Quite a number of businessmen and industrialists would suggest that the study is a bit too careful and prolonged.
I have heard it said that representations are sometimes made and that it takes two-and-a-half years to arrive at a decision. I hope that that is an exaggeration. It seems possible that some of these delays may be due to lassitude rather than Departmental diligence. Therefore, we 77 should like to know at what sort of speed will representations be dealt with.
The President of the Board of Trade will recollect that the Import Duties Advisory Committee—at any rate, up to 1939, when it was wound up—was held in considerable respect by the commercial and industrial community. It produced decisions at considerable speed, quite often within six weeks; and it would be pleasant if one could know that this Board will emulate such celerity. So far as one can see an application for representation has to be made to the Board of Trade which refers it to the Import Duties Board, and it is referred back to the Board of Trade. One can visualise the possibility of enormous delay and a great increase in those delays which now occur.
Another matter for criticism is the constitution of the Board. The old Import Duties Advisory Committee, which worked so successfully, consisted of a chairman and not less than two and not more than five members. The Import Duties Board, under the provisions of this Bill, will consist of a chairman and not less than nine and not more than 29 members. Most of us were relieved to hear from the Minister that he proposes to keep the numbers comparatively small in the first instance. I am sure, however, that the right hon. Gentleman will be aware that bodies of this kind have a tendency to increase in number, and it is probable that, sooner or later, this Board will approach its maximum figure. Then there will be quite a formidable Aulic Council from which it will be difficult to get straightforward decisions.
Hon. Members will be glad to hear of the adoption of the Brussels Nomenclature. That will result in clarification of matters affecting industrial concerns about which there is considerable confusion. There will be some minor difficulties which the President of the Board of Trade forgot to touch upon. For instance, it seems likely that some importers may experience difficulty in finding the correct heading for the goods they import.
§ The Minister of State, Board of Trade (Mr. J. K. Vaughan-Morgan) indicated dissent.
§ Mr. Cronin
The Minister of State shakes his head, but I suggest that that 78 is possible. I wonder what facilities will be given to people who find themselves in difficulty. Will they obtain the help of the Board of Trade?
§ Sir D. Eccles indicated assent.
§ Mr. Cronin
I am glad to see that the President of the Board of Trade nods his assent.
Another difficulty is that some trades are disturbed by the new tariff description of their goods. One gets the impression that it may well cause them embarrassment in their dealings overseas. If the new tariff descriptions cause difficulty, will it be possible for there to be some revision of the Brussels Nomenclature? One understands that there will be a Nomenclature Committee, established by the Customs Co-operation Council. Will that have power to make the appropriate revisions? Obviously, that is important.
Subject to those comparatively minor criticisms, I consider that this Bill will be a useful Measure. If the President of the Board of Trade will give careful consideration to the various Amendments which will be introduced by my right hon. and hon. Friends, he will find it a useful piece of legislation to put on to the Statute Book.
§ 5.58 p.m.
§ Mr. Arthur Holt (Bolton, West)
I am grateful to the hon. Member for Loughborough (Mr. Cronin) and other hon. Members for giving me such a "build up" before I rose to my feet. I found the comments of the hon. Member for Preston, South (Mr. Green), that we consider the important machinery for tariffs and that it should be thought to be out of order to discuss what that machinery is for, rather extraordinary. I should have thought the policy far more important than the machinery.
§ Mr. Holt
I have not misquoted the hon. Member.
Both in the Bill in the Seventh Schedule and in the White Paper, Cmd. 305, which accompanies it, a most important statement of policy is specifically made, and 79 was repeated again from the Front Bench this afternoon, that the level of tariffs will be exactly the same when this Bill becomes law as they have been before. I hope to say a few words on this subject. I have it on the authority of the hon. Member for Ealing, South (Mr. Maude), who is not here, that I am a nice, sensible, moderate man, and I hope to make another nice, sensible, moderate speech.
I expect that the broad mass of hon. Members who are described, whether aptly or not, by the term "Butskellists" will support the Bill. I do not see how protectionists or free-traders can support it. I hope to develop points against not only the machinery of the Bill, but against its policy. I shall read the speech of the President of the Board of Trade, I wonder whether he would not be wise to do so, also.
The right hon. Gentleman seemed to start off with a defence of tariff policy in the 1930s and particularly of the Import Duties Act, and, as the hon. Member for Battersea, North (Mr. Jay) pointed out, when the Minister was supporting the line which the Government appear to be developing now he said that we could not contract out of world trade and out of our responsibilities, as we did in the 1930s. Of course, that is exactly what we did. I would have liked to hear the right hon. Member for Battersea, North point out that the Import Duties Act, 1930, did nothing whatever to restore the prosperity of the country. The whole thing was a complete and utter mess.
The trend of present policy on the Government Front Bench is to lower tariffs all round. One quarrel that we have on that point and why we are opposed to the Bill, is that we see no sign whatever that if there is delay while we are trying to get other people's tariffs down we shall get our own tariffs down in the meantime. The situation is grave and the consequences of the Government's not taking dramatic action on tariffs now will only result in a continuation of inflation. A reduction of our own tariffs now would do a lot to bring about the conditions which the Government Front Bench have been talking about and which would reduce the cost of living, improve production and have other beneficial results.
§ Mr. David Price (Eastleigh)
Can the hon. Member give us guidance by stating which tariffs he would reduce unilaterally? Would he include those on horticultural products?
§ Mr. Holt
If the hon. Member will wait I will tell him which tariffs I would take off.
I will return to the machinery of the Bill. The second paragraph of the White Paper starts of by saying:Traders know that there is little uniformity among the customs tariffs of different countries. Headings and definitions of products frequently differ so much that each national tariff normally requires detailed study before it can be correctly understood. This causes a good deal of inconvenience to those engaged in international trade and the need for a common tariff nomenclature"—I cannot pronounce the word—has long been recognised.Can anyone say which is the greater inconvenience, the tariff, or all the jungle around it? This is why I say that protectionists cannot possibly support the Measure.
The Bill will slightly improve the situation for importers, making it slightly easier for people to import because they will know the hurdles that they have to get over. [HON. MEMBERS: "Hear, hear."] Exactly. It is a marginal advantage to importers. Protectionists cannot possibly support this, because they want to keep goods Out. [HON. MEMBERS: "No."] If hon. Gentlemen want goods to come in why not have a Bill to reduce tariffs? Free traders cannot possibly support the Bill, because it gives only a marginal advantage to the importer, which is irrelevant to the economic problems with which we are faced.
The Bill is a bureaucrats' Bill, and a very fine one, because it is concerned with tidying up. I cannot see that there is any overriding reason for the Bill simply because of the Free Trade Area, since we have already made arrangements to reduce steel tariffs with the Coal and Steel Community. Why should we make alterations to tariffs by Statutory Instrument? That is questionable. We are dealing with matters concerned with money and taxation. I cannot believe that to put tariffs up, as can be done, by Statutory Instrument, can be an improvement in our procedure.
Why not, for instance, put in a new Schedule dealing with tariff levels and 81 nomenclature? Could not they be part of a Schedule to the Bill? If they have to be altered at some time they should be altered not here and there, but in groups, and by an Amendment to the Bill. Can it not be done, as so many other tariffs have been altered before, through a Finance Act? To do it by Statutory Instrument will require only an affirmative Resolution.
A point which the Minister of State, Board of Trade, might clear up later is whether an affirmative Resolution will be required for the first Statutory Instrument? It is not quite clear whether it will come under Clause 13 (5), because there are no alterations to the duty. It might come purely under a Statutory Instrument requiring annulment only by the House.
§ Major Legge-Bourke
When did the Liberals come to this conclusion? The horticultural industry tariffs were introduced by Statutory Instrument in 1953.
§ Mr. Holt
We have been against it all along. There is nothing particularly new about what I said.
I welcome the proposal that the decisions of the Import Duties Board are to be entirely and completely in the hands of the Government and that the Board is not even able to make a recommendation. The hon. and gallant Member for Ely (Major Legge-Bourke) made some improper suggestions—I am sure that he did not mean to, but that was the nature of his remarks—when he implied that certain vested interests should be represented on the Import Duties Board because otherwise they might, apparently, not produce the right information.
There is no question of their coming to conclusions; conclusions they have not to come to. They have only to elicit the facts and to produce their findings on the facts. I am sure that he would not suggest that perfectly honourable people, either in the manufacturing industries or in the horticultural industry, would arrive at decisions which were not based on the facts. This is typical of the whole atmosphere which arises from protection. As soon as we set up protection, all kinds of vested interests try to get a little corner for themselves, and I am not at all surprised that the hon. and gallant Member is anxious about it.
82 One question which I should like to ask the President of the Board of Trade is why the hearings of the Import Duties Board cannot be in public.
§ Sir D. Eccles
The hon. Member must realise that to get at the facts it is necessary to go into the particular circumstances of different firms. Surely he knows enough about business to know that we cannot broadcast to everybody the transactions of individual firms.
§ Mr. Holt
I do not know that I agree. If a firm approaches the Government to ask for some protection in its trade, it should be prepared to state the facts. The Government are supposed to believe in competition, and, therefore, it will be necessary for the firm to make out a very strong case. There must be a substantial case before protection can be given. Is it suggested that this cannot be given in public? I think it is something the public should know about. They should know why a firm in Lancashire, or the Midlands, is in such a position that it requires the Government to give it special privileges. Am I right in thinking that the Advisory Council, before the war, met in public? Would the right hon. Gentleman like to answer that?
§ Sir John Barlow (Middleton and Prestwich)
If an inquiry of this kind is to be made, surely the hon. Member, as a business man, must realise that it is impossible or most unusual to give full evidence in public. It would probably give very valuable information away not only to British, but to foreign, competitors. Cannot the hon. Member be a little more realistic about this?
§ Mr. Holt
I should like to be given some examples of what this kind of information might be.
The firm has been competing with many competitors in this country or abroad and suddenly it says, "We cannot continue. We want some tariff protection". I think that it is up to the firm to lay everything before the public, from whom it is asking for a special privileged position, and I see no reason that that 83 privileged position should be given without the public being fully informed of the circumstances.
The alternative is for the people concerned to move their capital into another business, if they do not want to reveal the facts. They need not stay in that trade. We have full employment. Indeed, that has happened in the textile industry; both workpeople and capital are moving into different trades because they cannot get protection.
§ Mr. Richard Fort (Clitheroe)
The I.D.A.C., before the war, heard evidence, as the House would expect, only in camera.
§ Mr. Holt
I am subject to correction on that. I know that certain hearings were given in public and I am surprised to know that not all were.
Unless this country reduces its tariffs at an early date there is no hope whatever of tackling the cost of living and of getting more competition in industry. We should have liked the Government, when they produced this Bill, to have said, "We are tidying up the tariff structure, but we are taking this opportunity of cutting our tariffs." We say that the kind of Measure now required is an all-round cut of 50 per cent. as soon as possible.
§ Colonel Richard Glyn (Dorset, North)
Would the hon. Member make it clear whether he intends the 50 per cent. cut to include all tariffs on horticulture and such agricultural commodities as now bear tariffs?
§ Mr. Holt
I said "all tariffs". If we want everyone to be more efficient there is no reason for giving any person a privileged position. If we are to cut tariffs we must cut them all round. To have discriminatory tariffs, with some at a much higher level than others, is only another form of selective controls, which have been condemned constantly from the Government Front Bench, particularly in the debate on the economic situation recently.
The Chancellor of the Exchequer went to the Gloucester by-election and declared himself nine-tenths a Liberal. He made out that he has done great things to remove restrictive practices and he pointed out that he had introduced 84 the Restrictive Trades Practices Act into the House. He omitted one thing which is important—and that was to make price fixing illegal. Now he has produced this Bill, and again he has missed a great opportunity of making a contribution to- wards cutting the cost of living.
In his speech in the debate on economic affairs, on 29th October, he said:I am not in this speech appealing to anyone"—[OFFICIAL REPORT, 29th October, 1957; Vol. 575, c. 56.]I was glad to hear the Chancellor say that, and I thought we might get something different from past speeches, but during the week-end he went to Birmingham and began making appeals again. He said:This is no moment for price-rings designed to keep prices up, or for restrictive practices designed to prevent them from coming down. My plea to British industry is more not less competition.This is not good enough. One of the most substantial points of condemnation of the Government over the last six years has been that they have known the answers to inflation and the answers which would help to prevent the cost of living from rising, but they have not used them. Little by little they have taken measures, one at a time. Now we are at last grappling with the problem.
We shall fail now on two points, in spite of a 7 per cent. Bank Rate. The problem will still not be solved until we attack the causes of the rise in the cost of living, and one is the lack of competition. The Chancellor has had an opportunity of striking two blows in order to create more competition. He missed it on the Restrictive Trade Practices Bill and he will miss it again on this Bill.
The fact that he has not made price fixing illegal would probably not have mattered if he had taken steps in this Bill to cut tariffs substantially. It would have had such an effect on British industry that price rings would have gone by the board overnight. But what does he say about price rings? If the Chancellor of the Exchequer can believe what he said in his Birmingham speech he can believe anything. He said:Do not wait for the Restrictive Practices Court. I believe that many old restrictions have already been dropped.I really would like to know whether the President of the Board of Trade, who 85 should know about this, would like to tell the House of some important restrictions affecting competition, of some price-fixing agreements that have been dropped since that Act came in?
§ Mr. Speaker
I do not know that I would be in order if I allowed the right hon. Gentleman to respond to that invitation. That seems to me to be remote from the scope of the Bill, which is purely to do with the imposition and regulation of tariffs.
§ Mr. Holt
I am sorry if you feel that I am out of order, Mr. Speaker, but I should like to point out that a statement of Government tariff policy is also made in the White Paper, Command 305, and that that statement is supported by one of the Schedules to the Bill. I therefore felt that I was in order in discussing the policy for which this Bill provides the machinery. I was merely pointing out that had the Government said, in connection with this Bill, that they intended to reduce tariffs, another part of policy which I have criticised them for not having introduced—relating to agreements to do with price fixing—would not, in fact, have mattered. However, I have made the point and do not need to elaborate it.
The whole case for tariffs is going by default because hon. Members opposite will not study, or cannot see the illogicality of many of their own arguments. Perhaps I may just draw attention to one or two more recent ones. For instance, in the recent financial crisis, and in the previous one, when the Opposition have asked "Why do you not reduce imports?"—in the recent crisis I understood their suggestion was to do it by quotas—the Government have quite properly answered that if we reduce imports while there is the same amount of money in the country all we do is to put up prices or, alternatively, to draw back British goods which might otherwise have gone for export.
That is a sound argument, and I accept it entirely. But, of course, the contrary is also true. It must be true. If we have the same amount of money in the country and we lower tariffs, what happens? Either we drive from the home market into export goods that would not otherwise have gone for export—thereby increasing exports—or, alternatively, and probably there is a little of each in it, we 86 reduce prices in the home market. Therefore, when they refuse the Opposition's demand to reduce imports when there is a financial crisis the Government admit that argument in principle.
It must be obvious that if we want to lower costs in this country we cannot wait for the leisurely setting up of the Free Trade Area and wait until others agree to drop their tariffs, also. We must start to drop them now. It would make a significant contribution to the attack that the Government are pretending to make on the cost of living. Not only that, but this country must never forget that we depend on our imports, and on our export trade, as no other country does. They represent about a quarter of our whole national income, and what we pay for those goods is important to us.
It may not matter very much to countries like America, starting off with a large home market which is completely free trade. Their imports and exports are merely marginal to their national income, and if they choose to pay a little extra in order to safeguard some of their own industries the effect on their standard of living is comparatively small. That is not the case with us, and the sooner we examine again all the old arguments for free trade and realise that they are relevant today, the better it will be.
We shall not get out of our present difficulties until we face up to them, and get out of this protectionist mind that has riddled this country for thirty years or more, resulting in constant crisis year after year, since the war, whatever Government is in power. That really ought to make this Government sit up and examine afresh their whole attitude to the question of free trade. Time is short. I hope that they will not delay too long.
§ 6.26 p.m.
§ Mr. David Price (Eastleigh)
I feel very privileged, Mr. Speaker, to have caught your eye immediately after the hon. Member for Bolton, West (Mr. Holt). For years now the country has been led to expect an evangelical mission from the Liberal Party. We have been like the faithful at the bottom of Mount Sinai, waiting, to be shown the Promised Land, and at last, out of clouds of Liberal verbage, the hon. Member has descended with the tenets of the true faith—like 87 Cecil de Mille coming down from Mount Sinai with the Ten Commandments.
But what do we find? We find that in the Cecil de Mille case a gentleman called Moses had been there before him. In the hon. Member's case it was two gentlemen named Cobden and Bright, who had been up that mountain before and came down with the same tenets long before the hon. Member.
I never thought that it would be necessary to argue the case against classical free trade. The hon. Gentleman attacks my right hon. Friends and says that we must be completely protectionist, which, in his logic, means that we import nothing—no rubber, no cotton, no cocoa. Presumably we have to produce those out of the Royal Horticultural Society's glasshouses. The logic of his argument was too ludicrous—
§ Mr. Price
The hon. Gentleman was attacking my right hon. Friend for not being completely protectionist, in order to satisfy what he called the protectionist interest on these benches and, by implication, on the back benches opposite. He put the alternative as complete free trade. Mr. Speaker, if I had the honour to entertain you to a glass of our national liquor, the hon. Member would say that we must either join the Band of Hope or drink the entire distillery. That is his logic of his argument.
When pinned down by interventions from these benches to say how he would implement his policy, he said it could be done by a 50 per cent. cut in tariff duties, unilaterally if necessary. I hope that the electorate will notice that declaration of Liberal policy. When my hon. and gallant Friend the Member for Dorset. North (Colonel R. H. Glyn) intervened, the hon. Gentleman said that it would apply to horticulture, too; to the strawberry growers, whose only protection is a 15 per cent. tariff, and to the vegetable growers who get 10 per cent. Are those people to be pushed to the wall?
The right hon. Gentleman the Member for Battersea, North (Mr. Jay) very properly introduced into our discussion the consideration of maintaining full employment, a matter on which I thought we had 88 all agreed in the economic debate of a few weeks ago. But it would appear that the hon. Gentleman, presumably speaking with the authority of the Liberal Party behind him, would throw away the horticultural and agricultural industries. The electors at Hereford will be very interested.
I understand that the Liberal Party stands for honesty and consistency in the presentation of its case, so in the person of the hon. Gentleman the Liberal Party now comes out in its true colours on complete free trade. I am delighted that the hon. Gentleman has had the courage to do it. I certainly salute him, because it makes the chances of the two major political parties very much easier at the next General Election.
I thought that we had come here today to discuss a modest Measure to tidy up the machinery of our import duties. In fact, we have been privileged to attend a historic occasion—the long-awaited declaration of Liberal policy. The blessings of the Almighty come at the most peculiar moments.
This Bill, as the Explanatory and Financial Memorandum says, has three modest objects. One is to repeal the existing tariff legislation and to replace it by a single comprehensive Measure. Surely everyone will agree with that. Secondly, it changes the method of dealing with applications for changes in duty. That seems to be the most contentious part of a very uncontentious Bill. Thirdly, the tariff classification is to be put in the form of the Brussels Nomenclature.
On the last-named object, I must declare a professional vested interest. For my sins I have to earn my living by doing sums about import and export figures, and the amount of sums about the Free Trade Area that I have had to do in the last twelve months would have been very much reduced if we had gone over to this simplified Brussels Nomenclature a few years ago. Speaking on behalf of what I might call junior economic "egg heads", I would say that we have a strong professional interest in seeing that this Bill goes on to the Statute Book.
I like the feature in the Bill that puts irrevocably and clearly responsibility for changes in our rates of tariff firmly on the Board of Trade, which is where it should lie. I know that there has been some confusion about the exact position 89 of the new Import Duties Board. As I understand from my reading of the Bill, the Board is merely there as a fact-finding body because of the immense amount of detail that has to be gone into by the Board of Trade when there are applications for changes in duty, whether those applications come from industry or outside and whether they have been referred by the President of the Board of Trade.
Clause 3 says that the Board of Trade may refer questions to the Import Duties Boardto investigate the relevant facts…I cannot see anything in the Bill that suggests that its authority could go any wider than that. We in this House know quite clearly that my right hon. Friend the President of the Board of Trade and his colleagues on the Front Bench are responsible for any change in tariff policy, and if we and our constituents do not like it we know who is responsible. I believe that in these days of vast bureaucratic machines that is a great step forward.
§ Mr. Price
I hope that my right hon. Friend when he winds up will make clear that those recommendations are the sort of recommendations which will flow from intelligent men having studied the facts, feeling that they should not place a self-denying ordinance upon themselves but knowing also that my right hon. Friend is under no obligation to accept their recommendations, and whose discretion and authority remain as set up in Clause 1. Possibly we might have that clarified.
§ Sir D. Eccles
I think I could help my hon. Friend by saying that the cases of drawback and duty-free licensing where the Import Duties Board will have the power to make recommendations, and where I should think we should very seldom, if ever, disagree with the recommendations, are really simple cases of fact. The most obvious one is that if a machine cannot be made in this country we have a system whereby the foreign machine can be brought into this country free of duty. Obviously, proof 90 would be required that a similar machine could not be obtained in the United Kingdom. That is a specific job inside a particular set of directions.
The same applies to drawback. Either the goods that have been imported are re-exported, or they are not. It is a question of discovering the facts. That is why there is a big difference between recommendations of a change in one duty over the whole range of goods, and these exceptions to that duty.
§ Mr. Price
I thank my right hon. Friend for clarifying the point. I think that industry will judge the success of the relationship between this Board, the fact-finding body, and the Board of Trade functioning in its senior capacity, by the speed with which it deals with applications. I know of one or two applications, since the passing of the antidumping legislation, in which the applicants concerned feel that they have been definitely let down by delay and prevarication in the whole machinery of investigation. I should like reassurance on this point, particularly in reference to retaliatory legislation, such as we have here in Clause 11. It is most important to get speed of action. Against dumping it is better to have a low tariff now than a high tariff in six months' time.
Another part of the Bill that I like is the Clause by which this country will no longer be tied down to a general level of tariffs in an Act, as we were in the Import Duties Act, 1932, and that by delegated legislation it will be possible for my right hon. Friend, merely by Order, to get the approval of this House so that we will not have to go through the whole rigmarole of repeal legislation to alter particular tariff rates. In terms of more efficient conduct of our business, and in view of the negotiations that we are likely to have over the Free Trade Area, that seems a good administrative point. It is no use Members of Parliament continually exhorting everyone to be more efficient unless we try to arrange out own affairs so that we can streamline our business to keep up with the scientific age.
The right hon. Member for Battersea, North drew attention to Clause 1 (2), relating to the standard by which the Import Duties Board will determine what import duty, if any, ought to be charged. It seems to me that we have got the 91 balance about right by the inclusion in that Clause of these points: first,maintaining and promoting the external trade of the United Kingdom.…That includes consideration of balance of payments, as it clearly must do.
Secondly,…maintaining and promoting efficiency of production in the United Kingdom…I was delighted that the word "efficiency" was included. It will not be enough to show that an individual firm is being hurt if it is merely inefficient. In other words, it has got to show proof—at least, this is the way that I read it—that it is conducting its affairs reasonably efficiently, so that we shall not get the sort of political log-rolling of the individual firm in the marginal seat bringing political pressure to bear to get a tariff rate increased or imposed, when, in terms of efficiency of British industry, there is no case for it to be imposed at all.
The third yardstick is the interest of our own consumers, the housewives of Britain.
I venture the opinion, as I have often said outside this House, that one of the problems of British industry is that the spread of efficiency between the most efficient firm and the least efficient firm in any one industry is far too great for the health of the economy. To this extent I go with the hon. Member for Bolton, West. I should like to see some of the less efficient firms have more competitive heat put on them, but I will not go the whole way with him and say that this can be achieved by having unilateral free trade.
That is where he and I would differ. Joining the European Free Trade Area will go a long way towards that, but to throw off all tariff protection and leave ourselves exposed to the Japanese and Americans, on balance of payments alone—I am sure that the right hon. Member for Battersea, North would support me on this—would be the height of folly.
We could get the competition that the hon. Member for Bolton, West wants if we were prepared to see 20 million people emigrate from this country, and I suppose that if one were speaking as an economist on the staff of the United Nations one could make an argument for it, but I happen to be a British Member of Parliament.
§ Mr. Coldrick (Bristol, North-East)
I have followed the hon. Gentleman's argument, but is he really suggesting that if, for instance, Denmark is able to produce agricultural produce infinitely more efficiently than we can produce it in this country we should remove all the tariffs against the produce from Denmark so as to instil a little more efficiency into British agriculture? Does the hon. Gentleman think that he would carry hon. Members on his side of the House with him on that suggestion?
§ Mr. Price
No. I am obliged to the hon. Gentleman for giving me the opportunity of explaining. I am not suggesting that at all, but I am suggesting that, where there is a big spread of efficiency within an industry in this country, one should consider the appropriate tariff level or, indeed, whether a tariff is appropriate at all in relation not to the least efficient firm but in relation to some rough mean. These things are not accurately done.
As the hon. Gentleman knows as well as I do, the great argument for the protection of horticulture is that Nature ensures that we cannot compete on fair terms with the European countries, because they have their seasons earlier than we do and they will always have their main crop coming on when the earlies, which give the high profits, as the hon. Gentleman knows, are coming on to British markets. Unless people want to see, as no doubt the hon. Member for Bolton, West does, all our producers going out of business, there must be some protection.
§ Mr. Coldrick
The hon. Gentleman's argument does not hold good. If we are dealing merely with natural conditions, and since we have always been led to assume that the textile industry, particularly the cotton industry, in this country was advantageously placed because of climatic conditions, where does the hon. Gentleman's argument take him?
§ Mr. Price
I am much tempted to take up the hon. Gentleman's argument, but I think that I have strained your tolerance far enough already, Mr. Speaker.
The important Clause is Clause 11, that providing for retaliatory duties—what. I would call the "Eye for an eye and a tooth for a tooth" Clause. My hon. Friend the Member for Preston, South (Mr. Green) doubted whether it covered 93 certain ingenious devices for cheating. We all respect the ingenuity of my hon. Friend's mind. I am quite certain that if he were in the Kremlin the Russians would be making far more inroads into Western trade than they are, and we hope that he will be long with us. As many hon. Gentlemen know, in all these matters there are all sorts of ingenious devices by which one can, in effect, through various forms of regulation, have an import duty without imposing it.
According to my reading of Clause 11, its terms are sufficiently wide for my right hon. Friend to impose retaliatory duties when some other country is trading unfairly in whatever way. What is more, subsection (2) is drawn sufficiently widely so that, if that country is trading unfairly with other members of the Commonwealth, with the Colonial Territories, or with others of our partners in the world and the time has come to bring it to order, we can impose retaliatory duties.
The Brussels Nomenclature will be welcomed by all of us. I know that some industrialists have argued that it is not necessary, but it seems to me obvious that we must have standardisation in methods of classification. When we realise that, up till now, import statistics have been classified separately from import duty statistics, we can readily appreciate that that sort of "Alice in Wonderland" statistical collection under which we have suffered ought to be changed, and these figures should be in one simple form.
I hope that my right hon. Friend will tell us that the Board of Trade will install the appropriate mechanical devices for processing all these figures in the same way, as the Ministry of Pensions and National Insurance has done in dealing with its routine returns and as many of us have done in our own firms in private business.
Like all hon. Members who have spoken, with the exception of the hon. Member for Bolton, West, I welcome the Bill. It is a modest consolidation Measure. I feel that it is very proper that we should put our own house in order before we enter upon two important sets of negotiations, negotiations for the Free Trade Area and the negotiations which will take place next year in Canada at the Commonwealth Economic Conference. I hope that many other countries, both in the Commonwealth and in 94 Europe, will follow our example, and that the seven countries necessary under the Brussels Convention will pass legislation like this and that the Brussels Convention will be ratified and shown to work so that more countries will be encouraged to join it.
This is an example of the technical, international co-operation which we must press ahead with wherever we can. Upon successful co-operation in these technical matters we shall build up the confidence necessary for effective co-operation in more important matters.
§ 6.45 p.m.
§ Mr. Eric Fletcher (Islington, East)
Unlike the hon. Member for Eastleigh (Mr. D. Price), I am not at all happy about the Bill. I thought that the President of the Board of Trade was unusually apologetic in his opening speech commending it to the House and asking for a Second Reading. He went out of his way more than once to remind the House, as he said, that it was a Bill providing for mere machinery, dealing with procedure, a tidying Measure. I am unhappy about it for two reasons. First of all, in so far as it is a machinery Bill, it provides for bad machinery. Secondly, it seems to me—and this is, perhaps, more serious—to conceal from the House and the country what are the real policies of the Government with regard to tariffs in the next year or two.
It is a little surprising that the Bill has not been preceded by any great discussion or interest in the Press or elsewhere, and this is another factor leading me to be rather suspicious about the Government's intentions behind the Bill. It has been plain from the speeches made on both sides in this debate that tariff policy in the immediate future will be a matter of very great importance, and, in the circumstances, I much regret that the major object of the Bill is to withdraw tariff policy from consideration by Parliament and to vest it in the Government. After all, the real object of the Bill is to enable the Government in future to vary all tariffs on imports, either upwards or downwards, without any necessary reference to Parliament, other than by Statutory Instrument, and without any necessary reference to industry and commerce.
95 One knows that, theoretically, any changes are subject to affirmative Resolution if the tariff is to be raised or to negative Resolution if the tariff is to be lowered, but one knows also that Parliamentary control exercised over Statutory Instruments in a matter such as this is a very vague and unsatisfactory form of control. The powers of the House are strictly limited, the scope of the debate is limited, and the Order can be either accepted or rejected. Owing to the exigencies of Parliamentary time, the debates are held late at night. Therefore, though not in form, perhaps, the degree of Parliamentary control which has always been exercised in the past is taken away by the Bill.
Hon. Members may not think that this change in Parliamentary control is very important, but I received a circular from the London Chamber of Commerce, which represents some 12,500 manufacturers, merchants, wholesalers and retailers within a radius of twenty miles of the City who regard it as a very serious matter. I agree with the London Chamber of Commerce when it says that the Bill…in short, if not amended, would carry Government by bureaucracy to a point never yet attempted".I will come in a moment to specific criticisms of the way in which the Import Duties Board is constituted and the powers, such as they are, which are given to it. Before doing so. I should like to say how much I agree with the speech made by my hon. Friend the Member for Nottingham, North (Mr. J. Harrison) and speeches made by hon. Gentlemen opposite as to the great difficulty we are in in not knowing what the Government's intentions are in this matter.
It is most serious. It is a glaring example of what The Times, in an article today, complains about in respect of the whole policy of the Government. The article is headed, "High Policy in the Waiting Tray", and "Keeping Commons Guessing", and it says:But keeping the Commons in the dark seems to be becoming a habit with Mr. Macmillan's Ministry…Have Mr. Macmillan and his principal colleagues set so many policies in flux—relations with the United States and N.A.T.O., the root-and-branch reshaping of the Services, European free trade, Anglo-Canadian free trade, and investment cuts…— 96 that nobody knows where he is until the kaleidoscope has had more time to settle down into the new pattern?We are being asked to give the Government a blank cheque to alter their tariff policy as they like without telling us what their policy is. If we accede, it is an abnegation of our duty as an Opposition to criticise the Government. One thing that seems of significance is that the Bill is timed to come into operation on 1st January, 1959, which is the very day when the first reductions in the Common Market are to be made.
It is all very well for the President of the Board of Trade to say that this is merely a piece of machinery to enable him to do something, but hitherto, before asking for powers to do something, Ministers have had the common courtesy to tell the House what their policy will be. Neither the President of the Board of Trade nor the Chancellor of the Exchequer has condescended to tell us the Government's policy about the European Free Trade Area. What are their intentions about agriculture and horticulture? How do the Government intend to exercise the powers which they seek? These are matters in which the country is vitally interested.
I am not happy about the oft-repeated habit of the Government in playing down the tempo of legislation which they introduce, blanketing discussion of the real issues which agitate, or ought to agitate, the country. They blanket the measures with a superficial veneer of legislative activity, and they change machinery in a way which removes Parliamentary control but they do not tell the country what their real policy and intentions are.
We heard from the Liberal benches a speech which was very effectively criticised by the hon. Member for Eastleigh. It was, I suppose, the first shot in the new Tory policy of concentrated attack on the reviving hopes of the Liberal Party. I do not propose to go into that. I want to stress what other hon. Members have said in their criticisms of the Import Duties Board set up by the Bill.
My opinion is that the Board is nothing more nor less than a piece of unmitigated camouflage. I object to one thing in particular in the President's policy. It is not the first time that the Government have attempted to set up a board between the Government Department concerned and 97 Parliament. The body is always described as a "board", and its duties are very often vague, ill-defined and amorphous. The intention generally is to deceive the country into thinking that the Government, before taking the decisions for which they ought to bear responsibility, have consulted some independent board. Very often there is an attempt to shelter behind an independent board from a responsibility which should be readily accepted as Ministerial.
The honest thing would be to do one of two things. The Government might say "All decisions which are to be taken under the Bill will be taken by the Board of Trade. We will be responsible for them. If we are right, they can be approved. If we are wrong, they can be criticised in the House. The other method would be—there is a great deal to be said for it; I think it would commend itself to a number of hon. Members opposite, and it would certainly commend itself to the members of the London Chamber of Commerce—for the Government to say "Here are matters vitally affecting manufacturers, importers, merchants, dealers—the whole of the trading community. The matter is a complicated one. One cannot trust the Civil Service always to be purely objective in this matter."
Here I am not belittling in any way the great capabilities of the Board of Trade or any other Government Department, but it would be legitimate to say "Here is a matter affecting traders. Let us have an independent tribunal to which industry can make recommendations, which the Board of Trade can consult, and which can investigate the facts, make recommendations, publish its reports and take responsibility for making its recommendations known to the public, leaving it to the Board of Trade to say whether it accepts the recommendations or not." Admittedly, the final responsibility must be the Government's. That would be a sensible thing to do. It is done in other connections. It would give a great deal of confidence to industry and commerce and to the country.
But the Government have not taken either of those clear-cut alternatives. They have devised a very ambiguous and most unsatisfactory form of compromise. It is not really a compromise. What they have done is to set up something which 98 sounds as if it is independent, something that looks at first sight, until one analyses it, an entity which is really different from the Board of Trade and has some kind of independence. However, as other hon. Members have pointed out, when one examines it there is no independence at all. The body has no rights and no responsibilities. It is a mere creature, a mere handmaid, a mere tool of the Board of Trade. I do not see how any self-respecting person could sit on it.
What can the body do? According to Clause 3, which sets up the Board, it cannot do anything unless it is asked by the Board of Trade to do it. I will deal in a moment with Clauses 6, 7, 9 and 10, which deal with very minor matters, pure details on the periphery of administration. The Explanatory and Financial Memorandum gives the game away with regard to the Board because, if Clause 3 sets up the Board, we find that under Clause 3 it has no rights at all. The Explanatory and Financial Memorandum says:The Import Duties Board is given other functions under Clauses 6, 7, 9 and 10.Therefore, it looks to me like an attempt to persuade the country that Clause 3 is the vital one in respect of the Board, but if we look at the Clause we find that the Board has no initiative of any kind. It has no responsibility on its own initiative for making any recommendations to the Board of Trade to change any tariff. It can only investigate facts if any questions are referred to it by the Board of Trade. Its report may or may not be published. It can be published only if the Board of Trade thinks it should be published, and then only in such manner as the Board of Trade thinks most suitable.
Therefore, I think the criticism by the trading community is well founded when it says that it will have no confidence in the independence of the Import Duties Board as an independent tribunal—that is to say, independent of the Board of Trade, the Executive and the Civil Service. I agree with its suggestion that it would be far more satisfactory and would give far more confidence if something independent, both as regards initiative and the right to publish its own recommendations, were set up on the lines of the old Import Duties Advisory Committee.
I think that the principle which I am seeking to establish is important, but 99 I think it is doubly important, when we are dealing with a Bill the prime object of which is to divest Parliament of the control it has had hitherto over tariff policy and changes in particular tariffs. I do not wish to repeat the argument which engaged so much public controversy 25 or 30 years ago between the free traders and tariff reformers. It does not excite quite so much controversy today, although it may be equally important. If it is not important today it may be important in a few years' time. It is therefore a matter which essentially ought to come within the purview of the House. It is being taken away from the jurisdiction of the House. The only other safeguard in this particular sphere is that of an independent tribunal existing between the public and industries concerned on the one hand and the Government on the other; but that is not to be set up.
It appears to me that the secondary powers given to the Import Duties Board under the later Clauses of the Bill are quite derisory. The Import Duties Board has no initiative. Under Clause 6 its power to exempt particular importations of certain goods merely gives them a right to make recommendations to the Treasury, and, as far as I can see, the only duty and the only specific obligation laid upon the Import Duties Board is in Clause 10, where it says:The Import Duties Board in discharging Its functions under this Part of this Act shall conform with any general instructions issued to it by the Board of Trade.So one returns to the point from which one started. At every stage the Import Duties Board is hampered and restricted by restrictions imposed on it by the Board of Trade. In other words, it has no greater power than if it were an internal branch of the Department itself. It has the effect of being set up in such a way as to give the appearance of independence which in reality does not exist. I hope that when we reach the Committee stage we shall be able to devise some Amendments which will correct some of the more serious defects in the structure, constitution and duties of the Import Duties Board. I hope that we shall be able to suggest means of giving it greater powers, if it is to operate at all.
100 The only other point I wish to raise at this Second Reading stage is with regard to the first order to be made under this Bill. If I understood the President of the Board of Trade aright, he said that this Bill does not make any change in the existing tariffs. That does not seem to me to be a completely accurate statement, because if we look at page 19, towards the end of the First Schedule, there is the statement that the rates for light wines which operate at present and which were laid down by the Finance Act, 1949, shall be increased by 1s.
§ Mr. Vaughan-Morgan
That is in order to impose something which was laid down in the Ottawa Agreements. The position is exactly the same.
§ Mr. Fletcher
The Minister of State says that the position is the same. But we are agreed, are we not, that certain pre-existing tariff rates are changed by the Bill itself? I think the Minister agrees with that.
What I do not follow is this. We have been able to elicit from the President of the Board of Trade that if this Bill is passed the first thing that will happen is that an order will be made setting out the existing tariffs. This Bill, of course, abolishes or repeals all existing enactments. Therefore, if the existing tariffs are to continue they will have to be re enacted. Surely the sensible way of achieving it and the way most consonant with Parliamentary propriety is to set out the existing tariff rates in the Bill. Why could not the existing tariff rates have been set out in the Bill, as has been done in the past, rather than have an Act and then an order made under it? As I have said, I am very unhappy about the way in which the Bill has been introduced, the policy which it conceals and the machinery it sets up.
§ 7.8 p.m.
§ Sir J. Barlow (Middleton and Prestwich)
The hon. Member for Islington, East (Mr. E. Fletcher) said that he was very unhappy about the way in which the Bill has been introduced. I differ considerably from him, because I am very happy about the way it has been introduced. It is a very appropriate time to codify and replace the existing legislation. It was bound to be done sooner or later. There is no time like the present to follow so 101 many other countries. It is so much easier for everyone to proceed on the same basis. As a whole, therefore, I welcome the Bill. It is timely, opportune and helpful.
There are, however, two criticisms which I have to make. I will be very brief, as I know that other hon. Members wish to speak. I do not appreciate the importance of the way in which the proposed Board is to work. I know that my concern is shared with many other industrialists. I have had representations from many quarters. We feel that something more like the old I.D.A.C. would be preferable. The Board which the President of the Board of Trade proposes to set up will be confined very largely to procuring facts about any particular matter which my right hon. Friend puts before it.
In the circumstances, I think that much more is required. It is very much better to have a smaller Board of permanent members who have a knowledge of this subject and can soon create the requisite atmosphere and advise on policy on this most important matter. That is a detail, but it is a most important detail, and I hope that the President of the Board of Trade will consider it very carefully before the Committee stage.
I can assure him that in industrial circles there is great concern about exactly what work the proposed Board should do and about the size of the Board. In the proposals before us it is suggested that the Board should consist of a chairman and not fewer than nine and not more than 29 other members. It seems to me that that suggestion would make the Board so large that it would be difficult to work. The old I.D.A.C. was a small committee, consisting of about four or five members altogether. It was most valuable. I should like to see the Board constituted much more like that. I hope that my right hon. Friend will consider these views before the Committee stage. I can assure him that they are widely felt in industry.
§ 7.11 p.m.
§ Mr. Richard Fort (Clitheroe)
Even towards the end of this debate, I think it worth repeating the hope that my right hon. and hon. Friends on the Treasury Bench will take heed of the many criticisms which have been made from both sides of the House about the set-up of the Import Duties Board.
102 My hon. Friend the Member for Middleton and Prestwich (Sir J. Barlow) has expressed them as shortly and as pertinently as anybody. I share them, my wish being—I think it is the wish of all of us here—that the Board, when it is constituted, quickly achieves a real standing like that of, say, the Monopolies Commission in authority and in the thoroughness of its investigations on which that authority must be based. Unless it achieves that, the criticisms which have been made so widely on both sides of the House about the Board's being merely a creature of the Board of Trade will have been overwhelmingly proved.
I want to ask some questions about the Board's duties. Why is it excluded from consultation and from giving recommendations, which I should like it to be able to give, on the retaliatory provisions under Clause 11? Why is it excluded from giving advice and recommendations on the certificates of origin which are discussed in Clause 12? I should have thought that it would have been able to give useful advice and recommendations about them.
By Clause 5 certain reliefs are given which have been traditional under Import Duties Acts ever since the first one of 1932, and particularly reliefs for registered shipbuilding yards. Why must we always be tied to conditions pertaining twenty or twenty-five years ago? If special conditions are made for special industries why cannot we consider industries which are in difficulties today, instead of merely continuing reliefs given to industries which were in difficulties twenty-five years ago?
The logic is obvious. Those of us who come from textile industry areas know the difficulties in which the textile industry is. If it is logical to give relief for the problems of twenty-five years ago it is equally logical to consider giving special reliefs through a Bill dealing with import duties to the industries which are in trouble today. Whatever arguments there may be against it, there is certainly logic in that.
The problem is well known today. We are facing an increase of imports, and the fear in the minds of all of us is that that increase will go on and on. We see no limit to it. If there is to be special assistance given in such circumstances to the 103 shipbuilding industry by a reduction of tariff why is it not equally logical to give it to the textile industry?
§ Mr. Vaughan-Morgan
There is one detail of the shipbuilding industry which my hon. Friend has entirely forgotten. The ships concerned are not, like most goods, used inside the shores of this country. What, in effect, we are providing by the Bill is a kind of permanent, built-in drawback scheme.
§ Mr. Fort
I think we may discuss this subject a little more in Committee. I would certainly not accept that rather easy explanation. Help was given to the shipbuilding industry at a time when it was in difficulty. The textile industry is in difficulty today. Why should it not be helped by a Bill like this, so that the feeling of hopelessness can be mitigated?
I come to the retaliation duties in Clause 11. Will that Clause allow the Board of Trade to take the necessary action to deal with the problem of re-exports of Communist-made cloth and also Oriental cloth? My hon. Friend the Member for Preston, South (Mr. Green) discussed the problem of the Communist-made cloth and of its being made from Egyptian material.
This question relates to the Free Trade Area. I welcome the Free Trade Area. One of the reasons I want to see this Clause is to help to persuade others in industry how desirable the Free Trade Area is. When it is instituted, will the Clause make it possible for us to protect ourselves from the import of cloth which is made either in Communist Europe or in the Far East, which is sent into other countries in the Free Trade Area and there given enough processing to acquire about 50 per cent. increase in value and, therefore, to qualify under the certificates of origin, and which then comes into this country in ever-increasing quantity? Will it be possible to use the retaliation Clause to prevent that sort of thing from happening?
Will it be possible to use it to prevent repetition of what admittedly at the present is a diminished difficulty but a year or two ago was a very real difficulty, the import into this country of Indian cloth, the raw cotton for which was subsidised and which was receiving simultaneously rebate on the Excise duty on export, 104 consequently gaining an enormous price advantage over British-made cloth? Will Clause 11 prevent the sort of practice I have mentioned, and many other practices, from being worked to the detriment of our own industry?
I wish that my right hon. and hon. Friends at the Board of Trade would realise how much harm they have done to themselves in trying to get people to accept Bills like this with retaliation Clauses and Clauses designed to protect industry because of the slowness with which they have been operating the Customs Duties (Dumping and Subsidies) Act. We warned them at the time when that Measure was going through that the procedure would be slow. It has been so slow that there are many industries which have little confidence any longer in the so-called safeguard Clauses in Measures like this. That is because of the experience of the last six months with that anti-dumping Act.
Whether some of the criticisms I have mentioned are met in whole or in part I think one is bound to welcome this Bill. It makes an improvement, as many hon. Members have pointed out, in the machinery, and, basically, it carries on what one wants to see, the supplementation of the efforts being made through G.A.T.T. to ensure fair trading throughout the world and to make sure that when the Free Trade Area, in which, I hope, we shall be partners, is instituted it will not suffer from a bad reputation because of lack of machinery to deal with the malpractices which others may try to inflict upon us.
§ 7.20 p.m.
§ Mr. Coldrick (Bristol, North-East)
While there are certain features of the Bill which are generally approved, nevertheless it seems to me that the Bill succeeds in creating a great deal of concern in the minds of consumers and a large number of producers. It has been indicated already from the benches opposite, and admirably argued by my hon. Friend the Member for Islington, East (Mr. E. Fletcher), that instead of setting up an independent body which will be consulted about future arrangements on tariff, the Board of Trade, under the suggested arrangements, will appoint some kind of amorphus body, consisting of anything from nine to 29 people, with powers so 105 tenuous that no one knows precisely what the new Board will do.
It appears to me from the Schedule of the Bill that the President of the Board of Trade has divested himself of most of his powers and has handed them over to the Chairman of the Board, who will appoint this and direct that. I should have thought that the President would either have retained those powers or established an independent body which would command the confidence of consumers, traders and industrialists in the country.
I know that the Chamber of Commerce in Bristol, presumably in association with other chambers of commerce, is deeply disturbed at the idea that instead of having an independent body we are to set up the body now suggested. It advises that it would be far better to maintain a membership similar in number to that of the old Imports Advisory Committee, which apparently was not fewer than two and not more than five. There is a measure of perturbation in the minds of industrialists that this new body will take decisions without consultation and make representations to the Board of Trade and so provide a very convenient excuse which the President of the Board of Trade will use as an occasion for the introduction of Measures or orders which otherwise would not meet general commendation.
I am aware that well-organised chambers of commerce and big industrial establishments are capable of looking after themselves, but, on the other hand, very little protection is afforded to the consumer. I am opposed to this aspect of the Measure because we know from experience in dealing mainly with horticulture and agriculture that, instead of having legislation introduced into the House which can be amended, we are constantly confronted with orders which, when submitted, cannot be amended. Therefore, I can foresee that from time to time, acting on the so-called recommendation of a body that the President himself has largely established, we shall have coming before the House orders which cannot be amended suggesting that we should impose duties on this and that and should make changes in tariffs which would be to the detriment of ordinary consumers.
Just as I have argued on previous occasions against the terrific power which is 106 vested in monopoly marketing boards, so I am bitterly opposed to this kind of delegated legislation which gives some people the opportunity of introducing measures that cannot be amended in the House. I hope, therefore, that the President will look at this matter again and will introduce into the Bill something in conformity with the principles which he preaches from the platform.
According to his own statements, the right hon. Gentleman wants a wider measure of competition among industrialists. He believes in lowering prices through increased efficiency. If he is to accept the advice of well co-ordinated bodies which will make recommendations—as undoubtedly boards associated with horticulture will make them—which are not designed to protect the general interests but are in the interests of those bodies, I should like to see this whole proposal considered more closely before I give it my full assent.
§ 7.25 p.m.
§ Mr. William Shepherd (Cheadle)
The hon. Member for Bristol, North-East (Mr. Coldrick) made a point of substance in directing attention to the interests of the consumer. It is true that all too often the views of the consumer are lost sight of and one feels sometimes that the consumer loses sight of his own interests. I should like to see a strike of consumers. I should like to see an insistence on getting value for money and a strong resistance to any price increase. If we had that sort of attitude much could be done in reducing the present level of prices.
I thought that the Bill would not be of a very controversial nature until I listened to the hon. Member for Islington, East (Mr. E. Fletcher), who seemed to suspect many hidden perils, but when I reflected that the hon. Member is a very skilful maker of mountains out of molehills I realised that my initial judgment was right and that this Measure was not very controversial.
I do not like the proviso in Clause 3 (5, b) whereby information supplied to the Board may be used for criminal purposes. [Laughter.] Perhaps I have not phrased that as happily as I might. I mean that it may be used for a criminal prosecution. It may well be that there are compelling circumstances which demand that the Board of Trade uses the 107 information given to it for this purpose, but unless there is such a compelling circumstance I am opposed to this information being used for purposes of criminal prosecution. Perhaps the Minister of State, Board of Trade, when he winds up the debate, will give us the compelling reasons why the information should be so used.
We have advanced a rather long way on general policy in the past twenty-five years, and it is only the Liberal Party that has failed to grow up. Both the Labour and Conservative parties have now an adult approach to the tariff question. Only the Liberal Party remains immature. We in the Conservative Party, and I think people in the Labour Party, realise that the limited use of tariffs is of value. We realise that the use of tariffs as a bargaining counter is of some value. That is why we should retain some bargaining power against the world. We do not subscribe to the idea of unilateral free trade advocated by the Liberal Party.
As to general policy, I reinforce what has been said by my hon. Friends on colonial and Commonwealth imports. I had hoped that the President of the Board of Trade would have announced today some change of policy in relation to those imports. We cannot continue with the pattern of 1932, and I hope that when the orders are introduced we shall see that something is to be done to relieve the hard-pressed industries of this country, such as the cotton industry, from the weight of imports from Colonial and Commonwealth Territories. In my view, the time has come to deal with these problems, and I hope that very shortly my right hon. Friend will show the results of his work.
Turning to the Import Duties Board, my feeling is that my right hon. Friend ought to cut the throat of this child before it grows any older. I do not think it will serve any useful purpose. In general, industry does not like the Board as it is constituted. It wants a board with more power and authority. It wants a board with power to make recommendations. I do not dispute that that would be a desirable thing, but the plain truth is that as things are at present arranged, with our obligations to other countries under G.A.T.T. and our continuing changes of obligation, it would be exceedingly 108 difficult to allow this Board to have the right to determine policy.
If that is the case and if, for very sound reasons, we cannot allow this Board to make recommendations, the best plan is not to have the Board at all, because it merely creates uncertainty. If I may say so, my right hon. Friend has added to the uncertainty. I notice that the Board "may" consider the facts, not "shall" consider the facts. If we are to have the Board at all, let us have it in as definite a position as possible in order that any industry which is affected or is likely to be affected knows whether the case will be dealt with by the Board of Trade or by the Import Duties Board. The word "may" in the Bill leaves industry in a state of uncertainty about which is to be the authority responsible for dealing with these issues. I seriously suggest that the existence of this Board should be reconsidered and that if we are to have the Board we should make its position as definite in relation to industry as is possible.
I do not think the Board ought to have any existence at all. In my opinion, the best policy is to stick to the officials of the Board of Trade. In the eighteen years in which the Board of Trade officials have been responsible for dealing with industry and in some respects presenting the issues, they have gained a good deal of support and confidence in industry. On the whole, industry would prefer to have the devil it knows rather than the devil it does not know.
I seriously suggest to my right hon. Friend that between now and the Committee stage he should consider the question of the Board's existence. Its duties could more suitably be carried out by the Board of Trade, and certainly they could be discharged more economically by the Board of Trade. My right hon. Friend said that the volume of work which would fall upon this Board was uncertain and that he thought at any rate that it would be fluctuating. If there is to be a fluctuating volume of work, then clearly it is more desirable to use the Department, because in that way we can achieve a more effective and economic utilisation of staff. I hope that on the ground of economy, too, my right hon. Friend will further consider this issue.
109 I realise that there is a function for the Board in connection with drawback and duty-free imports, but I was surprised to hear my right hon. Friend say that these were simple issues of fact. I do not think they are. Often many contingencies have to be borne in mind. This is an exceedingly difficult task for the Board of Trade to carry out and no doubt it would he a good thing to have some outside authority to consider these issues of drawback and duty-free imports.
On the other hand, I do not think that it is necessary to have a body to consider these other questions, and I suggest to my right hon. Friend that it would be possible to set up an advisory committee to advise the Board of Trade on questions of drawback and duty-free imports. We have similar advisory committees, such as that dealing with insurance; the E.C.G.D. is well known. I have no doubt that we could get together a small committee capable of advising the Board of Trade, literally taking the decision out of its hands, but I do not think this Board is necessary for the purpose of dealing with general principles of tariffs.
I think I know why my right hon. Friend has, on balance, come down in favour of this Board. He is simplifying the legislative process whereby changes in tariffs are made and he probably says to himself that because we are reducing the amount of time which Parliament will have to consider these changes in tariff, we must relieve the bureaucratic steamroller effect by introducing the Import Duties Board. If that is the reason, I hope that my right hon. Friend will not be persuaded to continue this policy, because although it is true that in some measure we are reducing the time which will be afforded to Parliament to consider these changes, this method of dealing with tariff changes is nevertheless practical, certainly in the light of the changes which will be made under the European Free Trade Area.
§ Mr. Shepherd
I was thinking in terms of what will happen following the Bill. I agree that when we come to the changes in future we shall be in the same situation as before.
Nevertheless, I do not think that for the sake of these initial orders it is worth while continuing with the Import Duties Board, and I am sure that if my right hon. Friend were to change his mind and to abolish the Board, on the whole traders would welcome the change. In my opinion they have confidence in the officers of the Board of Trade. They know these officers and they recognise that they have treated traders well in the past. They would prefer the business to continue to be handled by the same men.
§ 7.38 p.m.
§ Mr. Cyril Bence (Dunbartonshire, East)
I wish to support the attitude adopted by the hon. Member for Cheadle (Mr. Shepherd) towards the Import Duties Board, because I am worried, as are many traders, manufacturers and distributors in the country, about the increasing number of what appear to be extra-Governmental agencies.
Those of us who have spent many years in the engineering industry have been concerned for a long time about the dangers of various forms of trade organisations with their powerful influences. We have been concerned about the establishment of institutions, perhaps by the Government or by traders themselves, which acquire an almost impregnable position, with the result that the Government, the Ministers concerned and the Departments of State are very often completely submerged under the welter of what might be called technocrats, for want of a better word.
When I read the Schedule on the appointment of the Board I was amazed at the powers of the Chairman and of the Board. According to paragraph 4 of the Second Schedulethe Board of Trade may at any time cancel the nomination of an acting or temporary chairman, and shall cancel that of an acting chairman if it appears.…In large-scale modern industry, investment is very expensive. When a company is engaged on the development of its production processes, it has to take a long-term view. It must have stability and must know what the tariff and trading position is. Investment is costly and production processes are not cheap, which is 111 why there are no new entrants into large-scale industry and why the older firms are expanding instead.
The Board of Trade is to have power to appoint the Chairman in the first place, but it can also cancel the appointment of an acting or temporary chairman. Paragraph 1 (4) of the Second Schedule says:The Board of Trade may at any time cancel the nomination of an acting or temporary chairman, and shall cancel that of an acting chairman if it appears to them that the chairman is again in a position to discharge his functions.That cancellation may be due to sickness, but it may be because the acting chairman disagrees with the Board of Trade.
Does the Bill empower the President of the Board of Trade to cancel the nomination of a Chairman with whom he or the Board of Trade disagrees, notwithstanding that that Chairman may have received representations from and have had consultations with all kinds of industry and may have been interpreting general conditions in the country?
§ Mr. Vaughan-Morgan
The hon. Member will see from paragraph 2 (1) of the Second Schedule that the reasons are the absence or incapacity of the Chairman. If a Chairman is absent or incapacitated, then the Board of Trade appoints a temporary chairman. One would not want to have both in office at once.
§ Mr. Bence
But paragraph 2 (4) says that the Board of Trade may cancel the nomination if it appears to the Board that the Chairman is again in a position to discharge his functions. It says "at any time." Could one acting chairman be dismissed and have another acting chairman appointed in his place? That seems to be a possible interpretation. When the Bill goes to Committee, this matter will have to be further discussed.
Paragraph 7 (3) of the same Schedule says:Any matter referred to the Import Duties Board under subsection (2) of section three of this Act shall be referred to and disposed of by a committee constituted for the purpose and consisting of not less than five members.I take it from that that if a matter is referred to the Board it can appoint a committee of five to dispose of that matter. It seems to me that we shall be giving tremendous powers to a body of five men, whoever they may be. To what 112 extent will those men be able to dispose of something referred to them by the Board of Trade, or the Treasury, through the Import Duties Board? This seems to be a very dangerous practice.
I have seen that sort of thing in large-scale industry, where small bodies of men dispose of matters handed to them. This is handing over the whole machinery of the State to bureaucracy in its worst form. Most people dislike bureaucracy—that is quite natural because we all object to being governed and to the spread of bureaucratic power—but the Government seem to be giving an extraordinary amount of power to this small committee. The President of the Board of Trade did not deal with this aspect of the matter. Will this committee be able to act without being responsible to the House? Can it take action without further reference to the President of the Board of Trade?
As democrats, those are questions which we must pose. The growth of bureaucracy is bad enough as it is, but in a country like ours, which has to export vast quantities of goods and where capital investment must be on a very large scale, it may be very difficult and embarrassing for manufacturers if they are not to have a reasonably stable attitude towards import duties on various products. The constitution of the Import Duties Board will be such that many industries—and I am thinking of the shipbuilding industry, in particular—will not feel very confident about the position.
I did not hear the representative of the Liberal Party, who spoke earlier in the debate, but I remember that before the war a well-known Liberal, with whom I was acquainted and who was a great believer in free trade and in laissez-faire, and who was a director of a very large manufacturing enterprise, sent a circular to distributors of his products offering them another 5 per cent. discount if they refused to handle German and Japanese products. That was an attempt to get rid of that competition.
I do not say that that sort of thing might happen nowadays. I do not say that that sort of thing might happen through monopoly of the trading associations, but the integration of large-scale industry and the development of monopolistic tendencies make it a very dangerous practice to create another Governmental institution not even responsible to 113 the President of the Board of Trade on many of the day-to-day administrative and policy decisions.
Very often in industry people who are employed for purely administrative and technical purposes become almost policy makers to a surprising extent. They have a detailed knowledge of the techniques of administration which they make so involved that they develop a mystique and become arbiters of the policies of their institutions. I do not know how far that applies to Government Departments. I do not know how far Government Departments are masters of the situation, nor do I know what the relationship between Ministers and Government Departments is, but I am always afraid that when more Government institutions are created they will be staffed with technicians and experts who by their very expertise and mystique will become arbiters of policy as well as the experts on administration.
This has been a dangerous situation for fifty years and the danger increases as the Government set up other institutions seemingly outside Government control. I do not want to be dogmatic about this, because my interpretation may be wrong, but I hope that in Committee the Government will deal with this point in detail because I am not convinced that the safeguards for preventing the Import Duties Board becoming another bureaucratic institution are adequate. We may be presented with a fait accompli which will result in the Minister becoming the victim of his own institution.
§ 7.50 p.m.
§ Mr. Ronald Russell (Wembley, South)
I am sorry that the hon. Member for Bolton, West (Mr. Holt) is no longer present, because I should have liked to explain to him how it is possible for hon. Members on this side of the House who believe in protection to welcome the Bill. He seemed to think it quite impossible for anybody who was not a free trader to welcome such a Measure, but we do so because it simplifies the machinery under which our tariffs are arranged. I am all for simplifying any machinery and making it easier for importers, if not to import, at least to understand what they have to do in order to bring in imports.
I only hope that this will be followed by similar measures in Commonwealth 114 countries. Although importers into this country may hitherto have experienced difficulty in finding out under what Measure their goods are being charged duty, those whose goods are imported into Commonwealth countries—and most of our exporting industries are concerned in this—experience an even more complicated situation. There are so many different rates of duty existing in Australia, Canada, the Union of South Africa and other Commonwealth countries. I hope that this Measure will be followed by similar ones in other Commonwealth countries, so that we can simplify the number of different rates of duty which exist.
I think that I am right in saying that we have altogether about eighty different rates of duty, both ad valorem and upon a specific basis. That is quite enough for importers to have to deal with without the extra mass of rates which exist in certain Commonwealth countries. In Australia, for instance, as I mentioned three days ago, there are about 800 different rates, and Canada has over 400. This is a question which should be looked into in the interests of increasing Commonwealth trade.
I gather that as a result of the Bill the United Kingdom tariff list will be completely reconstituted. That will be a good thing, and I hope that it will result in one rather curious anomaly disappearing from that list, namely, the fact that it does not include goods which are subject purely to the 10 per cent. tariff of the 1932 Act. I have always thought that it would be rather more intelligible if the goods excluded from the tariff list came in free of any duty whatsoever, but whereas the exemptions are included those goods which bear only a 10 per cent. general duty are excluded. I hope that that position will be put right, because it is confusing to anyone who is not familiar with the list. If he finds that something is not included he is apt to jump to the conclusion, quite wrongly, that it is free of duty, whereas it is subject to a 10 per cent. duty.
The hon. Member for Islington, East (Mr. E. Fletcher) referred to the curious paragraph 3 (2) of the First Schedule, which suggests that there will be an increase of 1s. in the duty on wines. I believe that that provision is taken from 115 the existing Act, and I take it that the last phrase in the sentence:unless the Treasury by order direct otherwise",has already been carried out and that the provision does not mean that another shilling duty will be imposed upon light wines imported into this country. The duty on them is already quite heavy enough.
Having listened to the arguments put forward by hon. Members on both sides of the House in relation to the Import Duties Board, I find myself in agreement with the majority. I would rather the Board were not constituted at all, or, alternatively, that it were constituted on the lines of the old Import Duties Advisory Committee, which was a very different affair. For many years the Chairman of that Committee was the late Lord May, formally Sir George May, Chairman of the famous May Economic Committee. I am wondering whether my right hon. Friend will be able to persuade anyone of the same calibre as Lord May to take the chair of the new board. If I remember rightly, two former eminent civil servants were his main assistants. That was a very different state of affairs from what is proposed in the Bill. I would prefer that the whole responsibility for the imposition or reduction of tariffs was taken by my right hon. Friend and his Department. They are there for that purpose. In any case they have to take the responsibility for decisions which are made, whether or not upon the recommendations of the Board.
They are just as well constituted to form a fact-finding body as any board that may be set up, and I am sure that people would rely upon facts as found by the Board of Trade and decisions taken by my right hon. Friend in imposing or reducing tariffs, just as much as upon recommendations made by an outside body. With that proviso, and in the hope that my right hon. Friend will reconsider this matter in the light of the criticism made, I welcome the Bill. I believe that it will do a great deal to simplify our tariff for importers, and I hope that it will be followed by similar measures in Commonwealth countries, where it is so badly needed.
§ 7.56 p.m.
§ The Minister of State, Board of Trade (Mr. J. K. Vaughan-Morgan)
It was wholly expected that this massive but not very enthralling Measure would not provoke a very sparkling debate, but we have had a very thorough and constructive debate upon what is a useful but complex Measure. There were moments, as I listened to some of the interpretations placed upon some rather innocent words, when I wondered whether we were all talking about the same Bill. We had an absolutely splendid essay in diehard, doctrinaire, dyed-in-the-wool, mid-nineteenth century, academic free trade, but the hon. Member who gave the essay has not stayed to listen to the applause. However, I have no doubt that I shall be able to comment upon that matter at a later date.
I had thought it was generally understood that the Bill dealt only with the tariff structure and not with rates, but none of us can be surprised that the question of structure has been strained to bring in some rather extraneous arguments. The present tariff remains virtually unchanged, and it is only the tariff-making machinery which is being remade to suit present-day needs. If I may use a topical simile—I do not want to be pressed too far on this point—it is rather like the Nash Terraces; the facade will remain the same, but behind the walls there will be much reconstruction and adaptation to suit modern needs.
Most of the points raised have dealt with the Import Duties Board, and of wider issues of tariff policy. I want to say a few words about the Brussels Nomenclature. That is the important part of the Bill; the recasting of our existing tariff in an internationally-agreed form. I was very glad to hear my hon. Friend the Member for Preston, South (Mr. Green) praise the Measure for what it will mean to commerce as a whole. Anyone who has had to pursue his way through the complexities of our present tariff will welcome the news that this simplified structure covers not only the tariff classifications but also the statistical classifications. It may seem a small point, but it is one which will be of immense importance to those in industry who have to fill up so many forms. Every article of commerce will now be found in one place only, and since there are something like 2 million inward Customs 117 entries a year it will simplify procedures to a considerable extent.
My right hon. Friend gave one example of the difficulties of the present tariff. I should like to give two. One is Christmas cake, which seems seasonable. Actually it is subject to the 10 per cent. ad valorem duty. The best recipes—Mrs. Becton and the like—call for the use of sugar, raisins, currants, honey, milk and butter. All of those are chargeable in one guise or another. In practice, those charges in total do not add up to 10 per cent., so the cake becomes liable to the general ad valorem 10 per cent. duty. It is for the trader to prove these facts. Now, under this new tariff, cake will be shown under one heading as liable to one duty only.
Let me give another example which I think will appeal to some of my hon. Friends who are in industry, if I wish to import some steel machinery belting 8 inches wide—not an unusual item—and look it up in the present tariff index, I find it is mentioned on pages 11, 21, 38, 56, 64, 65, 70 and 80. I start at the beginning, and I find that page 11 gives the criterion for Commonwealth Preference, which is interesting but, of course, irrelevant because the goods are foreign. I turn to page 21, where I find many types mentioned, but not the one I wish to import, which may not be charged with more than 10 per cent. duty. Page 38 tells me that this belting is not liable to the tariff for steel hoop and strip. Page 56 shows it is not liable at the 171 per cent. like most machinery, provided that it is mentioned somewhere between pages 55 and 66. Hot in pursuit of the clue, I find on page 64 that there is a duty of 15 per cent. ad valorem duty under the sub-heading "other". Page 70 covers textiles, and page 80 covers leather and leather goods. So I make a rough guess that it is probably 15 per cent. and, if I am wise, I telephone the Customs and Excise Department to find the real answer. In the new nomenclature it can be found as steel machinery belting in a matter of seconds.
The benefit of the Brussels Nomenclature is twofold, and I think this is an answer to the point made by my hon. Friend the Member for Wembley, South (Mr. Russell). As it becomes accepted elsewhere our exporters will profit in their turn and will be helped in other countries by the fact that the same classification 118 will apply there. How much progress has already been made in establishing the Brussels Nomenclature? We and 12 other European countries were the signatories to the 1950 Convention when the Nomenclature was agreed. There are a number of countries—it is now 14—which will gradually change to the Brussels Nomenclature; and it is of interest to note that there are other nations which have sent observers to the Convention and will, I hope, eventually follow suit. I think that of the greatest importance for international trade in the long run.
In changing our existing tariff into the Brussels form, minor adjustments to certain goods have proved inevitable, if we are to conform to the simplification that the Nomenclature brings with it. These alterations will be marginal. The Order introducing the new tariff will be presented for debate in the House when it is made, but the changes will be marginal ones. It is not possible to transfer completely without tiny adjustments, and I will give one example.
In the Brussels Nomenclature, heading 42.02 covers travel goods from trunks to collar boxes. Apart from women's handbags, which have two special rates which are being retained, the articles classified under that heading are at present liable under 17 headings, in addition to having liability for silk and artificial silk components. To set out in full the exact present tariff position we should have to have about 50 sub-headings. In order to adapt this to the Brussels Nomenclature, it has been accepted that the silk and artificial silk duties should henceforth be dropped, but there will, of course, still be the different duties for the goods. These will range from 33⅓ per cent. and 25 per cent. for some articles to 15 per cent. for others. Now we propose to bring out a new flat rate of 20 per cent. We shall thus have three simple subheadings instead of what would have been one of the most unwieldy sections of the tariff.
I do not want to exaggerate the importance of the change in itself, but I feel that the advantages are very real, particularly to a trading nation such as ourselves, and I am pretty certain that industry and commerce will almost universally welcome this change. Perhaps I may disillusion hon. Members on one point. Anyone who has looked at the present volume 119 will find that it is complex enough, but I should warn hon. Members about one thing, which bears on the point raised by my hon. Friend the Member for Wembley, South, that the new volume will be slightly larger. But it will be simpler, and that is the real point.
The hon. Member for Nottingham, North (Mr. J. Harrison) was concerned about the sinister implication of the Bill; whether we were using this Bill as a means of implementing the plan for a European Free Trade Area. I wish to make clear that this is not a free trade area Bill, but certain general powers contained in it, could, if necessary, be used to implement any such proposals. We are confident that the Bill is flexible enough to allow us to do most of the things which we shall need to do if we set up a free trade area as is envisaged and hoped by many of us.
Under this Bill, whether we had the European Free Trade Area proposals or not, we should still have to implement the Convention into which we entered in 1950, long before the Free Trade Area was thought of in its present form. But of course, if a Free Trade Area Convention were negotiated, it is pretty certain that there would be other statutory provisions on subsidiary matters which would prove necessary. The point is that to attempt to implement a free trade area without the Brussels Nomenclature form of tariff having been adopted by all the participants would run everyone into difficulties.
We now come to what has been the most contentious part of the Bill, the Import Duties Board.
§ Mr. Jay
Will the Minister answer the question which he has been asked by several hon. Members? Does the First Schedule—as would appear to a non-lawyer—taken together with Clause 2 of the Bill, in the case of light wines—and probably one or two other things—alter the rates of duty without any subsequent orders at all? On the face of it, if we look at Clause 2 (10) and the end of the First Schedule, it would appear that we were altering the duties on wines. If that is not so, perhaps the Minister will tell us.
§ Mr. Vaughan-Morgan
Those are Revenue duties and will not be altered. 120 This implements agreements entered into some time ago.
§ Mr. Vaughan-Morgan
Yes, exactly the same. I assure the right hon. Gentleman that the technical explanation is even more complicated than the problem.
§ Mr. Vaughan-Morgan
I turn to the Import Duties Board which has been criticised by a number of hon. Members and a good many of the criticisms were constructive. It is interesting to note that there have been divisions of opinion on each side of the House. I did not imagine that the Committee stage of this Bill would be very exciting, but when we come to debate these matters I think it will be interesting to see the alignment of ranks behind the Front Benches.
The changed duties and constitution of the Board have been much commented on. The duties are in some way different from, or have been diminished as compared with, those of the pre-war Import Duties Advisory Committee; but before we read too much into this we must, as my right hon. Friend said in his speech today, look at the very different circumstances which prevailed in 1932 as compared with the circumstances today. The circumstances have changed, and so have the purposes served by the tariff.
For the first time, in 1932, we had an Act which was avowedly protective. It sought to improve production and distribution in this country and to transfer to this country work which was done elsewhere. It sought to foster employment, and to stimulate our own economy. That tariff had to be constructed virtually ab initio. We had no precedent to guide us, and since the need was to frame a detailed tariff for the United Kingdom, the experiment of such an independent committee proved remarkably successful in keeping the matter as far as possible out of the political arena.
The committee had power to make recommendations for changes in duties. The Government were not obliged to accept those recommendations, but they 121 could not impose additional duties. In fact, except for a very few exceptions, those recommendations were invariably accepted.
The circumstances today are entirely different. It would be impracticable to re-establish the pre-war I.D.A.C. That body made its recommendations on an appraisal of domestic merits only. It did not have to pay heed to external international commitments. No Government today could contemplate delegating to an independent body the effective responsibility for decisions on tariff questions. To do so would be to abandon the Government's proper duties in relation to external commercial policy, in the light of all the international commitments—not only the G.A.T.T.—which we have accepted since 1932, and the very considerable concessions which we have secured in return. That is the dilemma that we are in with the matter of an advisory committee. If we accept its recommendations—if we have a body which can recommend—we lose control of policy. If we do not accept its recommendations we get an infuriated, frustrated and stultified committee.
Nevertheless, looking to the future, we feel that there should be some independent examination of the facts relating to the level of the protective tariffs. The present arrangements, whereby the work is done from start to finish within Whitehall, has worked well and with little criticism, but it has always been understood by industry that eventually some permanent, fact-finding machinery would take its place. I was struck and delighted with the paeans of praise for the Civil Service from hon. Members who spoke on behalf of industry and commerce today. That was a little unusual. We are confident that in the proposed Board we have put forward a reasonable proposal which meets the changed circumstances.
When we come to choice between a full-time and a part-time Board there are different arguments. It is difficult to predict the volume of work. We have felt that it is unlikely there will be a sufficient volume to occupy a full-time committee, consisting of a chairman and up to five members, such as the pre-war I.D.A.C. had. The present proposal is that only the chairman, and, of course, the secretariat, should be permanent and should supply the continuity of approach which is needed. The appointment of up to 29 part-time, unpaid members will give 122 us the flexibility which we require, but such a large number may never prove necessary.
My hon. Friend the Member for Shipley (Mr. Hirst) put in a plea for a permanent board, and it was supported by other hon. Members. I am a little puzzled by this attitude. Are we to understand that hon. Members have more confidence in a board of five gentlemen permanently sitting in Whitehall than in a part-time panel recruited from their own ranks of industry and commerce? I find that very hard to believe. We hope that we shall be able to recruit members from the widest range of industry, commerce and the professions, and thereby draw on wider experience and technical knowledge than we ever could have with a full-time professional commission. I hope that when hon. Members look again at this proposal in the light of these remarks they will feel more satisfied that their voice will be heard.
The operation of the Board has been questioned at various points. When an application for a change in the tariff or any other matter which the Government chooses to refer, is referred to the Board, the chairman will appoint a committee to examine that reference. I can assure hon. Members that there is nothing very sinister about a sub-committee disposing of something. It would be too awful if it sat on it for ever. It is highly desirable that it should dispose of the matter. The sub-committee, having disposed of the matter, will report to the Board, which will then report on the facts, where a change in the tariff is to be considered, without a recommendation.
Its reports are required to be published with obvious safeguards for the public interest and for confidential information. The hon. Member for Bolton, West (Mr. Holt) lives in a very unreal world if he thinks that adequate information will be given by firms if all their costings are to be blazoned abroad, not only in this country but elsewhere. It is not reasonable. Firms and individuals will expect that the information which they give will be treated as confidential.
§ Mr. Vaughan-Morgan
I am advised that they were not.
On the other side of the Board's work, wherever drawback of duty or individual duty relief in certain conditions is concerned, the Board will have the same power to make recommendations, on the basis of which the Treasury can act, as the I.D.A.C. had before the War. This is an entirely different matter. There is no question whatsoever of any conflict with our international commitments. It is essentially a question of determining the facts, which should be determined impartially without any pressure being able to be applied at all. I can assure one hon. Member who raised the matter—I think it was my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke)—that it is frankly unthinkable, at any rate unlikely, that the Government would in those circumstances reject such a recommendation. Therefore, a standing committee will be established to deal with the application, but it will be required to conform with general policy directions issued by the Board of Trade.
I can give my hon. Friend the Member for Shipley the assurance that industry will, of course, always have access to the Board of Trade. In the last resort, if he does not feel that he is getting justice, he can put down a Question to my right hon. Friend.
§ Mr. Vaughan-Morgan
The Board is charged with fact finding, and it would hardly be able to find the facts correctly without having those concerned report to it.
§ Mr. E. Fletcher
It is quite clear, is it, that any trader has a right of direct access to the Board?
§ Mr. Vaughan-Morgan
Obviously he has to have a prima facie case. There has to be a filter to eliminate frivolous cases. That is a very important proviso, which was applied even in the days of I.D.A.C.
On the question of legislation and Parliamentary procedure generally, I do not think the hon. Member for Islington, East (Mr. E. Fletcher) was entirely justified in his remarks about bureaucracy. The general principle embodied in present 124 legislation is continued, which is that any orders imposing or increasing customs duty or restricting the reliefs for specific purposes as outlined in Clause 5 require an affirmative Resolution as previously.
§ Mr. Fletcher
I hope the hon. Gentleman will appreciate that I was quoting from a circular from the London Chamber of Commerce.
§ Mr. Vaughan-Morgan
I am glad they were not the original words.
The only exception—it is a very small matter, but I think I ought to draw the attention of the House to it as it was raised—is that where the Treasury is satisfied that a change in the form, as by substituting a specific duty for ad valorem duty, will not raise the general level of duties on goods concerned, an affirmative Resolution is not required. In that case it is a negative Resolution. The point is that there is no change of substance.
§ Mr. Vaughan-Morgan
I am not quite certain. I have looked at the matter de novo, and I think it is where the change is a technical one. Orders reducing duty will be subject to a negative Resolution as heretofore. Generally speaking, Parliament will have more chance, not less, to scrutinise tariff-making policies, since Ministers were not answerable for the actions of the I.D.A.C., but they will be answerable in this case.
I would say one thing about the timing of operations. I said that the intention is to lay the orders imposing the new Brussels form of duties before the House, if the House grants the Measure, some time prior to their coming into effect on 1st January, 1959. The reason for that is nothing sinister, but the new tariff will be published well before it comes into operation in order to give the necessary interval to those concerned to become familiar with the new classification.
I should like to say a word about questions of general tariff policy. The Liberals wanted us to go back to the days of unilateral free trade, free trade by example as in the nineteenth century when we led and no one followed. The hon. Member for Bolton, West gave us 125 an idea of his policy on tariffs. I think it will be very well received in North Dorset and, perhaps, not so popularly by some of the Liberal candidates in agricultural constituencies. However, I give him full credit. He is thoroughly consistent. Anticipating this massive attack, I looked up his election address. It was very pithy. It said:Review our tariff system and remove or reduce import duties where necessary, particularly duties on essential imports.That is unilateral free trade.Abroad. Work to get other countries to reduce their barriers to our export trade. Dissuade them from bad practices like subsidies which result in unfair competition."Work" and "dissuade" are splendid words. The tense is imperative, the mood is persuasive and the effect would be nil.
Armed with our present tariff, as well as the anti-dumping powers which we now possess, we are far better placed to seek freer and fairer trade than at any time before in our history. There has been some comment about the powers of retaliation in Clause 11. These are not new but have been preserved since the 1932 Act. It is of some interest to note that the powers have been invoked only once, and then successfully. At a time when there was considerable discrimination against our goods, we were able to get the discrimination lifted forthwith.
But today all the leading commercial nations have common aims to raised standards of living, to ensure full employment, and to seek to reduce the barriers to trade. These aims, as far as we are concerned, can be, and must be, reconciled with our duty to and our ties with the Commonwealth, and they are not inconsistent with the maintenance of modest and reasonable protection of essential industries in the United Kingdom.
§ Mr. Vaughan-Morgan
If at this stage of the debate the hon. Gentleman has not grasped that what we want the tariff for is as a weapon and that we are seeking wider reductions ultimately on tariffs, then I really give up. All I can say is that at this stage that is one of the most irrelevant incursions. 126 I hope that, in the main, we are agreed on the policy behind the Bill in order to implement the policies which we nearly all hold and to take advantage of the opportunities of expansion which still offer themselves today. I hope, therefore, that the House will be able to give the Bill a unanimous Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time and committed to a Committee of the whole House.
§ Committee Tomorrow.