HC Deb 01 December 1964 vol 703 cc369-401

Again considered in Committee.

Question again proposed, That the proposed words be there inserted.

Mr. Percy Holman (Bethnal Green)

We have had a number of speeches dealing with individual firms and their difficulties which have arisen out of this special temporary impost of 15 per cent. on all manufactured or semi-manufactured goods. As an importer for the last 45 years I would say to the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) that I am surprised that he had not a clause in his contract and on his quotation forms to the effect that any import charge should he on the buyer's account. I have seen that on the forms of many merchants and importers.

We are told of the difficulties relating to a particular machine for Messrs. Wiggins Teape. I hope that this firm is buying the bulk of its machinery in Great Britain. When I was a young man practically every paper-making machine in Scandinavia was a British product and there is no reason why a British firm, financed largely by help from the British Government, should not buy British in respect of a major part of its machinery.

We spend vast sums on research and it may be that this temporary impost may be unlucky in respect of a particular piece of machinery, but it may not be possible to obtain the machine during the period of the imposition of the surcharge. Most hon. Members opposite must have got a shock when they heard of the figure of our balance of payments deficit. I wish to apologise to my constituents for never mentioning a figure of more than about £450 million as the adverse trade balance. It is now turning out to be considerably in excess of that. I hope that it will not prove to be anything like £800 million, but it looks as though it will be £700 million.

The Government had to take rapid and drastic action. I have discussed this matter for months past and long before the General Election. Quick action was necessary in an emergency. We destroyed the organisation which could have imposed quotas and action had to be indiscriminate and immediate because contracts are often signed for many months ahead. They can be broken, in most cases without any question of compensation. Several producers on the Continent have written to me saying that a number of orders were cancelled, although some were subsequently reinstated. I do not think that Messrs. Wiggins Teape need to be too unhappy about having to pay a little extra, because of this impost. Most of that company's paper has gone up by £4 a ton since the present Government took office. I can speak with knowledge of that.

The introduction of the 15 per cent. surcharge has been a nasty, unfortunate, but nevertheless necessary, act on the part of the Government and I can assure hon. Members opposite that I am a sufferer from it. A steamer was in collision while coming out of one of the Norwegian fiords, the result being that goods coming to a firm with which I am concerned arrived after the impost came into operation. I mention this to show that despite the adverse effect of the surcharge, I am prepared to stand by the Government's policy.

It should be realised that an impost of this description can be spread by firms over many months. It has the advantage of helping our export trade and I would like, if it were possible, bigger incentives to be given to exporters from the money which will be raised by this temporary impost. I regard the surcharge as an inevitable part of the heritage left by the party opposite. The Government realised that quick action was necessary, and thus the surcharge came into being.

Exemptions can be extremely unfair. It should be realised that contracts can be spread over anything from a month or two to 12 months and while some firms are unlucky in the hardships suffered by any Government policy, equal hardships arise with the establishment of quotas or any other method of restricting imports. I say "Good luck" to the Government because they have done the right thing in the right way. Exemptions of one sort or another are either impracticable or unfair to other importers.

Mr. H. P. G. Channon (Southend, West)

I do not take the same philosophical view of the 15 per cent. surcharge as the hon. Member for Bethnal Green (Mr. Holman). It is all very well for him to say that exemptions make hard law, so to speak, but the Government have completely given away any case of that description by themselves having tabled one Amendment after another to the Bill.

The hon. Member said that surcharges of this nature were absolutely essential and that no exemptions should be made. It is vital that they should be made. How can he possibly suggest that exemptions are unfair when the Government have themselves, for various reasons, no doubt all good, tabled Amendments to make exemptions? I submit that, although it may be true that many large firms may be able to absorb or offset the 15 per cent. surcharge, there are many small firms which will find the surcharge a severe shock indeed. The hon. Member was being less than fair to the smaller firms which are affected by it.

It is ironic that the Government should have called this a temporary surcharge. Many small firms which have been caught by contracts they cannot get out of are in an even worse position because they realise that had they waited six months or so they would not have suffered severe consequences resulting from the surcharge.

There is a case in my constituency, which I have referred to the Board of Trade, and, like my hon. Friend the Member for Peterborough (Sir Harmar Nicholls), I regret that we will not have the advice of a Board of Trade spokesman in the debate tonight. I hope that I will not be thought impertinent in saying that it always seems suspicious when a Government put up two lawyers to present a case. We have heard a good deal about the legal qualifications of the Minister without Portfolio in regard to the legal matters with which he will be involved, but this matter should surely be dealt with by a Board of Trade Minister.

The Financial Secretary to the Treasury (Mr. Niall MacDermot)

I thought that hon. Members opposite might be glad of some variety. I am the Minister who is responsible for matters concerned with Customs and Excise and, consequently, for this part of the Bill. The Committee had the advantage of hearing my hon. Friend the Minister of State, Board of Trade, and will now have the advantage of hearing my hon. Friend the Minister without Portfolio. Perhaps at a later stage in our proceedings they will have the tedium of listening to me, but I can assure them that there is always a responsible Minister present.

Mr. Channon

I am grateful to the Minister. I am sure that everyone is eagerly awaiting the speech of the Minister without Portfolio, because he always addresses us in such a charming and convincing way. If the Financial Secretary is responsible for this part of the Bill, it is extremely odd that my representations are answered by the Board of Trade and are not forwarded to him.

Sir Harmar Nicholls

Would my hon. Friend think it proper in his argument to say that the Minister of State, Board of Trade should be prepared to listen to arguments as well as to produce his own?

Mr. Channon

I am grateful to my hon. Friend. I am sure that he will agree with me that the fact that the Board of Trade has taken upon itself the burden of answering my representations when the Financial Secretary is responsible is another clear indication of the fact that the Government do not know who is responsible for what.

I hope that the Committee will forgive this somewhat frivolous start to my remarks, because I have a serious point to raise. I hope that the Minister without Portfolio will not think that I do not genuinely have a serious constituency point to put to him.

There is in my constituency a small firm—this matter affects small firms in particular—which has been caused extreme hardship. It is the importer of certain kinds of yarns which are obtainable in this country, but they are extremely difficult to obtain. There is a considerable waiting list and a considerable shortage of this type of yarn. It becomes virtually impossible for the firm which wishes to import it to get the supplies that it wants.

To make matters worse, the margins in this trade are extremely tight. This firm has, for example, entered into an extremely tight contract to buy things abroad and to import and sell them at a fixed price which it has already negotiated. The 15 per cent. surcharge will make a very substantial difference to this concern, and even if it does not result in financial ruin it will come jolly close to it. This is only one of many examples of small firms which are genuinely hit by this surcharge.

What makes matters worse is the fact that the Government originally said that they would exempt raw materials. I do not think that what they have exempted includes all raw materials. Nevertheless, contracts have been placed by this firm to buy yarn, produce the finished article—

Sir Eric Fletcher

I do not want to interrupt the hon. Gentleman, but it is not clear how the difficulties of his constituent would be improved if these Amendments were accepted. It seems to me that he is, perhaps, concerned with the inclusion of further items in the Schedule.

Mr. Channon

The point that I am making is this. This firm entered into contracts which it is extremely difficult, if not impossible, to get out of. If it had the opportunity to get out of them, it would no doubt cancel them and it would not be hit by the surcharge. There is a case for further exemptions to which we will come later in the Bill. Even a few pennies difference in this trade makes all the difference between a profit or a loss. This is a small firm which faces bankruptcy as the result of the surcharge. I have approached the Board of Trade on its behalf, but, unfortunately, I have not managed to get any satisfaction.

My hon. Friend the Member for Bath (Sir E. Brown) only a few moments ago brought to my notice a case of a slightly different kind. A firm in his constituency bought a certain type of crane from America. It was exempted from import duty. The Board of Trade recognised that, owing to the special circumstances of the case, it should be entitled to a licence to import it duty free. When the surcharge was imposed on 27th October the crane was in transit. It was due to arrive—in fact it may have arrived—in the third week in November. This firm is unable to cancel the order and, at the same time is faced with what is to it the insurmountable problem of possibly having to pay duty of about £10,000. No doubt it is extremely difficult to devise a method to get over this, but I cannot believe that it is impossible.

These Amendments are being pressed because there is a serious point behind them.

Mr. Stanley Orme (Salford, West)

With no sincerity.

Mr. Channon

The hon. Gentleman may disbelieve me, but I assure him that there is a serious point behind these Amendments and many people are affected by them. If he thinks the contrary, perhaps he will get up and say so and then we can have it on record.

10.15 p.m.

Mr. Orme

The hon. Gentleman said that he was pressing these cases, and I said "With no sincerity", and I meant it.

Mr. Channon

As far as I know, I have never had the privilege of speaking to the hon. Member for Salford, West (Mr. Orme) before, but I am astonished that someone should make that accusation against another hon. Member who is doing his best to represent his constituents.

Mr. J. M. L. Prior (Lowestoft)

On a point of order, Dr. King. Is it in order for an hon. Member to accuse another of no sincerity or complete insincerity? Ought not the remark to be withdrawn?

The Chairman

It is not in order for hon. Members to make personal attacks upon one another or to impute false motives to one another. I hope that the hon. Member for Salford, West will withdraw his remark.

Mr. Orme

Dr. King, I withdraw any imputation which may be thought particularly to reflect on the Chair—

The Chairman

Order. No reflection is made upon the Chair. Any attacks in the Committee are made between hon. Members who differ politically. All such political attacks and the clash of ideas are quite within order. It is not in order for an hon. Member to impute personal or false motives against another hon. Member, and I hope that the hon. Gentleman will withdraw what he said.

Mr. Orme

My remarks were not made in a personal sense, Dr. King. [HON. MEMBERS: "Withdraw."] If hon. Members will wait, I shall, perhaps, be allowed to make my point. [HON. MEMBERS: "Withdraw. That is all that is necessary."] The point I was making was to question not the individual sincerity of the hon. Member for Southend, West (Mr. Channon) but the sincerity of the argument.

Lieut.-Colonel Sir Walter Bromley-Davenport (Knutsford)

On a point of order, Dr. King. The hon. Gentleman said no such thing. He made a definite charge against my hon. Friend of personal insincerity.

The Chairman

It would be more in keeping with the spirit of the House if the hon. Member for Salford, West made the statement he has just made and then withdrew his first remark. I ask him to withdraw the charge of insincerity which he made.

Mr. Orme

Very well, Dr. King. I withdraw the personal implications but stick to the broad premise.

Mr. Channon

I am grateful to the hon. Gentleman for that withdrawal, as far as it went. I can assure him—I hope that he will not find this insincere—that when he is addressing the Committee on a constituency matter he will not have to meet the same kind of treatment from this side.

I am sure that the Minister agrees that this is a serious point, even though he may disagree with the substance of it. I accept that there may be difficulties in exempting either goods in transit or goods the subject of a contract entered into, but considerable hardship is being caused to a number of small and medium firms. I refer to the purpose of the import surcharge as stated by the Financial Secretary of 24th November: May I remind hon. Members, first, what the object of this charge is? It is to reduce imports, reduce them substantially and reduce them quickly".—[OFFICIAL REPORT, 24th November, 1964; Vol. 702, c. 1215.] Acceptance of this Amendment will make no difference to the level of imports. These are goods which will come in anyway. I hope that the Government will reconsider the matter and give help to the many people who are genuinely affected and genuinely in deep trouble as a result of the present wording of the Clause.

Mr. Peter Emery

I realise that it is late, but three very important Amendments are being discussed at the same time as Amendment 19. I call attention first to Amendment No. 14, to delete subsection (8). By their action, the Government are altering contracts freely entered into by willing buyer and willing seller. If this is not so, I hope that we shall have the proper correction. There is a great deal of worry among industrial buyers about the subsection as a whole.

I reinforce what was said by my hon. Friend the Member for Southend, West (Mr. Channon). We are delighted to have the Minister without Portfolio to answer the debate, but industry is concerned about the industrial aspects of these questions and it will judge the Government very harshly for not having even one of six Ministers at the Board of Trade present. This is no reflection upon hon. Gentlemen now on the Front Bench, but it underlines the fact that the Government do not care about the way they deal with industry. This is a terrifying prospect to emerge from this most important debate.

Mr. Prior

Perhaps the reason why Ministers of the Board of Trade are not represented on the Government Front Bench is that they are so disgusted with this whole business that none of them dares to come to listen.

Mr. Emery

I did not want to go to those extremes, but my hon. Friend may well be right.

On subsection (8), as I understand the Amendment, we transfer automatically from the seller to the buyer, indeed, to the ultimate buyer, this particular surcharge. If that is so—and the right hon. Gentleman seems to be nodding—it means that where a buyer has brought in a contract exempting himself in a specific clause of that contract from any increase in the surcharge, that clause is null and void. It seems very strange and unusual for the Government to be encouraging a breach of a freely negotiated contract.

The right hon. Gentleman must realise that over the last three months, because of the fear of a Labour Government coming into power, a considerable number of buyers attempted to ensure that their figures in their purchase prices were at all times absolute. I heard an hon. Member opposite say, "All the more reason for this Clause". He is suggesting that buyers in industry do not know their own business and that they should be lectured from the Government Front Bench. That is a strange statement., particularly if it comes from a Minister of the Treasury and not of the Board of Trade.

What industrial buyers have attempted to do over this period is to make the best bargains for their firms. They have bought only when they were absolutely certain that the prices at which they would be purchasing would not be reflected to their own customers. What the Government are saying is that it does not matter how good the contract was, nor how well buyers attempted to reinforce their position, a contract by this action of the Government will be rendered null and void. That needs a lot of explanation by the Government.

I turn to the position about delivery. I cannot for the life of me see what possible advantage the Government can have in not allowing this Amendment to be passed. Perhaps the wording is not adequate and perhaps they would like to change it, but what possible advantage can they obtain in demanding a surcharge on goods which have been bought and are already on the way of delivery? There are many ways of wording this Amendment, but we on this side of the Committee urge that this is the most simple of all. Where goods can be proved to be on the way of delivery, where there is a delivery note and they are in transit, the surcharge should not be made to the buyer.

The Financial Secretary said that it was imperative to make this bite, but it cannot do anything useful by encouraging the cancellation of orders of goods already on the way and being delivered. There is not any common sense in this, nor any business sense. Cannot the Government reconsider this aspect to see whether they can meet the genuine objections of industry in regard to the delivery of goods? I am told—I should like to be corrected if I am wrong—that even before the Bill becomes an Act the Customs and Excise are demanding surcharges before they will release goods from the docks. Is this so? If it is, there is a very strange position. It seems that they are taking firms' money on deposit—I am told that it is put into a separate account, but it has to be paid—and presumably the interest is obtained before the goods are released and before the Bill becomes an Act of Parliament.

I turn to the aspect which perhaps is the most important, that of contracts. We have heard much said about small businesses and that is of particular importance. This aspect of contracts entered into affects not only small businesses, but also very large firms. I shall quote two examples dealing with tens upon tens of thousands of pounds affected by this surcharge. In November, 1963, a firm decided to construct at its factory a plant for the manufacture of a certain type of product. A substantial portion of its product will be exported. When the decision had been made a programme for constructing and equipping the plant was laid down. According to plans, the plant was to be operational in 1966.

The total cost of the plant and equipment is about £3 million, of which approximately £600,000 is for specialised equipment obtainable only in America. The specialised equipment was ordered in February, 1964, the delivery phased to coincide with the building operations. Approximately £100,000 worth of the equipment has already been delivered, leaving a balance of £500,000 worth to come. Building for this equipment has begun. This machinery is absolutely essential for the continuation and expansion of the firm's export business. The Committee will readily understand that the project is getting into very large sums of money. This firm is considering what is the meaning of the words used by the President of the Board of Trade. What is "a temporary impost"?

Hon. Members

Where is he?

10.30 p.m.

Sir Harmar Nicholls

On a point of order. References in speeches are entirely Board of Trade references. Would you be prepared, Sir Samuel, to accept a Motion that you do report Progress and ask leave to sit again? There are five Ministers at the Board of Trade. These are arguments which ought to be heard and answered by a Board of Trade Minister.

The Deputy-Chairman

That is not a point of order and I am not prepared to receive such a Motion.

Mr. Emery

We well understand that you cannot accept a Motion, Sir Samuel, but the debate is on matters more and more affecting the Board of Trade. An hour ago it was suggested that one of the Members on the Government Front Bench should send for a Board of Trade Minister to listen to the debate. If this state of affairs had occurred in the last Parliament what an uproar there would have been.

Mr. Channon

Has my hon. Friend observed that the Leader of the House has arrived? Could he ask, through the Leader of the House, for the presence of a Board of Trade Minister?

Mr. Emery

I see the Leader of the House at the end of the Front Bench. Good evening. Before I am called to order, may I acquaint him with the fact that there is considerable disquiet arising from the situation that we are dealing with legal aspects of contract and delivery, all arguments having to do with trade, and that although there are six Ministers at the Board of Trade, not one has been sufficiently courteous to the Committee to attend and listen to the arguments. I hasten to add that we are delighted to see the two legal representatives of the Government, but it must be wrong for there to be no Minister from the Board of Trade present when the whole debate is on trade.

May I continue with the example which I was giving? The equipment costs £500,000. The firm is trying to decide what is meant by the temporary basis of the surcharge mentioned by the President of the Board of Trade. If it is to be temporary, the firm is willing to try to postpone the contract in order that it has not to pay 15 per cent. on £500,000. The benefit of the improvement in plant will go largely to exports. Surely the Government only lose by demanding 15 per cent. on a contract which has already been negotiated. It is of the greatest importance to the efficiency of the firm that it should be able to go forward with this equipment knowing that the Govern- ment are not "taking the firm for a ride".

Another example, again involving a considerable sum of money, is of a company building a plant at Dundonald, in Ayrshire. I am pleased to speak for Scotland when there are so few Scots present on the Government benches. This company is in a development area, the contract was made many months ago and the plant costs £260,000. My informant says that firms are offered inducements in the form of capital grants to assist employment in development areas but that the new levy can seriously detract from such advantages and in future would have to be taken into account when carrying out any economic evaluation of further operations in the United Kingdom.

The firm is saying that it is being encouraged to go into a development area yet it finds immediately that part of the risk which it is taking and its capital investment are being "upped" by an extra 15 per cent. These are on past contracts, and it is on the aspect of contracts entered into that I wish strongly to urge the Minister without Portfolio to reconsider the whole of the Government's position. Will the hon. Gentleman realise that if the contractor attempted to safeguard himself, subsection (8) would not allow him to do so and that is that?

Mr. Holman

In going to the special area the person concerned still has the same net advantage because the 15 per cent, impost is universal.

Mr. Emery

I am delighted to take that point, because it is so easily answered. The point is that these people did not necessarily want to go into the area. They were induced to go, and in going they are taking a number of risks which they did not want to take. They are attempting to deal with specific economic problems. They should not be induced with one hand and then slapped down with the other. This must have an effect on anybody else who is considering that type of action.

What have I said? [Laughter.] I specifically said that, because it had seemed to me once before that hon. and right hon. Members opposite think that this is a laughing matter. They do not think that a serious argument is being put forward. It is in that spirit that they have dealt with the Amendments throughout. This is why no representative of the Board of Trade is present. The Financial Secretary to the Treasury appears to shake his head, but industry will have to decide, not the hon. and learned Gentleman. This proposal in the Bill considerably increases capital costs on contracts entered into which have been finally costed and which may now bear a considerable loss. If they bear a loss, the Government must realise that the larger firms will probably stop these extensions. Do the Government wish to stop the further development of large-scale industry? If they do not, they must somehow make an allowance on the lines of these Amendments.

Sir Eric Fletcher

I should like to begin by offering most cordial congratulations to the right hon. Member for Taunton (Mr. du Cann) on the honour bestowed upon him as indicated in the late Prime Minister's Dissolution Honours List today.

A number of arguments have been addressed to the Committee in support of the five Amendments which we are discussing. I will do my best to deal with as many of them as possible. Perhaps I should indicate, however, that some of the speeches made do not seem to have been directed to these Amendments at all.

I must remind hon. Members that the Committee has just adopted Clause 3 without a Division. In other words, we start from the premise that the Committee has agreed to the principle of the temporary surcharge of 15 per cent. on imports. These Amendments are directed to making exemptions in two specific classes of goods—goods in transit and goods which have been the subject of a contract already made. I shall seek to show that it would be contrary to the object of Clause 3 and to the Government's objectives in this surcharge operation if either of those suggestions were accepted.

I appreciate, as we all do, that a certain amount of hardship is imposed on a number of people when an additional Customs duty is imposed. Obviously, no taxation can be imposed without somebody suffering as a consequence, but the Committee has recognised that our balance of payments position is such that steps have had to be taken to reduce the deficit. We have heard criticisms from various hon. Members, and hon. Members on either side of the Committee are naturally impressed by complaints which they have received from their constituents. We have heard of a number of hard cases.

Sir Harmar Nicholls

I understand the hon. Gentleman to be arguing that, because we have passed Clause 3 without a Division, we have therefore completely accepted the principle that the surcharge should be applied. However, we accepted that Clause without a Division in the knowledge that the Government themselves had already put down Amendments to exempt certain categories. would not the hon. Gentleman agree that the Government have breached the principle themselves and that we are therefore entitled to push for further exemptions if the arguments for them are justified?

Sir E. Fletcher

The hon. Gentleman is mistaken. When we discuss the Schedules, we shall be able to discuss whether certain goods are properly included in the surcharge, but at the moment we are arguing whether it is possible or practicable, even wise and just, to exclude from the operation of the surcharge all goods in transit and all goods subject to a contract. I shall seek to show that it would be quite impossible to do that.

I shall first deal with goods in transit, the subject of an Opposition Amendment and a Liberal Amendment. One of the difficulties about exempting goods in transit is that it is quite impossible to define "goods in transit". I will seek to explain why. One can determine the point at which goods arrive in this country and thereby when they are entered for Customs and become liable for duty, but it is impossible to decide what goods were ever destined to come to this country.

Hon. Members who are familiar with commercial operations will know perfectly well that many shipments of goods from foreign countries take place in circumstances in which the port of destination is not known at the time of shipment. The port of destination is very often changed during the course of the voyage, often by telegraphic or telephonic instructions to the captain of the ship. It would open the door to considerable evasion if goods intended for some other country were diverted to this country and thereby enabled to escape liability for surcharge. There is a major difficulty about giving exemption to goods in transit, partly because of the difficulty of deciding which goods in transit were originally intended to come to our shores.

10.45 p.m.

The second difficulty, of course, is that it would produce a whole range of anomalies, because goods in transit may come from some other European country or may come from the Far East, in which case there would be a long period of transit, and it would in effect be giving an unfair discrimination against goods from Europe, if there were relief given to goods shipped perhaps a month or two or even more before from other ports. It would really produce intolerable difficulties.

The right hon. Gentleman said that as this is a temporary surcharge intended to be of only short duration the administrative difficulties could be ignored, but as a matter of fact the argument is exactly the opposite to what the right hon. Gentleman put forward. The administrative difficulties of dealing with goods in transit are precisely the same whatever the duration of the charge, and it is exactly because this is a charge intended to be of temporary duration that it is not worth while going to the cost and expense and difficulty of erecting all the administrative machinery which would be required to disentangle legitimate goods in transit from cases of evasion.

Mr. Bessell


Sir E. Fletcher

Let me finish this part of my argument. I am dealing now with goods in transit. Then I will give way. All right, I will give way now.

Mr. Bessell

I am grateful to the hon. Gentleman. The whole point of my Amendment, and that of my hon. and learned Friend the Member for Montgomery (Mr. Hooson), Amendment No. 13, is that it specifically applies exemption to goods for which bills of lading specifying a British port of entry have been already dispatched, that is to say, dispatched prior to 27th October. The arguments which the hon. Gentleman is advancing, I would suggest, are covered by that Amendment.

Sir E. Fletcher

I had not overlooked the hon. Gentleman's Amendment. I was coming to deal with it in a moment. I was going to say that, as so often happens in these cases, I found the Liberal Amendment on this subject of goods in transit more intelligent and more sensible than the Amendment of the right hon. Gentleman. [HON. MEMBERS: "Oh."] T was just coming on to say that I am perfectly prepared to give credit to the hon. Members on the Liberal bench, that their Amendment goes some way to overcome the objection to the Conservative Amendment, which I call the difficulty of controlling legitimate as distinct from evasive goods in transit. The Liberal Amendment is more specific. It would enable one to rule out the ambiguous cases in which one did not know to what country the goods were originally consigned.

It is general Customs practice, and always has been, in this country, and, as far as I know, in all other countries, that Customs duties operate on goods in transit, that is the universal practice in our country and all countries down to date. There has been an attempt in recent years in Canada and Australia, to exclude from charge goods in transit if so defined in the kind of way the Liberal Amendment suggests, and we have examined that. But I must tell the hon. Member quite candidly that we have come to the conclusion that, although it might be possible to make that kind of exclusion in the case of Canada and Australia, where the countries from which goods are imported are far more limited, it would really not be practicable in our case, and moreover it would act against the basic principle of Government policy, which is that this surcharge should operate immediately, that it should have a quick immediate effect on all goods as from a precise, definite date. If one were to exclude goods in transit from liability to a temporary charge of this kind, there would be the further difficulty that when the surcharge was removed it would be only equitable to retain the charge in respect of goods which were then in transit.

Mr. Heath

When the hon. Gentleman says that the Government's objective is to make this surcharge effective, he presumably means keeping imports out. Goods in transit, or on order, will not be kept out by this provision. They are bound to come in in the same way. All that they do is bear the surcharge, which is a burden on industry and on the whole working of the economy. The method suggested by the Liberal Amendment is one practical way of identifying them, but would not the hon. Gentleman also agree that now, one month after the date of the imposition of this surcharge, there can be very few cargoes in the world which can be diverted? They are all here now.

It is only a question of looking at the bills of lading and seeing that the date was 27th October, or earlier, to distinguish them. This does not require great administrative machinery, or anything like that. It can be done easily at the ports.

Sir E. Fletcher

The right hon. Gentleman made three points. He said, quite rightly, that if the surcharge bites on goods in transit it does not keep those goods out. Quite obviously it does not, but it may indirectly limit the quantum of other goods which are coming in subsequently. I should have thought that that was obvious.

The whole intention of the surcharge is to limit the totality of goods which come in. If one makes an exemption in respect of these specific goods, one gives an unfair advantage to others. I hope that the right hon. Gentleman will bear in mind that during this debate three hon. Members on the benches opposite have pointed out that many importers have been forestalling the operation of this surcharge, because they anticipated it, and have been trying to send goods—some of which are now in transit—to this country before the introduction of the surcharge. It would be morally wrong to give those importers a benefit over those who have not made imports into this country.

Mr. Peter Emery

The hon. Gentleman said that he saw great difficulties in being able to define this. He said that on the whole he could not see an administrative way of getting round it. Would he be willing to have discussions with the professional bodies dealing with this matter? They believe that they can quite definitely and objectively define this. Before he forces this matter through, would he be willing to do what the Board of Trade has not so far done, namely, have discussions with the professional bodies affected to see whether they can advise him on the method of applying this?

Sir E. Fletcher

I am not prepared to give that undertaking because, as I pointed out, these administrative difficulties are only one of the various objections to the acceptance of the Amendment. The Board of Trade and the Customs have been into this matter very thoroughly already.

I pass briefly to the other Amendment which we are discussing, namely, the one dealing with contracts which have been entered into. Here I must refer to the speech of the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), be- cause there seems to have been a good deal of confusion about the operation of the Act of 1901.

In this connection I would refer to the valuable observations, as I thought them, of my hon. Friend the Member for Bethnal Green (Mr. Holman). He pointed out that there may be contracts of three different kinds. There may be a contract in which it is provided that all Customs duties are for the buyer's account. In that case no problem arises. There may be contracts in which that is not provided. In answer to the hon. Member for Walsall, South, as I told him at the time, the Act of 1901—which has been in operation now for 63 years—provides that whenever there is a new imposition of Customs duty the seller, in the absence of an agreement to the contrary, is able to add that additional Customs duty in his price to the buyer, and the whole intention of subsection (8) is to go on to provide that even if there is an agreement to the contrary that shall not operate, and the seller can still pass on that liability to the buyer.

The hon. Member for Reading (Mr. Peter Emery) took exception to that. He took an exactly contrary view to that of his hon. Friend the Member for Walsall, South. What the Government have done in this respect is to have regard—as I am sure the right hon. Member for Bexley (Mr. Heath) would wish them to do—to the wishes of some E.F.T.A. and Commonwealth exporters. Subsection (8), which the right hon. Member for Taunton wishes to remove, is introduced for the specific purpose of protecting those E.F.T.A. and Commonwealth exporters who otherwise might have had a legitimate grievance in this respect.

Mr. William Baxter (West Stirlingshire)

I am most interested in that part of my hon. Friend's speech dealing with passing on to the consumer any increase in costs caused by an alteration in the import duty, irrespective of the contents of the contract. If, perchance, a retailer passed that on to another contracting company which was under a set-price contract, say, with a local authority, could it then get a nullification of its contract, if it were on a fixed-price basis?

Sir E. Fletcher

In the ordinary case, if there is an existing contract the Act of 1901 enables a seller in this country to pass on the surcharge to a buyer in this country.

I want to conclude by dealing with the cases raised by a number of hon. Members about the difficulties which they say arise where specific pieces of machinery have already been imported, or have been agreed to be imported, under contract. Everyone recognises that there may be difficulties for various importers where they have committed themselves to buying machinery, but it is relevant to remind the Committee that it is largely because there has been such an excessive importation of machinery in recent months that these steps are necessary, in order to correct our balance of payments. I would add that importers of machinery, as distinct from importers of raw material, will get the benefit of the initial allowances and the investment allowances, as a result of which they will not suffer to anything like the extent of the 15 per cent. surcharge. The figure in their case will be substantially reduced.

For all these reasons I must advise the Committee, consistent with the provisions of the Bill, that the Amendments should be resisted.

11.0 p.m.

Mr. Prior

I want to take up the time of the Committee for only one minute. The hon. Gentleman could have given me a chance to make my few comments before he got up, as I have listened to the whole of this debate so far. I want to make a constituency point. This point backs up the speech of my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), because I have details of a case where a contract was entered into on 5th October with a firm in Norway to buy 2,000 tons of fertiliser. This was at a fixed price, duty free at an East Coast port.

According to Clause 3(8), the extra 15 per cent. surcharge can now be passed on in the original price—it was £23 10s. a ton and it now becomes £26 a ton or thereabouts. But this supposes that this company which has imported this fertiliser can pass it on in turn to its customers.

Sir Eric Fletcher

If there has been a contract pre-existing he can, under the 1901 Act.

Mr. Prior

In agriculture, it is quite usual for no contract as such to be entered into. So this firm has now agreed to import 2,000 tons, it has to pay the extra duty, and it stands no chance at all of being able to pass this duty on to the farming community, because they can obtain at least part of the fertiliser they want at a lower price from the British market.

The object of the surcharge is to keep down imports and increase home production thereby. At the moment, we are producing, flat out, all the nitrogenous fertiliser we can, and therefore all we are doing by putting on this surcharge is either to cause this firm the grave embarrassment of having to pay the extra duty and hold supplies it cannot sell or we are denying to the farming community the chance to buy this fertiliser and improve their production. That is the sort of case which could be dealt with under one of these Amendments.

If we are to have no remission in the case of contracts entered into before 26th October, then this firm will be placed in very serious trouble. Ruin, as my right hon. Friend said in opening this debate, is not too strong a word in a case like this. The Government have not had any speeches from their own back benches, and hon. Members opposite have made no constituency points. That is very strange. I cannot believe that we are the only people with constituency points. There must be many hon. Members opposite who have them. This is a serious matter, and I hope that the Government will look at this again to see whether they cannot make provision, which is covered by one of our Amendments, to put this matter right.

Mr. G. B. Drayson (Skipton)

I am very sorry that the Minister without Portfolio has not been able to distinguish in these Amendments the difference between materials in transit and orders for machinery to increase the efficiency of firms which have ordered machinery from overseas because they have not been able to get comparable machines in this country. If there were anybody on the Government Front Bench from the Board of Trade, they would know that I have been in correspondence with that Department on the subject of machinery ordered by a firm in my own constituency which wishes, naturally, to increase its efficiency and production and to increase its exports as well.

These machines are subject to a contract which has been entered into over many months, after very careful investigation as to whether the appropriate machines were available in this country. I wish that the Minister would look at this whole matter again, because what the Government are doing is taxing efficiency. We do not claim that we have machines manufactured in this country which will do every job, and, therefore, we are relying considerably on the export of our machine tools overseas, and there is a give and take in the machine tool industry. Some firms overseas may have machines which we need, while we have machines which companies overseas wish to import from us. Where a contract is in existence—and the Minister specifically referred to contracts in existence—it should not be impossible to differentiate and make an exception so that where a machine has been ordered and the necessary financial arrangements entered into, a remission of duty should take place.

Mr. du Cann

I should like, first, to thank the Minister without Portfolio and the whole Committee for the kind things they have said about me this evening.

There is overwhelming evidence, from the admirable speeches made by my hon. Friends—including my hon. Friend the Member for Yarmouth (Mr. Fell), my hon. Friend the Member for Reading (Mr. Peter Emery), my hon. Friend the Member for Lowestoft (Mr. Prior) and my hon. Friend the Member for Skipton (Mr. Drayson)—that the situation which the Government have themselves created is thoroughly unfair in respect of these two categories. There is further overwhelming evidence to show that there will be no saving in imports because the Government are, apparently, unwilling to accept our reasonable Amendment. There will be no saving in foreign currency, an unnecessary increase in

costs and a sense of injustice throughout industry.

The whole of industry will be bitterly disappointed by the Minister's speech. We entirely appreciate that there might be difficulties over the drafting of the Amendment, but I pointed out at the outset that we were not particularly wedded to the wording. We are concerned only that this injustice be removed. Hard cases make bad law. I was weaned on that phrase and I dare-say the Minister was, too. I beg him to remember it.

We appreciate that it may not be possible for the Chancellor of the Exchequer to be present tonight. That may create certain difficulties for the Committee as a whole, but the absence of a Board of Trade representative, certainly for most of this discussion, cannot be so easily excused. I hope, therefore, that the Minister without Portfolio will bring what has been said in this debate to the notice of the Chancellor, and perhaps the Government may decide to table an Amendment to deal with the position on Report because, with the greatest respect for the Minister, I positively refuse to believe that the matter cannot be dealt with.

To hear the Minister say that it was not practical to deal with the matter surprised me. Frankly, I was shocked to hear the word "impossible" come from the lips of a Minister of Her Majesty's Government on a question relating to righting an injustice. [Interruption.] Hon. Members opposite below the Gangway should realise that there is an injustice. As we have pointed out, some manufacturers, agents and others are facing ruin. It is right that we should take this matter seriously and I must advise my hon. Friends to vote in favour of the Amendment.

Question put, That the proposed words be there inserted:—

The Committee divided: Ayes 160, Noes 187.

Division No. 20.] AYES [11.9 p.m.
Agnew, Commander Sir Peter Bennett, F. M. (Torquay) Blaker, Peter
Alison, Michael (Barkston Ash) Berkeley, Humphry Bowen, Roderic (Cardigan)
Astor, John Berry, Hn. Anthony Box, Donald
Atkins, Humphrey Bessell, Peter Boyd-Carpenter, Rt. Hn. J.
Awdry, Daniel Biffen, John Braine, Bernard
Baker, W. H. K. Biggs-Davison, John Brewis, John
Barlow, Sir John Bingham, R. M. Brinton, Sir Tatton
Batsford, Brian Black, Sir Cyril Bromley-Davenport,Lt.-Col.Sir Walter
Brooke, Rt. Hn. Henry Heath, Rt. Hn. Edward Morrison, Charles (Devizes)
Brown, Sir Edward (Bath) Hendry, Forbes Murton, Oscar
Buchanan-Smith, Alick Higgins, Terence L. Nicholls, Sir Harmar
Buck, Antony Hill, J. E. B. (S. Norfolk) Noble, Rt. Hn. Michael
Butcher, Sir Herbert Hirst, Geoffrey Nugent, Rt. Hn. Sir Richard
Carlisle, Mark Hornby, Richard Onslow, Cranley
Carr, Rt. Hn. Robert Hornsby-Smith, Rt. Hn. Dame P. Osborn, John (Hallam)
Channon, H. P. G. Howard, Hn. G. R. (St. Ives) Osborne, Sir Cyril (Louth)
Chataway, Christopher Howe, Geoffrey (Bebington) Page, John (Harrow, W.)
Chichester-Clark, R. Hunt, John (Bromley) Page, R. Graham (Crosby)
Clark, William (Nottingham, S.) Irvine, Bryant Godman (Rye) Pickthorn, Sir Kenneth
Cooke, Robert Jenkin, Patrick (Woodford) Pitt, Dame Edith
Cooper-Key, Sir Neill Johnston, Russell (Inverness) Pounder, Rafton
Crawley, Aldan Jones, Arthur (Northants, S.) Powell, Rt. Hn. J. Enoch
Cunningham, Sir Knox Jopling, Michael Prior, J. M. L.
Curran, Charles Kaberry, Sir Donald Pym, Francis
Currie, G. B. H. Kershaw, Anthony Rawlinson, Rt. Hn. Sir Peter
Davies, Dr. Wyndham (Perry Barr) Kilfedder, James A. Redmayne, Rt. Hn. Martin
d'Avigdor-Goldsmid, Sir Henry Kimball, Marcus Rees-Davies, W. R.
Dean, Paul King, Evelyn (Dorset, S.) Roberts, Sir Peter (Heeley)
Deedes, Rt. Hn. W. F. Kitson, Timothy Roots, William
Douglas-Home, Rt. Hn. Sir Alec Lambton, Viscount Russell, Sir Ronald
Drayson, G. B. Lancaster, Col. C. G. Scott-Hopkins, James
du Cann, Edward Legge-Bourke, Sir Harry Sharples, Richard
Eden, Sir John Litchfield, Capt. John Spearman, Sir Alexander
Emery, Peter Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield) Stainton, Keith
Fell, Anthony Lloyd, Ian (P'tsm'th, Langstone) Stanley, Hn. Richard
Fletcher-Cooke, Charles (Darwen) Lloyd Rt. Hn. Selwyn (Wirral) Summers, Sir Spencer
Forrest, George Longbottom, Charles Taylor, Edward M. (G'gow, Cathcart)
Foster, Sir John Loveys, Walter H. Thompson Sir Richard (Croydon,S.)
Fraser,Rt.Hn.Hugh(St'fford & Stone) Lubbock, Eric Tilney, John (Wavertree)
Fraser, Ian (Plymouth, Sutton) Lucas-Tooth, Sir Hugh Turton, Rt. Hn. R. H.
Gammans, Lady Mackenzie, Alasdair (Ross&Crom'ty) van Straubenzee, W. R.
Giles Rear-Admiral Morgan Mackie, George Y. (C'ness & S'land) Walters, Dennis
Gilmour, Sir John (East Fife) McNair-Wilson, Patrick Ward, Dame Irene
Goodhew Victor Maginnis, John E. Weatherill, Bernard
Grant, Anthony Marten, Neil Whitelaw, William
Griffiths, Peter (Smethwick) Mathew, Robert Wilson, Geoffrey (Truro)
Grimond, Rt. Hn. J. Mawby, Ray Wolrige-Gordon, Patrick
Hall, John (Wycombe) Maydon, Lt.-Cmdr. S. L. C. Wood, Rt. Hn. Richard
Hall-Davis, A. G. F. Meyer, Sir Anthony Woodnutt, Mark
Hamilton, Marquess of (Fermanagh) Mills, Peter (Torrington) Wylie, N. R.
Harrison, Col. Sir Harwood (Eye) Miscampbell, Norman Younger, Hn. George
Hawkins, Paul Mitchell, David
Hay, John Monro, Hector TELLERS FOR THE AYES:
Heald, Rt. Hn. Sir Lionel Morgan, W. G. Mr. McLaren and Mr. More.
Abse, Leo Delargy, Hugh Hamling, William (Woolwich, W.)
Albu, Austen Dell, Edmund Harper, Joseph
Alldritt, W. H. Dempsey, James Harrison, Walter (Wakefield)
Armstrong, Ernest Diamond, John Hayman, F. H.
Atkinson, Norman Dodds, Norman Hazell, Bert
Bagier, Gordon A. T. Doig, Peter Heffer, Eric S.
Barnett, Joel Driberg, Tom Holman, Percy
Baxter, William Duffy, Dr. A. E. P. Hordern, Peter
Beaney, Alan Dunn, James A. Houghton, Rt. Hn. Douglas
Benn, Rt. Hn. Anthony Wedgwood Dunnett, Jack Howarth, Harry (Wellingborough)
Bennett, J. (Glasgow, Bridgeton) Edwards, Rt. Hn. Ness (Caerphilly) Howarth, Robert L. (Bolton, E.)
Bishop, E. S. Edwards, Robert (Bilston) Hoy, James
Blackburn, F. English, Michael Hughes, Emrys (S. Ayrshire)
Blenkinsop, Arthur Ennals, David Hunter, Adam (Dunfermline)
Boardman H. Ensor, David Hunter, A. E. (Feltham)
Bowden, Rt. Hn. H. W. (Leics S. W.) Fernyhough, E. Irving, Sydney (Dartford)
Boyden, James Finch, Harold (Bedwellty) Jackson, Colin
Braddock, Mrs. E. M. Fitch, Alan (Wigan) Janner, Sir Barnett
Bradley, Tom Fletcher, Sir Eric (Islington, E.) Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)
Bray, Dr. Jeremy Fletcher, Ted (Darlington) Jones, Dan (Burnley)
Brown, Hugh D. (Glasgow, Provan) Fletcher, Raymond (Ilkeston) Jones,Rt.Hn.SirElwyn(W.Ham,S.)
Brown, R. W. (Shoreditch & Fbury) Foley, Maurice Jones, J. Idwal (Wrexham)
Buchan, Norman (Renfrewshire, W.) Foot, Michael (Ebbw Vale) Jones, T. W. (Merioneth)
Buchanan, Richard Fraser, Rt. Hn. Tom (Hamilton) Kelley, Richard
Carmichael, Neil Freeson, Reginald Kenyon, Clifford
Carter-Jones, Lewis Galpern, Sir Myer Kerr, Mrs. Anne (R'ter & Chatham)
Coleman, Donald Garrow, A. Lawson, George
Crawshaw, Richard Ginsburg, David Leadbitter, Ted
Cullen, Mrs. Alice Gourlay, Harry Ledger, Ron
Dalyell, Tam Gregory, Arnold Lever, L. M. (Ardwick)
Davies, G. Elfed (Rhondda, E.) Griffiths, David (Rother Valley) Lewis, Ron (Carlisle)
Davies, Harold (Leek) Hale, Leslie Lomas, Kenneth
Davies, Ifor (Gower) Hamilton, James (Bothwell) Loughlin, Charles
Davies, S. O. (Merthyr) Hamilton, William (West Fife) Mabon, Dr. J. Dickson
McBride, Neil Palmer, Arthur Swain, Thomas
MacDermot, Niall Pargiter, G. A. Swingler, Stephen
McGuire, Michael Pavitt, Laurence Symonds, J. B.
McInnes, James Pentland, Norman Thomas, George (Cardiff, W.)
McKay, Mrs. Margaret Probert, Arthur Thomas, Iorwerth (Rhondda, W.)
MacKenzie, Gregor (Rutherglen) Redhead, Edward Thomson, George (Dundee, E.)
MacMillan, Malcolm Rhodes, Geoffrey Tinn, James
MacPherson, Malcolm Richard, Ivor Tuck, Raphael
Mahon, Peter (Preston, S.) Roberts, Albert (Normanton) Urwin, T. W.
Mahon, Simon (Bootle) Roberts, Goronwy (Caernarvon) Varley, Eric G.
Mallalieu,J.P.W.(Huddersfield,E.) Robertson, John (Paisley) Wainwright, Edwin
Manuel, Archie Rose, Paul B. Walden, Brian (All Saints)
Mapp, Charles Ross, Rt. Hn. William Walker, Harold (Doncaster)
Mikardo, Ian Rowland, Christopher Wallace, George
Millan, Bruce Sheldon, Robert Warbey, William
Miller, Dr. M. S. Shore, Peter (Stepney) Watkins, Tudor
Milne, Edward (Blyth) Short,Rt.Hn.E.(N'c'tle-on-Tyne,C.) White, Mrs. Eirene
Molloy, William Short, Mrs. Renée (W'hampton,N.E.) Whitlock, William
Morris, Charles (Openshaw) Silkin, John (Deptford) Wilkins, W. A.
Murray, Albert Silkin, S. C. (Camberwell, Dulwich) Williams, Alan (Swansea, W.)
Neal, Harold Silverman, Julius (Aston) Williams, Mrs. Shirley (Hitchin)
Newens, Stan Silverman, Sydney (Nelson) Williams, W. T. (Warrington)
Noel-Baker, Francis (Swindon) Slater, Mrs. Harriet (Stoke, N.) Willis, George (Edinburgh, E.)
Norwood, Christopher Slater, Joseph (Sedgefield) Wilson, William (Coventry, S.)
Oakes, Gordon Small, William Winterbottom, R. E.
Ogden, Eric Snow, Julian Woodburn, Rt. Hn. A.
O'Malley, Brian Solomons, Henry Woof, Robert
Orme, Stanley Spriggs, Leslie
Page, Derek (King's Lynn) Summerskill, Dr. Shirley TELLERS FOR THE NOES:
Mr. McCann and Mr. Grey.
Mr. Geoffrey Lloyd

I beg to move Amendment No. 23, in page 5, line 6, at the end to insert: (4) Duty under section 3 of this Act shall not be charged on goods which, on 26th October 1964, were exempted from duty by Treasury Direction under section 6 of the Import Duties Act 1958 or on goods which may be so exempted at a subsequent date.

The Deputy-Chairman

I suggest that it would be convenient to discuss with this Amendment Amendment No. 113, in page 5. line 6, at the end to insert: (4) Duty under section 3 of this Act shall not be charged on goods which, on 26th October 1964, were exempted from duty under sections 3(6) and 13 of the Import Duties Act 1958.

Mr. Lloyd

Yes, Sir Samuel.

I shall develop the case for this Amendment briefly. The purpose is to exempt from the surcharge a very special class of imports. In the first place, they are not obtainable in this country, and, in the second place, they have to be exempted by the action of the Government themselves. Not only that, but the whole operation is very closely restricted by statute. The three classes of goods concerned are mentioned in the Fourth Schedule to the Import Duties Act, 1958, and they comprise only certain types of machinery, scientific instruments and organic chemicals.

It is not mandatory on the Treasury to exempt goods of this type from duty. The Treasury has to take action only if

it considers it desirable, and the onus of proof is firmly upon those who make application. Moreover, the application has to be made not in respect of classes of goods but in respect of specific importations. Thus, the Treasury is able to examine the argument in regard to specific importations coming within the classes covered by the Schedule.

It will be seen, therefore, that we are concerned with a very highly restricted type of imports which have received, so to speak, a certificate from the Treasury, on the advice no doubt of the Board of Trade, because they are highly desirable for this country and are, in fact, excused ordinary duty. I have already mentioned the formal position, and the Committee will understand how restricted it is, and how, furthermore, it is completely within the control of the Government. I should like to give one example of the type of goods dealt with in this way. They are highly specialised electronics items, some used by industry, and some in university laboratories.

These are goods which our own country is very good at producing—that may be said—but we do not produce every kind. Some of our products are better in this field than any in the world, but sometimes we have to import—there is no other expedient—and the Government are always the judge. We feel that the surcharge, as it has been explained today, is certainly not appropriate for this very special class of import, over which the Government maintain full control. I ask that this Amendment, in the interests of a very special class of goods, should be favourably considered.

Mr. Humphrey Atkins (Merton and Morden)

At this hour I will very briefly support this Amendment and draw the attention of the Committee to five particular items which have come to my notice. They were ordered from abroad and are due to arrive here within the next few months, and in every case the Government has examined the application for free admission and in every case has agreed that these items are so essential that they should be allowed in without any duty.

I want to point out to the Committee that this is something which has already happened. These items are on order and I suggest that, since these particular items of which I am speaking—and no doubt, many others like them—have already been identified by the Government and licences granted for their admission, there is no case at all for charging the extra 15 per cent. surcharge. If the Government persist, it will have no effect on the delivery, but will simply add to the cost of manufacture and production in this country for the people who buy the completed articles.

It has already been admitted by the Government in the action they have taken so far that these goods are so essential for us to have that they are being allowed into this country duty-free. I am not talking of minor pieces of machinery. What I have in mind are items all concerned with the printing trade and they amount to a value of about £½ million. Considerable sums are involved and the only possible effect of charging the 15 per cent. duty on these items will be to increase production costs. It surely cannot be the Government's idea to load British industry with unnecessary burdens.

The Government want to restrict imports, but since these items about which I am speaking are so readily identifiable, and since the Government admit that they are so essential, and they are bound to come here in any case, then I submit that my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) has a strong case for arguing that the surcharge should not be applied to goods in this very narrow category.

Mr. MacDermot

The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and the hon. Member for Merton and Morden (Mr. Atkins) have urged this Amendment with brevity and persuasion. I shall try to emulate their brevity to make up for the length of my Second Reading speech.

As they have pointed out, there is under the Import Duties Act, in the Fourth Schedule, a list of classes of goods which may be exempted by Treasury direction from the protective duties. What is being urged is that we should apply a similar exemption to this duty for any goods which are covered by such a direction. I think we can go some way to meet the hon. Members, but not all the way, as I shall show. On the face of it, there is nothing illogical in refusing to apply to a temporary and non-protective duty a carefully selected list of exemptions from a permanent protective duty. That is what this list is.

The list includes aircraft and spare parts and equipment for them which are intended to be used in maintaining overseas services, machinery, certain optical and scientific instruments and apparatus, dyestuffs, articles for test and examination with a view to promoting or improving the manufacture in the United Kingdom of comparable articles intended to be used non-commercially in scientific research or for the promotion of learning, of art, or of sport. As hon. Members will see, it is a very varied list.

Representations have been made from many quarters, including the F.B.I., on the lines of these Amendments. We have considered them very carefully, but point out that the reliefs given under the Act do not cover all types of machinery and other equipment used in machinery, and are limited in their scope partly from considerations of what would be protective criteria laid down under the Act and partly from practical considerations and special arrangements agreed with the interested parties. As an example, the remission is not granted to machine tools. I think hon. Members will agree that a remission system which has only limited application and is automatically tied to protective and other criteria would be inappropriate for this new charge, which is temporary, which is intended purely for balance of payments purposes, and which—as we have repeated, I fear ad nauseam—must be defensible as being non-discriminatory and non-protective in character.

To apply a non-availability test only to these goods which happen to be covered by the protective duty system would be indefensible. To try to apply them to the whole field of plant and machinery and that of semi-manufactured goods and processed materials would be unacceptable on policy and practical grounds, indeed it would undermine the whole basis of the charge.

However, we have looked very carefully at the list and we find that there are certain classes in that list which we think we can make the subject of exemption without offending against the general principles on which we have sought to draw the line for this charge. These will be the subject of Amendments which will be moved at a later stage. They cover the categories of goods, firstly parts of aircraft where they are to be parts of large aircraft of a kind already exempt with a maximum total weight exceeding 18,000 lb. This is a corollary of the removal of large aircraft as announced by my right hon. Friend the Chancellor of the Exchequer at an earlier stage.

Secondly, we find that articles imported for non-commercial purposes and intended to be used in scientific research or for purposes connected with the advancement of any branch of learning or art or promotion of sport are again of a type which we think we can legitimately exempt. To do so would accord with our obligation under the U.N.E.S.C.O. Agreement not to charge for goods which are for educational and research purposes and for non-commercial purposes.

This is as far as we can go without undermining the whole basis in principle of the distinction which we sought to draw.

I hope that for these reasons the right hon. Member will not feel it necessary to press the Amendments.

11.30 p.m.

Mr. du Cann

I wonder if I could just say this. I listened with some care and attention to what the Financial Secretary had to say, and I am sure we are all grateful to him for going some part of the way to meet us.

What we shall plainly require to do, I think, is to examine his words in the cold light of dawn, on the one hand, and to examine his Amendments, on the other.

It occurred to me in listening to him that in fact the list of exemptions he was proposing to deal with would in truth be rather narrow. If that is the case, then I must tell him in advance that my right hon. and hon. Friends and I would be far from satisfied. As my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and my hon. Friend the Member for Merton and Morden (Mr. Atkins) made clear, and this surely is a good point, it must be logical and reasonable for us to suggest that categories of goods which fall for exemption under the Import Duties Act, 1958, should be exempted under this particular head of surcharge.

Whatever is the sense of one Act of Parliament saying "No duty" and another Act of Parliament saying You must pay duty"? This seems very plain to us.

I do not wish to pursue the matter now, but we shall have to look at the Amendments which the Financial Secretary is proposing to table. We are grateful for his sympathetic attitude to the matter, but we think that there is a very large number of categories of goods here which could justifiably be regarded as being proper exemptions under the Act, avid we must inevitably—and I hope the Financial Secretary will understand my putting it in this way—reserve our right if we are not satisfied with the Amendments he puts forward, to table further Amendments ourselves.

Mr. Geoffrey Lloyd

In view of the conciliatory attitude of the hon. and learned Gentleman, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Mr. Diamond

I beg to move, That the Chairman do report Progress and ask leave to sit again.

I do this in view of the very conciliatory spirit which is abroad, and the remarks of the right hon. Member for Taunton (Mr. du Cann) that he would wish to examine certain things in the cold light of dawn, from which I take it that it was implicit in his remarks that a little sleep between now and dawn would not be harmful to his examination.

Mr. Heath

We have made very considerable progress today on this Bill. There have been some long and detailed discussions, but I think that progress might have been easier if it had been possible for one of the many Board of Trade Ministers to be present during our debates. I hope that tomorrow, when we come to the Schedule, the Leader of the House will be able to arrange that one of the five Board of Trade Ministers is here. After all, the Board of Trade is becoming a smaller and smaller Department, but it is having more and more Ministers. It would help if we had one of them here to assist us in the matters we are discussing.

The Financial Secretary seemed to be going some way to meeting us on the last point, but I am not sure that the Government have gone very far. They are going to put some Amendments on the Paper, and then we can consider them, but I hope that the Financial Secretary or the Board of Trade Ministers will be able to help us tomorrow when we come to the details of the Schedule.

Question put and agreed to.

Committee report Progress to sit again Tomorrow.