§ Considered in Committee under Standing Order No. 69.
§ [Sir DENNIS HERBERT is the Chair.]
Motion made, and Question proposed,
That it is expedient to amend the Overseas Trade Acts, 1920 to 1930, by extending to the thirty-first day of March, nineteen hundred and forty, the period within which new guarantees may be given under those Acts in connection with export transactions, and by extending to the thirty-first day of March, nineteen hundred and fifty, the period during which guarantees so given may remain in force."—(King's Recommendation signified.)—[Lieut.-Colonel colville.]
§ 8.45 p.m.
§ Sir GEORGE GILLETT
I should like to ask whether in the Bill that will be introduced on this Financial Resolution there will be any Amendment with regard to the Export Credits Guarantee Department. I have always wished that when the period was being extended advantage might be taken of such a Bill to extend the valuable benefits that industry has obtained for the purposes of their 1755 export trade by means of the Export Credits Guarantee Department. I never could understand why it is limited to our export trade. I would remind the Committee that in the earlier stages, when the first scheme of this kind was introduced, it came in among a number of other Measures with the object of relieving unemployment. The scheme has been gradually enlarged and has become a permanent factor and seems likely to continue not merely for giving help to the unemployed but to help industry in a very direct and practical way.
I should like to congratulate my hon. and gallant Friend the Secretary of the Overseas Trade Department on the innovation that has been made in regard to guarantees that are now being given, not for special transactions brought forward by firms, which they specially wished to secure because they are rather doubtful whether the payment will be made when it becomes due, but under which the Department is prepared to enter into an arrangement with firms practically guaranteeing 75 per cent. of the whole of the export credit. This new innovation is one which ought to be more widely known among business men. When we consider the great difficulties that industry has to-day with its export trade, not only in regard to the question of exchanges but the financial stability of the firms with which the British houses have been doing business on the Continent, it is a great pity that this branch of the Overseas Trade Department is not more widely used. In that respect I should like to suggest to my hon. and gallant Friend that it might be possible to advertise rather more largely than the Department are doing at the present time. I notice in the statement of accounts that a sum of about £1,300,000 was transferred to the general funds of the nation from the Export Credits Department. A few thousand pounds from that large sum might very well have been used in making the work of the Department more widely known. I wish the Minister could have persuaded the Treasury to devise a financial statement about his Department so as to make its work absolutely distinct, and enable those interested in the Department to see what the exact position is.
Perhaps I might explain very briefly what happens now under the rules laid 1756 down by the Treasury, which virtually ensure the payment of certain liabilities. The firms pay certain premiums and those premiums, which amount to a considerable sum, are taken at the end of the financial year by the Treasury and used in the general cash resources of the nation, the Treasury on behalf of the nation taking the liability that may sometime accrue through the failure of the overseas importer to meet the payment when it becomes due. In one year you may get a seemingly large inflow of money from the Department. I submit that the premiums ought to be set aside for the purpose of meeting any deficit that may accrue eventually. At the present time we have a system of accounts which the ordinary man in the street would find it very difficult to follow. Anyone interested in the Department hardly knows what is going on. I cannot help thinking that it is a great pity that the financial statement has to be made on those lines. If my hon. and gallant Friend could persuade the Treasury to allow us to have this Department treated in the same way that any financial concern would treat payments in and out of that kind, I think it would be for the general advantage of those who are interested in the work. I am very glad that the Government are going to continue the Department for another five years. I only hope that its very valuable work will become much more widely known in the country and that many more firms and business men will take advantage of it.
§ 8.50 p.m.
§ Lieut.-Colonel J. COLVILLE (Secretary, Overseas Trade Department)
This Resolution does not ask the Committee to approve any further expenditure of money, but to agree to the introduction of a Bill which will extend the powers conferred upon the Board of Trade by the Overseas Trade Acts, 1920 and 1930, for a further period of five years. A White Paper has bean available since an earlier hour of to-day explaining briefly the reason for the introduction of this Financial Resolution. The Overseas Trade Acts empower the Board of Trade, with the consent of the Treasury and after consultation with an Advisory Committee appointed for the purpose, to give guarantees in connection with the export of goods wholly or partly manufactured in the United Kingdom, other than muni- 1757 tions of war. They contain a proviso that the amount of guarantees outstanding at any time shall not exceed £26,000,000. It is not proposed to alter that limit, which has, in fact, never been approached.
The sum required to finance the Department's operations is voted annually by the House, and I would draw the attention of hon. Members to the fact that for the fourth year in succession we have presented an estimate for a token sum, the receipts from premiums and elsewhere having been sufficient to cover our expenses. There is a widespread belief that the Department exists mainly to finance business with Russia, and that the fact that this Financial Resolution is moved now shortly after the conclusion of the Russian Trade Agreement might suggest that these two things have some connection with each other. That is not the case. The Department does business all over the world, and it is a coincidence that the Financial Resolution should arise at this time. I mention that fact to avoid any misunderstanding. The Russian Trade Agreement stipulates that business with Russia shall be considered for facilities on the same grounds as trade with other countries, each application being considered on commercial and financial grounds only.
Guarantees are given on the recommendation of an Advisory Committee, of experts in banking, insurance and industry, and the Government, in common with its predecessors owe a great debt to the disinterested skilful and arduous work performed by the committee. Such complaints as are made against the committee are that they take too conservative a view of their responsibilities. This may be due in part to a misunderstanding as to the objects of the scheme. It is not a relief scheme, and the committee are not concerned with employment except in so far as it is promoted by the encouragement of normal trading. In this respect their policy is entirely consistent with that of His Majesty's Government, which, as the Prime Minister reminded the House last week, is directed to the restoration of normal industrial activity.
While the Committee have set their faces against the use of these facilities for wild cat schemes, they have recommended the Department to go to what they have regarded as the utmost limits 1758 of prudence in giving guarantees for reasonably sound business. During the last seven years the guarantees given have covered £47,000,000 worth of exports. Up to the end of December last these guarantees had involved payment of about £350,000, and nearly £100,000 has been recovered from defaulters. The commercial accounts of the Department up to the 31st March, 1933, will be found in the annual volume of trading accounts which has just been published. This shows that as regards the current scheme, which began under the auspices of the Executive Committee on 1st April, 1930, the Committee have been able to show a balance in hand of £1,359,000, which represents a trading result of which I think the Department have no reason to be ashamed. Having regard to the fact that the outstanding liabilities at that date were some £8,000,000, I do not think that we have been excessive in our caution in charging a reasonable premium in order to have some funds in hand. I appreciate what the hon. Member for Finsbury (Sir G. Gillett) has said, and I will bear in mind the points he has raised. I think that the House is in agreement with him when he says that the work of the Department should be more widely known because the help it can give to our export trade is considerable. We are now proposing that it shall go on for a further period of five years so that its work may be continued.
§ Resolution to be reported To-morrow.