HC Deb 19 March 1934 vol 287 cc1011-4

10.56 p.m.


I beg to move, in page 1, line 13, to leave out "fifty" and to insert "forty-six."

I move this Amendment to give the Minister an opportunity of explaining a change which appears to have been made in the present Bill as compared with previous Measures dealing with this subject. In 1920, the Overseas Trade Bill then introduced provided for a guarantee of credits for a period of three years and thereafter, for a further period of three years, any obligations undertaken could be continued. There were subsequent renewals of that Measure. In 1930 it was again renewed and on that occasion provision was made for credit for five years and after that for an overlap of a further five years during which obligations could be liquidated. The Bill before us appears to propose an extension of credits for a period of six years and thereafter for a period of 10 years any obligations undertaken can be liquidated On the Second Reading of the Bill nothing was said about this extension of the period during which credits could be given or the much longer period given for the liquidation of obligations. Very powerful arguments are needed to justify the Committee in agreeing to this further long extension. It is not clear to me that it is not possible under this Bill as now drawn to give a credit guarantee for a period of 14 or 15 years.

The majority of these credits have, I believe, been done with Russia. The other day we had before us a Trade Agreement with Russia, and it was particularly emphasised that it was a temporary agreement. It does not seem to be suitable, if that agreement is temporary, that we should now provide for giving them credits extending even to 10 years. It is true that these credits are to be extended to other countries also but in the main these credits have not been particularly successful and it is admitted that the profit which is in the fund at the present moment almost entirely comes from the business with Russia. The main object is to give employment in this country. I think one ought to take into account the consideration that if these credits are unduly long, it seems obvious that we cannot give as much employment as we could give if the credits were for a shorter period. The total amount which the Government are authorised to guarantee is £26,000,000. If we are to give 10 years credit it is obvious that we cannot give as many guarantees as we could give if the credits were for a shorter period. That also is a thing of which, I think, notice should be taken. I want to hear what is the Government's reason for making this considerable variation from the terms of the Bill as last introduced.

11.0 p.m.

Lieut.-Colonel COLVILLE (Secretary, Department of Overseas Trade)

I should explain that the White Paper made it clear that, in point of fact, the extension of the period during which guarantees may remain in force would enable the Department to grant a longer credit than formerly. As the hon. Member has suggested, we could, under the terms of the Bill, at the present time give a credit of over 15 years. The next period would be 14 years, and then 13 years and so on. What is known as the medium term credit business is done in each case in consultation with the Treasury, and it was agreed with them that we would in no case undertake business of more than 10 years. I repeat that undertaking in the House. We wish to have during the life of the Department as extended in this Bill, the right to go up to 10 years if necessary, and I would explain why. The extent of the period covered by the guarantee asked for in the Bill is the result of overwhelming evidence that if this feature of the Department's work is to be developed, it must be in a position if necessary to guarantee credit to 10 years. It does not mean that the Department is going in for an orgy of medium-term credits or that it will guarantee large sums which will not fall due for 10 years. In these medium-term credits, payments are spread. There is usually a substantial initial payment on the placing of the order, or at least when deliveries begin, and instalments very often become due at quarterly intervals throughout the period of delivery and erection. Normally, only a small portion of the total would fall due at the end of the operation, and it must not be assumed, because the Department is seeking authority to guarantee credits for a maximum of 10 years that the maximum will be normally or very often reached.

It is our experience that foreign firms usually offer longer and more favourable terms of credit than British firms, and in many cases the facilities are offered with the help of the foreign Governments themselves. The Advisory Committee has set its face against abnormally long credits, and will do its utmost to keep the duration of the credits as short as possible, for the reasons the hon. Member has stated. In the Russian business which has been referred to, the Department had powers to give much longer credit than they gave, and since the National Government came into power no credits of more than 18 months have been given. I think it is wise that the Advisory Committee should use its discretion in this matter, and while I am grateful to the hon. Member, I hope the House will not hesitate to support the Department in giving them the power to grant credits up to 10 years should they be required. I must emphasise that the credits are not given for the benefit of the foreign borrower but of the British exporter, and the fact that the former may incidentally benefit is no reason for depriving the latter of the facilities without which it would very often be impossible for him to secure an order. I could give examples of the excellent contracts that have been secured because of the ability of the Department to guarantee occasional contracts of the long-term variety.


Are other countries giving this sort of credits?

Lieut.-Colonel COLVILLE

Yes. The schemes in other countries outbid us, and I want to say that I cannot undertake that this Department will go in for a credit competition with all the world. We want to handle our Department in a business-like manner, but we are faced with severe competition from other countries who are giving credits and greater facilities than we are.

11.7 p.m.


I have been asked to say on behalf of important interests in the City of Sheffield that I welcome the speech of the Minister, while agreeing with the general thesis of my hon. Friend the Member for Gravesend (Mr. Albery). There are important contracts pending at the moment with foreign countries which necessitate a considerable period of negotiation before they are in fact secured for this country. There are important competitive advantages enjoyed at the moment by foreign countries, but in view of the primary interests of employment for our people, which has already shown great improvement in Sheffield, we welcome the attitude of His Majesty's Government in resisting this Amendment.

Lieut.-Colonel ACLAND-TROYTE

The Minister continually referred to what the Department wants. May I ask whether this Bill represents what the Minister and the Government want?

Lieut.-Colonel COLVILLE

I should make it clear that this is a Government. Bill and has the support of the Government.


In view of the explanation of the Minister, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 2 (Short title), ordered to stand part of the Bill.

Bill reported, without Amendment; to be read the Third time To-morrow.