§ Order for Second Reading read.
§ 11.27 a.m.
§ Mr. R. S. Hudson (Secretary, Overseas Trade Department)
I beg to move, "That the Bill be now read a Second time."
When moving the Financial Resolution the other day, I gave the Committee an explanation of the reasons for which we were asking permission to introduce this Bill. I think the House will not wish me to go over that ground again. I will simply remind hon. Members that, considering the difficulties that still exist in carrying on international trade owing to the disturbed position of the world, and considering the increased use which has been made of the Export Credits Department, we are of the opinion that the time has come to regard these facilities for the British export trade as part of a permanent structure. It is for that reason that we are asking for the abolition of the existing time limit, and it is owing to the success which the Department has recently had that we are asking for the financial limit of £26,000,000 to be increased to £50,000,000. In addition to that, we propose to take advantage of the opportunity to consolidate the existing law, which is spread over a number of Statutes, and to introduce one or two small Amendments which our experience has suggested would be useful.
Clause 1 of the Bill gives us power to give guarantees, and in lines 13 and 14 the persons to whom the guarantees may be given are defined. That represents a slight change of the existing practice. At present we can give guarantees only to firms which are domiciled in this country. Difficulties have arisen in connection with the definition and in deciding where a 2333 particular firm is domiciled, and of course that has prevented us also from giving facilities to firms established in the Dominions but having branches here. The main object of the Export Credits Department is to facilitate the export of United Kingdom goods, and if they are United Kingdom goods, it does not seem to us to be of importance where the firm is established as long as the branch is here. Of course, we take great care to make inquiries regarding the standing of the firm exporting the goods and the firm to whom the goods are consigned. At the bottom of page r and at the top of page 2 of the Bill, we provide for an increase of the limit of £26,000,000 to £50,000,000.
Proviso (a) on page 2 is an innovation and enables us to give guarantees in respect of work executed outside the United Kingdom. A certain number of cases arise in which a firm can get a contract for the provision of British goods provided they carry out in the territory of a foreign country certain constructional work, and so on. Hitherto we have not been able to guarantee that expenditure. We are asking for permission to guarantee it provided that in no case expenditure outside England exceeds one-third of the price of the home-produced goods exported. Proviso (b) is also an innovation, and will enable us to cover cases where in a large consignment of British goods there are a few articles of non-British origin. What often happens is that an exporter in this country receives an order from a firm overseas for a considerable consignment of British goods, but the firm overseas also demands that he shall send certain specified goods which can only be obtained from overseas, and it is very difficult in the invoices and so on to distinguish the home-produced goods from the others. The mere fact that the consignment includes goods of foreign origin has in the past prevented us from extending cover to it. In order to get over that difficulty we are asking for additional powers, and again the Committee will notice that we have imposed a limit and that the amount of foreign goods must in no case exceed 25 per cent.
There is a slight change in Clause 2. In order to make the guarantee formally complete, it is proposed that if in a particular case there is not enough money available out of the provision voted by Parliament, the payment under the 2334 guarantee should be met from the Consolidated Fund. Clause 3 continues the existing provision that the Board of Trade shall publish quarterly a return showing the aggregate amount of the guarantees that are outstanding, but we are omitting the existing provision that there shall also be published a list of the countries to which goods have been sent. When the scheme was first started, there was a definite restriction of the countries to which it could be extended, and there was consequently some advantage in publishing a list of the countries in the case of which guarantees had, in fact, been given. That distinction has now disappeared and, practically speaking, all the countries in the world are covered. Clause 4 changes the title from Overseas Trade to Export Guarantees Act, and Sub-section (2) repeals the existing Acts to the extent specified in the third column of the Schedule.
There is one further point I will mention. In the course of the discussion on the Financial Resolution, the hon. Member for Wallsend (Miss Ward) asked me whether the time had not come when we could remove the existing administrative restriction under which the Export Credits Department is not able to give guarantees in respect of building ships in this country for owners abroad. I promised that that matter would be reconsidered. We think the time has come for that change, and I am glad to be able to tell the House and the hon. Lady that we propose to suspend that restriction. In future the Export Credits Department will agree to consider applications for guarantees in respect of the export of ocean-going ships provided that there is reason to suppose that the vessel would not be built in this country without a guarantee and, in addition, that it would be built elsewhere. This limitation will apply to ocean-going vessels which might conceivably compete with British ship-owners, but will not, of course, apply to vessels in the coasting trade, tugs and so forth. I think the House will agree that it is necessary and desirable.
The shipowners of the country have expressed some apprehension that as a result of a decision of this kind a glut of tonnage might be created with serious effects in regard to foreign competition. Of course, that is a risk, and it is in order to avoid that risk that we have put in these safeguards. In addition, in order 2335 to reassure the industry still further, I propose to increase the number of the existing advisory committee which passes these individual applications by adding thereto a leading expert of the shipbuilding interest and a leading expert of the shipowning interest and so I hope both sides of the industry will feel that their interests will be safeguarded when any particular case arises. In conclusion, I wish to repeat the warning uttered by me on the last occasion when this subject was discussed, namely, that it must not necessarily be considered certain that guarantees will be given even when the two desiderata to which I have referred are fulfilled. Of course, every individual case has to be considered on its own merits, having regard to all the relevant circumstances and, in particular, the standing and financial position of the countries conerned. I hope the House will agree that we have come to a right decision.
§ 11.38 a.m.
§ Mr. Pethick-Lawrence
When this matter came up at an earlier stage I gave the hon. Gentleman the support of Members on this side, and I propose to do the same on this ocassion. This export credits scheme is the work of all parties in this House. We have all helped to build up this system, which we believe to be beneficial to British trade. There is a considerable amount of money involved in these proposals—not as much as is involved in the Bill with which we dealt a few moments ago, but still a by no means insignificant sum. From experience of the past working of this fund, there is of course no suggestion that the money is being lost. Rather is it to be supposed that the money is being utilised for the best advantage of the country and that being so, I think the House can properly vote in favour of the Second Reading of the Bill.
The primary object of the Bill is to increase the total amount which can be used from £26,000,000 to £50,000,000. With regard to the provisos in Clause I, I think the Minister has made out his case, but these innovations must, he will, I am sure, agree, be regarded as an experiment and will, I think, want very careful watching. If it should be found that these provisions are abused or are capable 2336 of abuse, we shall expect the Minister to come to the House again for some amendment of the Measure which will prevent any abuse taking place. I understand that the change relating to the Consolidated Fund is only an added safeguard to meet the exceedingly unlikely possibility of some future Parliament repudiating the promises made at an earlier date. However unlikely that eventuality may be, if there is any advantage in having the additional security of the Consolidated Fund, I see no objection to the course proposed here.
Next we come to the question of the administration of the Measure relating to the question of the shipping industry which has been referred to by the Minister. In the previous Debate the hon. Lady the Member for Wallsend (Miss Ward) put forward a strong plea for the inclusion of shipping within the scope of the guarantees and I felt that, to a very large extent, she made out her case. I realised, however, as I am sure other hon. Members realised at the time, that there might be considerations which were not apparent then and which might make that concession undesirable. I am very glad that it has now been found possible to meet, not merely the plea of the hon. Lady but the requirements of districts all over the country where an increase of shipping will reduce unemployment and add to the trade of the country. I have not of course had time since the hon. Gentleman spoke to estimate how far the safeguards he proposes are desirable or adequate but we shall have opportunities of considering that matter later on and, speaking off-hand, what he proposes seems to be sound and advantageous. Therefore, speaking on behalf of those who sit on these benches I conclude by saying that we approve of the principles and outline of this Measure which is, I repeat, the outcome of the work not of one party, but of all parties in this House.
§ 11.42 a.m.
I welcome this Bill, and I am very glad to see that my hon. Friend has had the good sense to put all the provisions dealing with credits into one Act of Parliament. That will be a great convenience to everybody who has to deal with this question. I have only one comment to make. I am glad that the rigidity of the old Acts which limited the guarantee to the export of goods of 2337 British manufacture has been slightly relaxed by paragraphs (a) and (b) of Subsection (I) of Clause 1. The first extension is that where works or services outside the United Kingdom have to be added to the goods exported, the guarantee can still be given, provided those works and services do not exceed an amount equal to one-third of the price of the home-produced goods exported. The second extension is that a guarantee can be given in respect of mixed consignments of home and foreign goods but the guarantee shall not be given unless at least three-quarters of the price of the goods is payable in respect of the home produced goods included among them. I welcome those extensions and I venture to think that, as time goes on, further extensions may be made for the benefit of British trade generally and not only for trade in home-manufactured goods. I think, if my hon. Friend watches the operation of these extensions, he will find that the point which I have in mind might be met by giving to the very able committee which now looks after the operation of the Act, a greater degree of flexibility in regard to the extent to which these guarantees can he applied to trade generally instead of confining them to the export of British goods. With that comment I welcome the Bill.
§ 11.45 a.m.
§ Mr. Ellis Smith
As one who is associated with 12,000 men and women who are now in regular employment as a result of the facilities given under this Export Credits Scheme, I want on their behalf to welcome the increased facilities which are contained in the Bill. I understand that the main purpose of the Bill is to consolidate the existing Acts, and also to increase the amount at the disposal of the Export Credits Advisory Committee in order to enable them to give increased credits for the export or more goods from this country. In view of the policy which is being pursued in certain countries, I contend that unless this country takes steps to deal with that policy—and in my view this is one of the necessary steps to take—the equilibrium of British industry will be very vitally affected in the near future. In our correspondence this morning we had a little book published by the Ministry of Health, a book which is typical of the policy which the Ministry is now pursuing with regard to health in 2338 this country. Apart from our political ideas with regard to the present Minister of Health, there is no doubt about it that there is a growing feeling in this country among all public-spirited men and women of the need to safeguard the health of the workpeople of this country, and just as that policy has been brought up to date in this way, so I am hoping that our trade relations with other countries will also be brought up to date.
We who are relatively young have a good deal to be thankful for in regard to the way in which industry has been developed in this country, and, therefore, having regard to that, we have to be concerned about the future, because it is on the shoulders of the young people of the country that will fall the running of this country. Unless we take steps of an up-to-date, scientific character to safeguard the industries of Britain, seeing how our prestige is being deliberately undermined by certain countries, we shall not be able to hold our own in the future. I therefore welcome this Bill, because I have seen the facilities operating from the administration of this scheme. In 1930 had it not been for these facilities the probability is that where I was employed there would have been considerably more unemployed or on short time than there were, but owing to these facilities it was possible for big-scale industry in particular to obtain orders from a number of countries in the world. Although they were only just able to cover their overhead charges by running the factory on that basis, through the facilities operating under this scheme, it was possible for them to meet competition in other parts of the world and so keep their factories going.
I am very much concerned about the effect of the Schacht policy on the future of this country. There is no doubt about it that this country has not yet paid the attention to this matter which it ought to have done, and which the big industrialists in this country realise they have to do, but up to now this House has not paid sufficient attention to it. The Schacht policy in Europe in particular is undermining the future of British trade. I, therefore, welcome this Bill as being one step that will put a strengthened instrument in the hands of the Board of Trade officials to enable them to counteract to a small extent the effect of the policy to which I have just referred. Up 2339 to now it is true to say that the facilities in these Acts have only benefited the heavy industries particularly electrical engineering and turbine and locomotive manufacturing, and these are the firms which have the great monopolies. They already have the benefit of large finance companies behind them, and they are the firms which have at their disposal great credit facilities. I appeal to the Board of Trade, through the hon. Gentleman opposite, to reconsider their policy with regard to this Bill, and to see that light industry has the benefit of these facilities in the future in the same way that heavy industry has had in the past.
The old Josiah Wedgwoods were pioneers in trade in this country, and in just the same way the young Wedgwoods, whom I have met recently, are pioneers also. They were very progressive-minded men, and they are going to embark upon large-scale capital expenditure, pioneering in the same way as the old Wedgwoods did for the purpose. of manufacturing on a large scale, and I want the facilities in this Bill to be used in order to encourage progressive-minded people in industry so that they can be pioneers in the same way as such people were 100 or 150 years ago. The progressive minded men in industry at this time are not able to take advantage of credit facilities because the big business companies in London will not place at the disposal of the light industries the financial facilities with which they help the heavy industries, because in the heavy industries they get a relatively big return and a relatively earlier return, and, therefore, the only hope for the light industries is that the same facilities should be placed at their disposal.
Take the coal trade. It is generally acknowledged that one of the main reasons why we have certain depressed areas in this country is the loss of our export trade in coal. I have been looking up some figures during the past week, and I find that we are increasing our imports of coal from Germany, the reason for that being mainly that the German coal trade is very highly syndicated. I want the coal trade of this country to have the benefit of the facilities in this Bill, which they have not had in the past. It is well known that Germany is pursuing a deliberate policy of this kind. The coal industry in this country is not yet syndicated to the same extent, but if the coal industry in certain 2340 areas could have a guarantee that they could have these credits placed at their disposal and could be encouraged to export coal in large bulk as a result of these facilities, the export coal trade would be considerably increased. The same kind of thing applies to the whole of the North Staffordshire area, where we have the pottery industry carrying on with the restricted credit facilities at their disposal. I want the whole of the pottery industry and the whole of the coal industry to have the benefit of these facilities, and that is why I am making this appeal.
We are finding that the Colonies and the Dominions that are attached to this country are, relatively speaking, adopting a more progressive attitude than is this country, and we are finding that they are in the forefront in regard to proposals of this character. Take New Zealand, for example. You find that one of the most scientific proposals that has been made for some time has been made by the New Zealand Government, who have given an undertaking that they will be prepared to take the whole of their imports from this country on condition that this country will take from them the whole of the agricultural produce with which they can supply us. In this way lies the future of industry, and in this way Britain will be able to hold its own in future. Therefore, I am hoping that when this Bill becomes law it will be administered on the lines I have indicated, and that light industry will be able to benefit from the facilities in the same way as heavy industry.
§ 11.56 a.m.
§ Mr. Kirkwood
It would be wrong on my part if I did not express my appreciation of a Bill of this kind, seeing that I come from the greatest shipbuilding district in the world. I rise only to ask the Minister whether he can tell us the names of the ship-builder and the shipowner whom it is proposed to put on the Committee.
§ 11.57 a.m.
Mr. David Adams
I am glad to welcome this Measure to-day on two broad grounds—first, because of the increase in the amount to the substantial sum of 15,000,000, and second, because of the raising of the embargo which has prevailed altogether too long against the use of export credits for shipbuilding for foreign countries. As the head of a 2341 municipality some years ago, I was privileged to lead delegations to various Ministers in order to see whether it was not possible to utilise export credits for the building of ships for foreign countries. It was turned down at that time, but while we are five or six years late in taking advantage of building for, say, the Russian Government, orders may now be available to us and there is probably a substantial amount of business still to be done. At that time the general opinion was held on the North-East Coast that in the struggle between the shipowner, who did not desire an increase of. foreign tonnage in the markets of the world, and the shipbuilder, who was anxious to build for all and sundry and could do so under normal conditions, the shipowner was successful.
The appearance of the North-East Coast would have been entirely different during the last five or six years in the matter of shipbuilding if these facilities could have been extended to the Russian Government. Some years ago there was great monetary stringency there. That appears to have abated, but it is probably true to say that they will be glad to avail themselves of the export credit facilities for the purpose of placing orders for deep sea tonnage with our shipbuilders. The North-East Coast would share substantially in any such orders. I think that the Government were wrong in the period of which I have spoken, because facilities were being granted by shipbuilders to certain foreign countries, particularly Scandinavia, and credit was given for as long a period as seven years, but no such credit would be extended to the republic of Russia. Therefore, no business passed in regard to shipbuilding in a voluntary way.
That state of affairs has happily been relieved now, and I believe it is possible that we may find that the shipbuilding industry of this country, particularly in regard to orders coming from Russia and contiguous countries, which, owing to lack of facilities, have not been able to place orders there, will be able to receive such orders that, when the present industrial prosperity has passed, our great centres of shipbuilding will be kept busy for many years to come. I should like to ask a question about the rates of interest on advances. Certain complaints were made 2342 some time ago that the rates were excessive and that the banks were making excessive charges for the encashment of advances. Are the rates of interest what may be termed reasonable? I hope the Department will see that the struggle which will inevitably occur between the shipbuilder and the shipowner will not be permitted to prevent orders being placed with such countries as Russia, against which a certain amount of prejudice still prevails.
§ 12.2 p.m.
§ Mr. R. S. Hudson
With the leave of the House, I should like to express appreciation of the kind things that have been said about this Bill. The hon. Member for Stoke on Trent (Mr. E. Smith) made an interesting speech, and I was glad to hear his tribute to the Department. He will, I am sure, be pleased to know that the Department does, in fact, grant facilities to light industries, and that actually the figures show that this is done to a greater extent than to the heavy industries, and that the Department's facilities are granted for coal exports also. The hon. Member for Dumbarton Burghs (Mr. Kirkwood) asked me who the representative shipowner and shipbuilder would be. He will realise that we have only just come to the decision which I announced this morning and that it will take a few days to make the necessary arrangements. I am afraid that I am not in a position to give the names, but there will be no avoidable delay in getting the appointments made.
§ Mr. Kirkwood
This is an important question to Clydebank and also to the trade unions. I am speaking on behalf of 250,000 trade unionists in shipbuilding engineering. Will the Minister tell me when I can put down a Question so that he will be able to announce who the individuals are? Will there be a workers' representative on this Committee?
§ Mr. Hudson
I think that I might be allowed a few days to think it over, but I will get into communication with the hon. Gentleman so that he can put down a Question. As regards the point made by the hon. Member for Consett (Mr. David Adams) about the rates of interest, I think at the moment that it is a hypothetical question. He can rest assured, however, that they will be the best possible that we can do in the circumstances of the particular cases.
§ Question, "That the Bill be now read a Second time", put, and agreed to.
§ Bill read a, Second time.
§ Bill committed to a Committee of the whole House for Monday next.—[Sir A. Lambert Ward.]