§ 12.8 p.m.
§ Sir Herbert Williams (Croydon, South)
I beg to move, in page 1, line 13, leave out "two," and insert "one".
The effect of my Amendment would be to reduce the limit of £200,000,000, which is proposed, to £100,000,000 and I move it partly for the purpose of obtaining some information. This Bill is an Export Guarantees Bill; it is not an Export Credits Bill. I want to find out to what extent it will be operating in effect as an Export Credits Bill. We are 2259 now not a creditor nation, but a debtor nation, and it is very important, at least during the two or three years after the war, that we should export only for cash. It is vital to us to obtain foreign currency, so that we can import those things which will be very necessary. Everybody talks about building lots of houses after the war, but we cannot do that unless we have a lot of timber, and the Swedes and others will not sell us timber unless we pay for it. I am, therefore, perturbed at any proposal which may have the effect of stimulating exports without at once producing cash payment for those exports.
It was all right in the days when we were a great creditor nation; we could afford to have exports which represented the export of capital, and the payment for which we only got later in the form of interest on the investments we had created overseas. My difficulty over this Amendment is that it is not easy for me to predict to what extent export guarantees will have the effect of postponing a cash payment by an overseas recipient in respect of an export of goods. If this was an Export Credits Bill I should say that we ought to reject it out of hand, because I do not think we ought to be granting export credits at this moment. Only yesterday, the House was discussing a very important Bill for the purposes of Colonial development, with which I have always been exceedingly sympathetic, but even under it, up to £17,500,000 per annum, desirable as the cause is, we are to export goods which, at the moment, will give us no overseas credit.
What is worrying me is how we are going to get industries moving when hostilities terminate. We shall need all sorts of textile materials, non-ferrous metals, timber, and there will be great pressure to increase the import of many foodstuffs of which we have been denied. All these things must wait unless our exports can be largely increased and if, as they are increased, they produce to us an immediate foreign credit which we can use to finance imports. Therefore, I am raising an important issue, but to what extent it is important I cannot visualise, because I do not know what the procedure will be under the Bill and to what extent the granting of guarantees will have the effect of delaying payment 2260 by an overseas buyer. As I have indicated, this is not a hostile Amendment in the ordinary sense but is merely put down to draw attention to what seems to me to be an important principle.
§ Mr. Molson (The High Peak)
I did not know what point my hon. Friend the Member for South Croydon (Sir H. Williams) intended to raise, when he moved his Amendment, but I think he has dealt with a point of some importance, and I hope the President of the Board of Trade will welcome the opportunity of giving an answer to it. There is, I feel, general agreement in the Committee as to the need for a great increase in our exports, primarily in order to pay for our immediate need of large importations of raw materials and foodstuffs at the end of the war. In addition, and secondarily, we are all looking forward to a great export of capital goods for the benefit of our Dominions and, I hope, for the benefit of Russia and other countries whose economic development will, in the long run, be of immense value to this country. But there is a danger of what I might call a hiatus, if we are trying to concentrate upon those exports of capital goods which will not bring us in an immediate return. There might well be a danger that we should be engaged upon exports which would bring us in a longterm return, but leave us short for that difficult intermediate period, when there will be a shortage of raw materials throughout the world and when overseas countries are likely to ask—not in an unreasonable spirit, but because of pressure upon them—that they shall receive immediate payment in the appropriate currencies.
I am glad my hon. Friend has raised this point in no hostile way, and I am sure it would be most valuable to the Committee and those who are studying this matter in the country if they could have some indication as to how far the Board of Trade feel they will be able to go in maintaining the balance between those equally important forms of export, capital goods bringing us a long-term return and consumption goods bringing us an immediate return, the appropriate priority must be given to one over the other in our export policy at the end of the war.
§ Mr. Ellis Smith (Stoke)
I oppose this Amendment because, in my view, it is an 2261 indication of a fundamentally wrong approach to our post-war problems. Our people have to make up their minds that after the war we shall be living in a new world. The war has proved the enormous productive capacity of British industry. The needs of the world will be so great that an industrial country such as ours will have to re-adjust itself to the new situation. Enormous resources in all parts of the world will be at our disposal, and if this country links its productive capacity to those resources then we should not be concerned, as the hon. Member for South Croydon (Sir H. Williams) evidently is, about the postponement of cash payments. In an Amendment which I have put down, I seek to apply this policy to the Commonwealth. There will be enormous resources of timber, food of all kinds, fruits and the like, and if the Government formulate a new, concerted economic policy for this new situation, there will be no need for concern about the out-of-date ideas that lie behind the hon Member's Amendment.
§ 12.15 p.m.
§ Mr. Harcourt Johnstone (Secretary, Overseas Trade Department)
The Amendment moved by my hon. Friend the Member for South Croydon (Sir H. Williams) was, as he said, intended rather to cover an inquiry than to be pressed to a Division. I should like to start by assuring him that the question of long credits which he raised is very much in the mind of His Majesty's Government. The difficulties which he enumerated are practical; they exist and must be faced, but as regards the machinery of the Export Credits Guarantee Department, as I think I said last week, the normal ratio between short-term and long-term credits has in the past been something in the nature of 8 to 1. I know, no more than the hon. Member does, whether that ratio will alter conspicuously after the war, but up to the war the number of what may be called cash transactions, that is, credits up to 12 months, was as about 8 to 1. Therefore, unless there is a very conspicuous change in the ratio between the two, there should not be any real danger of our giving too much credit.
As to the length of credits as opposed to the amount, that must, in every case, be a matter of negotiation. The longterm credits granted by the Export Credits Guarantee Department are 2262 generally for very large sums, which may go as high as £10,000,000 or £15,000,000, and in every case they are the subject of special inquiry and of special negotiation. The same terms cannot apply to each transaction; there is no fixed term which one can apply over the whole field. The terms must vary in every case. I can assure my hon. Friend that there will be no inclination on the part of the Government after the war unduly to lengthen the terms of credit. On the contrary, our inclination will be to secure as much cash and as rapidly as possible. Naturally we shall have to take account of the terms that our competitors may offer.
It may unfortunately be necessary on occasions to refuse business, because we cannot or do not deem it wise to offer the same length of credit as our competitors may offer. On other occasions the balance of advantage may lie in offering credits quite as long as or in some cases longer than those offered by competitors. But, by and large, I can assure the hon. Member that the policy of the Government will, as I said, be to get in as much cash as possible and as quickly as possible, and not to fish unnecessarily, as it were, for business by dangling very long credit terms before our customers.
§ Mr. Edgar Granville (Eye)
I hope that the Government will not accept this Amendment, and I am sorry that the Secretary of the Overseas Trade Department appeared to go out of his way to try to placate my hon. Friend the Member for South Croydon (Sir H. Williams) on this question. I hope that his reply does not mean that the policy of exports for this country is to be something in the nature of a cash register. I do not think that we shall be able to organise or to increase our export trade by keeping our eyes solely on an immediate return. I do not know whether the new Clause which seeks to amend the principal Act and which has been put on the Paper by the hon. Member for Stoke (Mr. Ellis Smith) will be ruled out of Order, but that would of course raise the specific question of a fund to be earmarked for developing export trade within the Commonwealth. I was hoping that the Overseas Trade Department would give us some indication of a plan, some sort of long-term plan, which they hoped to promote in association with the democratic Dominion Governments of the British Common- 2263 wealth. As my hon. Friend the Member for South Croydon said, we yesterday adopted something of this kind in relation to the development of the Colonies, and an attempt is being made to increase the trade between the Colonies and this country. I at least hoped that the right hon. Gentleman would tell us that he had some sort of general scheme to deal with this problem, and that he had discussed it with the trade Ministers of the Dominion Governments and particularly with those representatives of Dominion industry who have been visiting the factories of this country during recent months.
Let me give the Committee an illustration. If we are to export motor cars, aircraft, refrigerators or other things after the war it is not sufficient to give credit or export facilities to the manufacturers in order that they make first sales abroad. That will not even get this country back to the position in the export market which it had before the war. If I may have the attention of the Secretary of the Overseas Trade Department I would suggest that one of the things we ought to concentrate on is a long-term policy in the Dominion markets by building up and maintaining the service and practice of British industry in those markets.
§ Mr. Granville
It has a great deal to do with it, because it asks that we shall provide only £100,000,000 instead of £200,000,000, and I am arguing against that Amendment and am proposing a policy which is consistent with what business men here and in the Dominions want to see undertaken by the right hon. Gentleman's Department. We shall have no chance of competing with the United States of America in the export of motor cars, aircraft and other machinery unless we are prepared to establish in the Dominions proper, efficient and effective servicing facilities and the supply of technical information. We shall not be able to export aircraft unless the right hon. Gentleman's Department is prepared to use a large portion of this money to encourage modern export methods in the supply of spare parts and so on, and also some sort of organisation which will 2264 enable those who are selling these capital or consumption goods in the Dominions to deal with the troubles of all sorts which follow after primary sales. If the right hon. Gentleman thinks he can send Lord Nuffield or industrialists of that standing out to the Dominions to say, "Here we are, producing good motor cars for your requirements" and leaving it at that and in that way we shall compete effectively with highly organised and specialised export business of America, we shall see very little result from the £200,000,000 provided by the Bill. I heard recently of a case where this country was producing certain aircraft in the Dominions and was experiencing difficulties, and instead of sending back to the designers and makers of the aircraft to find out where the faults lay and get the necessary technical assistance they sent to one of the business concerns in the United States of America, because there the problem of the export trade has been tackled on a scientific and specialised basis.
If the Department of Overseas Trade is to justify its existence and the time it has been spending on this problem it will have to tackle the question of exports from a comprehensive point of view, with a long-term policy, and will have to guarantee more than the £200,000,000 which the Bill provides. I should be out of Order if I were to raise the question of the decentralisation of industry or bulk purchases in this Debate, but surely I am in Order in asking the right hon. Gentleman if he contemplates that the £200,000,000 will cover in any way bulk purchases priority through trade agreements. As the right hon. Gentleman knows, an Indian Purchasing Commission is visiting us in this country at the present time. What is to be the attitude of the Government towards it? Is there to be any direction—
§ The Chairman
I have directed a very kindly eye upon the hon. Member so far, but he certainly cannot raise the question of the Indian Purchasing Commission here. The only question before us is of the amount to me made available.
§ Mr. Granville
With great respect to your Ruling, Major Milner, that Commission is here to purchase certain British commodities which will be exported from this country under the provisions of this Bill. [HON. MEMBERS: "No."] May I 2265 put it another way? Anyone selling commodities to the Indian Purchasing Commission will be entitled to avail himself of the provisions of this Bill, and I want to know whether the right hon. Gentleman has that in mind. I certainly hope that the Overseas Trade Department, in considering any long-term planning, will not listen to the blandishments of the hon. Member for South Croydon but will tell us that not only have they this Bill but that they have a long-term plan which will put export trade throughout the British Commonwealth upon the map after the war.
§ Mr. Pritt (Hammersmith, North)
I am a little disquieted by the answer of the Secretary of the Overseas Trade Department. I understand the purpose for which this Amendment has been moved, The hon. Member for South Croydon (Sir H. Williams) says: "Do not export much unless you get actual cash." The only way of working an Export Guarantees Bill, which involves, of course, certain limited credits, is, for preference, not to use it at all, but if it must be used to use it as much as possible for short-term credits. The hon. Member said that he was not hostile to the purpose of the Bill. The real answer to that is an answer in somewhat elementary economics. What does the Minister do? I do not know whether it is a hang-over from the old habit of appeasement, for which, if I remember rightly, he was not particularly responsible in the wider field, but his answer is "It is only a little one. We will not do very much. We cannot prognosticate exactly what will happen under the Bill, but we hope that they will rather be short-term credits; that the hon. Member for South Croydon will not suffer undue anxiety or be kept waiting very long, and that the Bill won't be very much used for the wider purposes discussed by His Majesty's Government on Second Reading." On that occasion Members on all sides of the House pointed out the inestimable political value and also the great economic advantage of both short-term and long-term credits, and of letting the Bill build up a bigger long-term credit trade not only in consumer goods but in producer goods with the U.S.S.R. and a good many other countries. If, the moment the hon. Member for South Croydon says, "I do not like that; it is going to keep us out of cash," and instead of giving a real answer just says, 2266 "It will only be a little one," it is not very satisfactory.
§ 12.30 p.m.
§ Sir Granville Gibson (Pudsey and Otley)
The hon. Member for Eye (Mr. Granville) wanted a long-term policy. If this Bill is anything at all, it is a longterm policy, and that is why I support it. I was very intrigued by the Amendment because generally on matters of economic policy my hon. Friend and I walk along the same road. I was somewhat relieved when the Secretary for Overseas Trade said that short-term business compared with long-term business was in the ratio of eight to one. That was very comforting because it indicates that the risk of losses need not be very great.
When one casts one's eyes over various parts of Europe, one must face the fact that in the post-war years there will be an enormous demand for capital goods, generally speaking of very large amounts. I notice that with regard to Leeds new capital machinery was wanted for the extension of the power station and it amounted to over £1,000,000. Some European countries have been devastated, and others may be before the Germans leave them. It is quite conceivable that some of the wonderful power stations in Norway and Denmark will be destroyed and it is very desirable that we should be in a position to finance firms in the exportation of capital goods and assist them in getting orders. I am informed that the devastation in Russia is almost incomprehensible, it is so enormous. Russia is now the third, if not the second, largest gold-producing country in the world. Before the war she was taking £50,000,000 a year out of the soil but that is nothing compared with what she will have to spend, and she will not be in a position to pay cash for the capital goods that she will desire to put down. It is inconceivable that we should take up the attitude that we are not going to explore every possible avenue to enable our manufacturers of capital goods to be in a position to finance their exports, or at any rate to put them in such a position that they feel that, having undertaken such large financial commitments, if there is a danger of a bad debt they stand a chance of recovering part of the loss that may be entailed.
I can therefore see my hon. Friend's point of view in putting down the Amendment 2267 with no hostile intent, but simply for information. I was delighted when the Minister gave the assurance last week that, if £200,000,000 was not sufficient, he would be prepared to ask Parliament for more. I wish the Measure every success. I believe it can play a very important part in winning for this country a large amount of export of capital goods and, if we did not have a Measure of this kind giving tremendous financial assistance by insurance against possible losses, it would militate enormously against the provision of capital goods which will be wanted in the devastated countries of Europe, and probably in many parts of the world. I shall oppose the Amendment.
§ Mr. Benson (Chesterfield)
This matter was discussed rather cursorily on the Second Reading. The President of the Board of Trade mentioned that we should be very largely concerned in cash transactions and he was not particularly anxious to see long-term credits expand beyond a certain point. I agreed with him then but in the meantime I have rather changed my point of view. I think he had in mind the exchange position. I am not sure that this is really fundamentally an exchange problem. Probably it is more a problem of actual physical goods. It is obvious that we shall have a very great difficulty in balancing our trade after the war, partly because we shall have enormously to increase our exports but also because many of our markets will have suffered such devastation that they are not able to produce the goods to send to us. Thus, if we are to re-establish our markets, they will have to be fed with capital goods on credit from some source or another and it will pay us to make considerable efforts to re-establish those markets in the first two or three years in order that they may be able to buy from us for cash at a later period.
But there are one or two other points that arise. Let us admit right off that the crying need of this country after the war will be to export goods for cash, in other words, to export in order that we can immediately get consumable imports. Another question arises. How far are the firms which make capital goods able to switch from capital goods to cash goods without any great difficulty? Take, for 2268 instance, a firm like Beyer, Peacock, who make steam-engines. They may not be able to switch their capacity immediately to cash goods, and to limit their exports would not help us in any way to balance our trade. There is another thing. Our foreign markets are not the only places which will be starved of capital goods. There is this country. We have to do an enormous amount of re-equipment and the problem that we are really faced with is a threefold one: first of all, which shall have priority for capital goods, the foreign markets or this market; secondly, would it be possible to increase our exports of cash goods as a result of curtailing our export of capital goods; and, thirdly, how are we going to finance the export of capital goods with long-term credits? As regards the last point, I think we shall succeed. It is true that we are likely to be a debtor instead of a creditor nation on current account, but our position is nothing like as parlous as is sometimes made out.
§ Sir H. Williams
Is the hon. Member overlooking the £3,000,000,000 of sterling credits in London which enable people to buy vast quantities of goods from us without our getting any imports at all?
§ Mr. Benson
I am not overlooking that fact. I am coming to it, but for the moment I am stressing the point that the credit of this country will be good after the war and it does not matter very seriously if for three, four or five years we have a considerable adverse balance of trade. I doubt very much whether we shall escape having that under any circumstances. We are not going to export hundreds of millions of pounds' worth of capital goods. We shall not have the capacity to do it. It is the export of capital goods that requires long-term credit. [Interruption.] You do not export cotton goods on a five years' credit. Things that are to be exported on long-term credit are capital goods only and we are not going to export capital goods in such an enormous proportion as is likely completely to wreck our exchange position. I think we shall be able to risk an adverse balance, for the export of capital goods is not going to increase that adverse balance to unmanageable proportions. Therefore, the real question is how much of actual physical capital goods we can afford to export in view of our own home needs.
2269 The hon. Member for South Croydon referred to the £3,000,000,000 sterling balances. No one knows better than the owners of those sterling balances that, if they try to spend them immediately, they will fail. They have been built up as a voluntary effort on the part of their owners in the general war effort.
§ The Chairman
We are getting rather far distant from the Amendment. The only question is whether the amount available by way of guarantee shall be £100,000,000 or £200,000,000.
§ Mr. Benson
I submit that this has a definite bearing on the question. Anything that tends to facilitate long-term exports affects the matters that I have been talking about and, if we cut down our maximum from £200,000,000 to £100,000,000, it would definitely curtail it. I am suggesting that we do not need to cut it down because I do not think the export of capital goods is likely to involve this country in serious exchange transactions. But if, Major Milner, you rule sterling balances out of Order, I must accept your Ruling.
§ 12.45 p.m.
§ Mr. Hammersley (Willesden, East)
I am not going to try to deal with the rather long disquisition which has just been made, with which, on the whole, I do not seriously disagree. The purpose of this Amendment was to obtain information, which was forthcoming. It was to the effect that the proportion of long-term credits to short-term credits was one to eight. The mover of the Amendment pointed out that since the war our financial circumstances have changed for the worse, and he indicated that if it was right that we should export on long-term one-eighth of what we exported on short-term through these credits before the war, it was not right that we should increase that proportion to our disadvantage. I think that in that argument he was perfectly sound. It cannot be right that we should use the limited resources of this country to export goods which we can only make, perhaps, inefficiently, and can only sell by long-term credits, as against exporting goods which we can make efficiently, and which do not require such long-term credits. Although it may be possible in the long run to do both, we should not adversely affect the ratio between the two. The Government have said that it is not 2270 their intention to do so, and, for my part, I am perfectly satisfied.
§ Mr. Stokes (Ipswich)
I certainly oppose the Amendment. I thought that this Bill was a miserably small Bill when it was introduced. Although I expect that the Amendment was put down to elicit information, it would, in point of fact, make what is a miserably small Bill an absolutely diminutive Bill, and the effective increase over pre-war credits would not be more than £12,500,000.
§ Mr. Stokes
There is one point on which I probably agree with my hon. Friend the Member for South Croydon (Sir H. Williams). There are people overseas who have enormous sterling balances. I have found in my wanderings that these people think, for some extraordinary reason, that they are going to get long-term credits and guarantees. It ought to be made abundantly clear to them that they are not, and it would have a healthy effect on their attitude to travellers and business men who go abroad if they understood clearly that countries with large sterling credits are not going to be allowed to engage in trade with business firms in this country and avail themselves of the facilities afforded by this Bill.
§ Sir Patrick Hannon (Birmingham, Moseley)
I want to support my hon. Friend the Member for East Willesden (Mr. Hammersley), because he focused the result of this long discussion in the answer of the Secretary to the Overseas Trade Department. My hon. Friend the Member for South Croydon (Sir H. Williams) was right in bringing this Amendment forward in the friendly way he submitted it to the Committee. He wanted a statement from the Board of Trade as to the extent to which facilities to purchase raw materials required for production could be made available. That reply was given, and, as my hon. Friend has said, it has proved to be satisfactory.
§ Dr. Russell Thomas (Southampton)
We owe a debt of gratitude to the hon. Member for South Croydon (Sir H. Williams) for bringing this matter up. There is no doubt that we can export to all parts of the world without getting any return at all. My hon. Friend the Member 2271 for Pudsey and Otley (Sir G. Gibson) mentioned Denmark and other countries of Europe. We can send them capital goods, but we shall not get anything in return for a long period. Denmark used to supply butter, eggs and that sort of thing, but their cattle, and hence their production, has been destroyed by the German invaders. Therefore, we can hope for no return from such a country. There are many other European countries which were in the past a market for our goods, which can give us nothing in return for a long time.
§ Sir G. Gibson
The reason I mentioned those countries in regard to long-period commitments, was because they cannot export to us and have not the money to pay for our goods. I would not grant credits to those countries which already have large credits here.
§ Dr. Thomas
We cannot expect much from these countries for a long period of time. In regard to the other point brought out by the hon. Member for South Croydon, we have to be careful in regard to exporting to Australia, New Zealand, India, Egypt, Argentine and so on, to whom we owe £3,000,000,000. We could export under that debt arrangement an enormous quantity of goods but again we would not get much in return. I do not suggest that we should not export at all to these countries, but we must bear in mind that we might well get nothing in return.
§ Viscount Hinchingbrooke (Dorset, Southern)
I presume the hon. Gentleman means that we should not get interest on our investments. That is true, but what we should get is the foreign exchange which is necessary.
§ Dr. Thomas
The hon. Member is under a misapprehension, and I do not think I need follow up that point—the Committee has signified its opinion of the hon. Member's mistaken interjection. We could send our goods to recondition the Far East when it is recovered from the Japanese, but there again we would have no immediate return. Another point is that the money which will be spent through the Colonial development loans, which we discussed yesterday, will bring no immediate return to us. Much will be spent on education and so on. There is no doubt that our people have 2272 suffered acutely during the war. The Minister of Production has said that our import trade has dropped by 60 per cent. during the war, and we have had to do without an enormous number of things. The demand which will be made on the population of this country for houses, export trade, reconditioning of industry, railways, water Bills, and all sorts of things will require, not 20,000,000 workers, but 40,000,000. We shall require an army of workers far above anything we have in this country to achieve these things in a few years. We cannot therefore ask our people to go on tightening their belts indefinitely, but that is what will happen if we are not careful in regard to this matter. We must see that as far as possible our immediate postwar export trade results in material benefit to our people who have been without so much for so long.
§ Mr. Petherick (Penryn and Falmouth)
I said nearly everything I wanted to say in the Second Reading Debate, and I am still not happy about the general export credits scheme as a whole. Therefore, I think my hon. Friend the Member for South Croydon (Sir H. Williams) has done a service in raising this matter again. I should like some representative of the Treasury to intervene to tell us how the general system of export credits under the exports credits guarantee scheme is to be related to our post-war trade and finance, in view of the fact that there are so many imponderables. We do not know in what direction trade is going and who is going to be in a position to buy British goods after the war, and it is important that we should have the Treasury view. We cannot expect to have it to-day, but I hope that, when the Budget comes forward for discussion, we may have some further information as to the way in which the general export credits system will tie up with foreign trade and finance in general. I do not think the noble lord the Member for South Dorset (Viscount Hinchingbrooke) was correct in his intervention. We are not getting any foreign exchange as the result of these export credits schemes.
§ Viscount Hinchingbrooke
It we export capital goods to a country, we shall get foreign exchange in return. There is no difference between capital goods and consumption goods, so far as receiving foreign exchange is concerned.
§ Mr. Petherick
We are not getting foreign exchange because we are not being paid in that form. What we are doing is to place sterling at the disposal of foreigners, which is quite a different matter. The point I am putting is, whether we are right, in relation to our post-war trade, our enormous commitments and the necessity for conserving our credit in every form, in continuing this general system of export credits. I therefore hope that His Majesty's Government will, between now and the discussion on the Budget, look into the whole matter of the scheme of export guarantees in regard to the financial and trade structure which it is envisaged will hold good after the war.
§ The President of the Board of Trade (Mr. Dalton)
I understand that my hon. Friend the Member for South Croydon (Sir H. Williams) has moved this Amendment, not with a view to pressing it to a Division, but to elicit information and to stimulate Debate. He has done that. My hon. Friend the Member for Ipswich (Mr. Stokes) is not as strong at arithmetic as on some other subjects, and if he will excuse my saying so, he got it wrong again to-day. If the Amendment were carried, it would not be the case that the increase in export credits would be small; it would be a minus quantity, because export prices have doubled since the outbreak of war. Consequently, if you reduce the limit from £200,000,000 to £100,000,000, and the equivalent of the pre-war limit of £75,000,000 is now £150,000,000, because prices have doubled, the effect of the Amendment will be, not to increase the credits by a smaller quantity, but definitely to diminish the availability of export credits. I am sure that that is not what he intends.
What we have to do is to steer a course between too much and too little On the issue between my hon. Friend the Member for Penryn and Falmouth (Mr. Petherick) and my Noble Friend the Member for South Dorset (Viscount Hinchingbrooke), I am sure that my hon. Friend the Member for Penryn is right and that the Noble Viscount is wrong. If I advance to the Noble Viscount a sum of money on credit, I do not get paid until he repays me. In the same way we do not get foreign exchange, unfortunately, from any of the credit operations during the currency of the credit. On the other hand, 2274 when we export for cash we get foreign exchange at once, and, equally, when we export on credit terms we get foreign exchange when finally the credit is repaid, but we do not get it during the period when the credit is running. That is a point which was in the mind of my hon. Friend when he moved the Amendment and which has been in the minds of other hon. Members who have taken part in the Debate. When I was moving the Second Reading of the Bill, I sounded a note of warning in that regard when I said:The purpose of exports is not fun, it is not to send away goods merely for the sake of sending them away—goods on which British labour has toiled and sweated—in order that other people may enjoy them. … There is only one justification for exports and that is that it is more useful to send away the things we have made in exchange for other things we need rather than to keep them here."—[OFFICIAL REPORT, 31st January, 1945; Vol. 407, c. 1487.]I went on to develop that argument and to show that in the post-war period we must have substantial imports in greater volume in some respects than before the war, if we are to achieve our full employment policy, because raw materials and food, which cannot be produced in sufficient quantities here, must be imported from abroad. If these things are to come in, we are not going to get them on credit from the producers and growers. This is not a two-way credit with which we are dealing. Our good friends in the Dominions—and I am as keen on Dominion trade being developed as anybody—are not proposing to let us have all sorts of things on credit, even when they come under the aegis of bulk purchase. We have to pay for the raw materials and food in some way or another. The way we pay for them is by our exports. The moral to be drawn is that there must be some limit and some prudence in regard to these operations of export credit guarantees, and that prudence will be forthcoming. We have an arrangement whereby all these proposals are scrutinised by the Advisory Council, and that arrangement will continue. We must be prudent in this matter.
On the other hand, those who have opposed the Amendment have dwelt upon the importance of export credits to certain branches of our industry immediately after the war and upon the great importance of a number of markets, from 2275 which we cannot hope to get very quick returns. That also is right and proper. We must keep a balance between the two sides of the argument. If I might again revert to the Second Reading, I did myself say that the limit now proposed is one which, when all adjustments had been made for price variations, meant an increase of some 33 1–3 per cent. on the volume of goods which may be covered. I think that is reasonable. I went on to add that there was still a bit in the "kitty," nearly £40,000,000 within the present limit of £75,000,000. There is a little slack that we can take up there. I also said that if it should appear, in course of time, that we got close up under our ceiling, it would be easy to come back to this House, and, by a one-Clause Bill, seek agreement for the raising of the ceiling. That we will do, if we feel it is necessary and if the circumstances justify such a course. My own guess would be that this would not be necessary for some time to come. I shall be surprised if we get into that position very soon. We will watch the position, and will consult the House accordingly.
As to who should benefit from these export credit arrangements I will not lay down any hard and fast rule. They are available generally for British exporters and any British exporter is entitled to seek this form of assistance in regard to any projected transactions. Many may seek it, but be rejected on consideration. As was explained during the Second Reading Debate we are going to make the arrangements rather more flexible in future and we shall not require an exporter to bring in all his business when he seeks guarantees in respect of some part of it where particular risks have to be undertaken.
§ Dr. Russell Thomas
Would the Minister expect a private manufacturer to use the whole of his own financial credit before seeking or being granted credit under the scheme, as has been the policy in the past?
§ Mr. Dalton
No. I can assure my hon. Friend that that has never been the practice of my Department, and that it certainly will not be the practice in the future. An assurance can be given on that point.
Reference has been made to the countries which are fortunate enough to hold 2276 large sterling balances. It would be out of Order for me to do what I should like to do and say something about that subject. You would very properly draw my attention to it, Major Milner, if I did so. There is a lot to be said about the holders of sterling balances, but this is not quite the time to say it, or to say how some of those sterling balances have come into existence. A person who desires to export to people who are fortunate enough to hold sterling balances has not, at first sight, a particularly eligible claim for this form of assistance, which ought not to be required.
Having said that, I repeat that there is no hard and fast rule whether or not those applications should be refused. They will have to go through the ordinary machinery and each case will have to be looked at on its merits. In reply to the hon. Member for the Eye Division (Mr. Granville), I think it is true that trade with the Dominions does not in general carry risks either way. We trust each other. That has been proved through the years to be a sound expectation. Therefore, although Dominion trade certainly stands second to none in importance in my view, and in the view of the Government, yet we do not think there will be very much need for anybody trading with the Dominions, by and large, to apply for this assistance. They will be entitled to ask for it, but we must remember the traditions which have grown up between ourselves and the Dominions in this matter.
With regard to the long-term plan, what we seek to achieve is a continuous process of planning in regard to these matters. This is an observation of rather wider import than in relation to this Bill. People talk sometimes as though you could have a long-term plan and do nothing more than carry out the plan which you have made. The Russians have taught us, in fact, that planning is a continuous process of adjustment. We have all done it during the war and that is what we must do with regard to these trade matters. Here I would like to say a word for the benefit of my hon. Friend the Member for Chesterfield (Mr. Benson), who asked about priorities and how they were going to be determined in regard, for example, to the needs of industry here in this country. I have several examples in mind of the kind of thing which he is thinking of.
2277 As to how we are to allocate priorities between the home market and the requirements abroad for capital goods, between the export of capital goods and the production of such goods which are urgently required to make good depreciation in our capital equipment here—in some cases where the goods are produced perhaps by the same firm in another branch of their business—I say quite frankly that each case has to be considered on its merits, and in the light of the circumstances of the time. The Committee are quite entitled to ask the Government, and the Government are quite prepared to give the Committee an assurance, because the Government are most anxious and willing in this matter, that we are constantly in touch with various industries and representatives of various industries with a view to making this continuous adjustment of priorities. Only last week I had a very interesting talk with the representatives of one of our most progressive branches of industry, which is very much concerned with the export of capital goods. We were discussing this very topic. I cannot give the details to the House, because it was a private talk, but it illustrates the way in which we are continuously engaged in the adjustment of the various claims upon our total industrial capacity. Those claims are very much in excess of our capacity, expanded though that has been during the war, and of what we hope to achieve in the near future. The priority problem is a real one.
If my hon. Friend were proposing to press the Amendment to a Division, and I do not think he is, I should have to ask the Committee to reject it. I hope the Committee will accept my assurance that we shall keep a very constant watch upon these problems, and that we are not going to give credits needlessly. Certainly not. We shall give guarantees where we think it is necessary to do so in the interests of British trade. We are working within the present ceiling, and we shall take a little while to get up to the new ceiling. As we approach it, we shall not hesitate to come back to the House and ask for the ceiling to be lifted.
§ Sir H. Williams
I am very glad that I put down the Amendment. It has produced a very interesting Debate. I find myself quite satisfied with the attitude of the Minister but I am a little disturbed to 2278 find there are still people left in this House who do not realise that the facts are quite different now from what they were in 1939. The shift from a creditor position to a debtor position means that new policies are needed, and it means that we must be ahead of the times and not behind the times. I have heard three interjections which indicated that those who made them did not realise the change which has come about.
§ Sir H. Williams
Apparently the Noble Viscount does not realise that the use of sterling balances to pay for exports from this country does not produce foreign exchange for use by this country. His ignorance was so monstrous on the point that I am surprised that he should want to intervene any more. Our fundamental need is to pay for our imports, and how we are to pay for them without exports I do not know. I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. Ellis Smith
In reply to a number of questions the Minister, during the Second Reading Debate, said, if I understood him correctly, that the Department were disappointed with the relatively small number of applications which they had had. We ought to put similar questions to the Minister at this stage, to obtain a clear statement of what the Government's policy will be when they come to administer this Measure, and how they propose to stimulate greater interest among business concerns to take advantage of these facilities. When the Bill becomes law, it will provide for an increase from £75,000,000 to £200,000,000, representing an addition of £50,000,000 on present export credits. The liabilities at present on the fund are £40,500,000. If those figures are correct, I calculate that we shall have a surplus of £84,250,000. The question arises how this sum is to be used and where we can utilise it to the maximum extent, in order to ensure against all risks which business concerns will have to take in the post-war situation. It is on these points that I want to make a few observations.
In the speech which he has just made the Minister said that risks within the 2279 British Commonwealth were relatively small. I readily agree with that, but the difficulties are also great in some cases. In my view it is the duty of this country to adopt a policy of assisting the Dominions more than we have done in the past. After the war, one of the most serious matters will be the use of accumulated surpluses, which are bound to arise from the agrarian countries.
§ The Chairman
I do not think we can have a Second Reading Debate at this stage of the Bill. The Clause with which we are dealing only entitles us to discuss the merits of the proposed increased guarantees. The hon. Member may have a chance to raise the question in which he is interested on Clause 3. We have had a very long Debate on the Amendment and I hope we shall not have a long repetitive Debate on this question.
§ 1.15 p.m.
§ Mr. Ellis Smith
I hope you will give consideration, Major Milner, to what I am going to say. This Clause provides for guarantees to be given… for other purposes conducive to the establishing or encouraging of trade …That is in paragraph (c), and upon that, I was proceeding to make two points. My first would be that this country now has enormous resources at the disposal of civil engineering, and I understand that this Bill provides for credits to be given to cover contracts for large scale civil engineering which are bound to be required in all parts of the world. It is most important that our surplus capacity in civil engineering should be utilised to the maximum extent if we are to pursue a policy of full employment. It is most important that this country should get a clear understanding of what will be at the disposal of industry immediately on the termination of hostilities. It is for that reason I would like further information to be given to-day in regard to the enormous, accumulated stocks that will be available.
§ The Chairman
I must restrict the hon. Gentleman to the question arising on the Clause. The increase of the limit under Clause 1 (1, c), to which the hon. Gentleman is directing himself, increases the limit in respect of guarantees under Subsection (4) of Section 1 of the principal Act, from £2,500,000 to £5,000,000. I 2280 do not see how the question he is now raising comes under that heading.
§ Mr. Smith
Under the arrangements that will be made, after the war, the question will arise, how and for what purpose that increase is to be used. It is upon that I am hoping to stimulate interest, and also to get a reply from the Minister that will enable us clearly to understand what is in the mind of the Department of Overseas Trade with regard to the increased facilities that have been provided by this Bill.
§ The Chairman
If the hon. Member will relate his remarks to the increased guarantee, he will be in Order but, at the moment, I do not see how he is going to do that.
§ Mr. Smith
I do not propose to pursue the point. You have been good enough to assure me, Major Milner, that on Clause 3 there will be an opportunity of developing further the point I am making. Having made these points, may I add that I hope the Secretary of the Department will reply to a number of questions that should have been replied to on Second Reading?
§ Mr. Dalton
I was thinking of saying a word in reply to my hon. Friend, but I cannot remember what questions raised on Second Reading were not replied to. If my hon. Friend, keeping within the Rules of Order, can remind me of any, I will do my best to deal with them.
§ Mr. Granville
All of us in the Committee are greatly indebted to the right hon. Gentleman the President of the Board of Trade, for making clear a number of points on which there was a certain amount of ambiguity on the occasion of the Second Reading of the Bill. We are grateful to him for making these points clear not only to the Committee but to industrialists and traders outside, who may or may not have the opportunity, through their trade associations, of having contact with his Department or the Department of Overseas Trade. I find that there are a number of manufacturers, some in my own constituency, who think that at the end of the war all they have to do is to pack their bag, put in their samples, and go abroad and compete with various countries in trying to get orders. The right hon. Gentleman made the position quite clear to-day, 2281 when he dealt with the difference between capital goods and consumption goods and the question of priorities.
The question of priorities is, in itself, a tremendous subject, and would require for its full consideration a degree of expansion in the scope of the Debate which would be out of Order. I hope that the right hon. Gentleman will, on some occasion, deal more specifically with this question because, as he knows, there will have to be direction and assistance—not so much control—given from his Department to the traders of this country, as to what they are to produce, when and where they are to export their products, and this Bill, of course, provides the necessary guarantees. This will be so because of the various Trade Agreements after the war. Those who think we live in a world of laissez faire, and that all we have to do is to produce samples and price lists and go into the world looking for orders, have a rude awakening coming. I would like to stimulate the President of the Board of Trade to state at some time the details of the Government's overseas trade plan in a world disrupted by war conditions.
§ Mr. Dalton
My hon. Friend the Member for Stoke (Mr. Smith) raised the question of civil engineering. It is true that engineering has been expanded for war purposes more than any other branch of our industry. One of the problems of the switch-over will be how to ensure that we shall retain the advantages of all the improvements that have taken place in engineering technique, equipment, factories, etc., and not find a surplus of labour in the engineering industry which cannot find full employment—a state of affairs which would constitute a violation of Government pledges. As an aid to that readjustment these export credit guarantees will certainly be of considerable assistance. I would say that among the branches of industry that will certainly come along and make good their claim to participate in these export credits, civil engineering will hold an important and prominent place. These guarantees will, I hope, aid the maintenance of full employment in civil engineering after the war, and so enable us, perhaps, to develop new forms of exports with which we did not previously deal to any great extent. I recognise civil engineering as being a very likely 2282 and strong claimant for aid under this scheme.
The hon. Member for Eye (Mr. Granville) raised the question of priorities. It would be out of Order to go into that now, beyond repeating what I said just now. We are anxious to keep in close touch with the various industries on these questions as they arise from time to time. As to whether it is part of our duty under this Bill to tell industry quite all the things that my hon. Friend suggested—to tell them, as he said, what to make and where to sell it—I beg leave to doubt whether, in spite of my own political proclivities, I shall be called upon to give quite that degree of authoritative guidance to all branches of industry. I rather hope and believe not.
§ Question put, and agreed to.
§ Clause ordered to stand part of the Bill.