EXPORT TARGETS

HC Deb 19 April 1948 vol 449 cc1451-509

3.50 p.m.

Mr. Hollis (Devizes)

I beg to move, to leave out from "That," to the end of the Question, and to add: this House expresses its alarm at the revision of the export targets for 5948 and its concern at the lack of definite plans for their achievement. The Ballot, in which I had the good fortune to be successful, took place some time ago—I think at the end of February—and at that time I was not aware when this Debate would take place. Indeed, so far as I had any time to meditate during the split second after, to my surprise, my name was read out, I imagined that it would take place comparatively shortly after the Ballot. Therefore, it was in my mind that perhaps we should have a discussion on these export targets—have some preliminary probe—before the Economic Survey was produced. As it happens, some months have elapsed and the Debate has come along today, when the general economic position and in particular the export targets, were discussed in some detail only six or seven days ago.

The fact that I have had good fortune in the Ballot—and it would be an impertinence even to suggest it—obviously gives me no sort of claim to direct the course of the Debate or to seek to guide hon. Members as to what subjects, large or small, they may choose to raise. That is so obvious that it hardly needs saying. But for myself, I thought it more convenient not to attempt to go over the whole of the large ground which has been covered by hon. Members so comparatively recently, or to discuss these all important but general questions of why there is the problem of the balance of payments, and so on, with which every- body must now be fairly familiar, but rather to concentrate in particular on the Press statement made by the President of the Board of Trade last Tuesday and certain matters arising out of it, because, as the House will recollect, the right hon. Gentleman spoke in the Debate on Monday and then made a Press statement on Tuesday. Thus, we have certain new questions to which it will be of great interest to the House to get answers.

If we were dealing with the larger question, the long-term question of what should be the economic policy of this country in export or import trade, naturally there would be certain matters upon which we should have differences of opinion. Even when our Debate is tied down to a short-term Amendment about the export trade for 1948, one obviously cannot, in the nature of things, entirely consider the short-term policy without glancing at one's view upon long-term policy. I, most certainly, and most, I think, of my hon. Friends are very doubtful whether the time will come when it will be possible to practise non-discrimination in foreign trade nearly so soon as we have sometimes been promised. We have expressed our doubt whether it was wise to sign certain instruments expressing the hope to practise that policy at dates when we do not think it will be at all probable that we can practise it. Such statements as have sometimes been made from the Government Front Bench about their hopes to be able to practise a policy of non-discrimination at such dates as 1952 seem to us to be reckless and dangerous. Nevertheless, whatever may be the year when such things may be possible, for the moment we are concerned with the export targets for 1948.

Whatever differences of opinion there may be on what will or will not be possible in 1952, there is at any rate no difference of opinion that for the moment, in 1948, our policy must be a policy of practising discrimination; that the great gap in our balance of payments is the balance with the Western hemisphere; and that therefore, in order to make effective use of Marshall aid, and to make it last as long as possible, it is necessary that our imports from that hemisphere should be as small as possible and that our exports to that hemisphere should be as large as possible. The Government, which for some time took the line that it was of secondary importance to them whether they got Marshall aid or not, now frankly confess that, had Marshall aid not been forthcoming the most drastic austerity would have had to be imposed upon the country. Fortunately Marshall aid is to be forthcoming But there still remains the very grave question—and it is obviously in the light of that question that this Debate must be carried on—whether Marshall aid will be sufficient to bridge the formidable gap, or whether that aid will run out as rapidly as the American Loan ran out and leave the problem entirely unsolved. It is in order that we may be helped towards getting an answer to that anxious question that I want to approach the right hon. Gentleman today.

Before we discuss the prospects of the particular commodities about which the President of the Board of Trade spoke—our visible exports—I should like to say a word or two about our invisible exports, because one of my most serious criticisms of the Government is that at this time, when exports are such a necessity, the Government have shown such a very cavalier attitude towards invisible exports throughout their whole term of office. We are continually being told—and it is patently true—that our position is extremely difficult, because of the things that we, produce in this country there are extremely few which are not also produced in the United States of America and other countries. Therefore, once the sellers' market goes it will be extremely difficult for us to maintain our exports. That being so, it would surely be the merest common sense that we should have fostered in every way an export trade in things we do which are unique, which the rest of the world needs, and which are not done in the rest of the world. A wise Government would have paid supreme attention to our invisible exports throughout these years. Instead, this Government has treated them in an extremely cavalier fashion. The Economic Survey is typical of the sort of way in which these expert services, in which this country has an especial tradition, are treated by the Government, for in Table VIII on page 13 we see a rather contemptuous entry under invisible receipts of what is called "Other (net)", and we read the figures: 1938, + 100. 1946, + 73. 1947, (provisional) — 20. 1948, 1st Half (forecast) — 11. That is a matter which should give us very great concern. It is extraordinary that in such a position the Government, instead of having fostered invisible exports, should have done such a thing as shutting down the Liverpool Cotton Exchange. I see the Financial Secretary to the Treasury is here; and perhaps the next point is rather for him to answer than the President of the Board of Trade.

Consider the policy which the Government have pursued in the handling of gold sales by the City of London. Towards the end of 1946, the Bank of England gave permission to the London market to act as intermediary in bar gold transactions, at a premium of over 35 dollars. It is estimated that, in the first half of 1947, about one million dollars were earned by this country in this way by commissions on freight, insurance and so on. Then at the request of the International Monetary Fund these transactions were closed down in July, 1947. But for some reason or other, the Americans were allowed to go on for a further six months, while, as I have said, the Treasury prevented British financiers from indulging in them.

The result is that we have lost an extremely valuable market. The same applies with processed gold. Under the Treasury Export Float Schemes there were steady demands from New York and other places for 22-carat sheet gold. It is estimated that a further one million dollars were netted in this way over the price which the Bank of England were obtaining for their own gold sales. Now the Treasury is refusing to grant further licences for this. Meantime, transactions are going on in New York and other countries, and these extremely valuable and lucrative export services, which we have carried on for centuries, have been lost by this country, and it will be extremely difficult to regain them. Why, at this moment, should everything be done to hamper these experts in carrying on these services?

Let us take next the question of convertibility. This is not the time or place to discuss the technical question of the date when it might be safe to make sterling convertible, but it is for that reason a good opportunity to lay down a general principle upon which all sane people must be agreed, whatever their side in that controversy; that is that, whatever may be the time to make sterling convertible, the ideal, which all sides are agreed upon in this controversy, is to have a state of affairs where countries are anxious freely to leave their money in this country, are free to withdraw when they like, but do not withdraw it because they trust the integrity of, and have confidence in, the British financial administration.

That being so, there never was a time when it was more manifestly ridiculous to pursue a policy which destroys confidence in the £. The whole financial policy of the right hon. Member for Bishop Auckland (Mr. Dalton) stands condemned, not only because of its immediate effect upon this country, but because it has made incomparably more difficult the international financial policy of this country, whether pursued by him or by his successors. We have this great dilemma which I should like cleared up: that the Chancellor of the Exchequer holds out hope that by the end of the year our books may balance in general, but he holds out no hope that our trade with the Western hemisphere will balance. That obviously means, as a matter of mathematics, that if we are to have an unfavourable balance with the Western hemisphere and at the same time a general balance, we are to have a heavily favourable balance with the rest of the world.

That being so, even if we get that balance, we shall have an enormous volume of unrequited exports, which we can ill afford in our present state of affairs. If we had a more sensible financial policy at home, there would be very much less pressure in regard to unrequited exports, because foreign countries would be only too willing to keep their balances in this country, as they did before the war. The pressure of unrequited exports is the vote of censure on the financial policy of the Government by the rest of the world. Therefore, my first point is to impress the importance of invisible exports.

I now wish to come to the particular commodities referred to in the Economic Survey, and in respect of which the right hon. Gentleman spoke during his Press conference the other day. Broadly, the picture of the revision of targets was that coal should be the same as before, that we should export less steel than we had expected, and that we should, to make up for this, export more textiles; on balance, our percentage of exports was not to be as high as we had hoped. It is on these three commodities, coal, steel and textiles, that I should like to make a few observations. The Minister of Fuel and Power congratulated himself and the country upon the fact that coal exports had started again. He is right to congratulate himself on that, and it would have been disastrous if these exports had not begun. The only point I wish to make about coal is this: The Minister of Fuel and Power has issued a general warning against people who demanded a larger output. He said that It is an easy game to set targets. It is easy to say that there ought to have been a 20 or 30 per cent. increase in output, or that we should aim at 220 million tons or 230 million tons."—[OFFICIAL REPORT, 13th April, 1948; Vol. 449, c. 822.] Indeed we can all play that game, but if the right hon. Gentleman teaches us that lesson, he should also teach it to some of his colleagues. There is no point in saying that there shall be a target of 220 million tons, if we are not going to reach it. But the right hon. Gentleman also said that at present we were producing 4¼ million tons a week, and he held out hopes that that figure would be 4,600,000 tons by the end of the year. It is simple arithmetic to multiply 4¼ million tons by 52 weeks, thus giving us a figure of 221 million. Therefore, I cannot understand why a target of 220 million tons is such an extravagant target, for we have not the slightest hopes of attaining it.

I come now to steel. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) said last week that there was a mystery about steel which it was most important to clear up. We had been told time and again about the magnificent performance of the steel industry by Members on the Government Benches, and it was then extremely disheartening to learn that the targets must be cut "owing to a serious shortage of steel." Why, if these records are being achieved, is steel short at the end of the year? The right hon. Gentleman at his Press conference emphasised the point slightly differently. We were told that the targets were reduced not so much owing to a serious shortage of steel, but because the targets were unrealistic in the light of steel supplies likely to be available in 1948. It seems that there was no mistake on the part of those in the industry but a mistake by the Government in adding up the sum wrongly in 1947. It is extremely important that we should note that that is where the failure lies, that we should remember that if ever we have to debate the question whether the steel industry is most likely to be run well by its present managers, or by the Government, it is the Government who added up the totals wrongly in 1947. We must not forget that the fault lies with the estimators, and not with the steel industry.

We now have a situation where steel supplies are 12 per cent. higher, while there is to be no increase in industrial output. Why? The first answer we are given is that it is because more steel is to be used in capital work, which will eventually enrich the country but which will not give us immediately consumable products for this year. So far as it goes, that is a perfectly sensible and intelligible point. On the subject of capital work I and most of my hon. Friends are what is called "middle of the way" men. I by no means associate myself with some of the extremists who tend almost to talk as if all capital work was an entirely unnecessary luxury, and that if men were taken away from capital work and put on to other work they would produce consumer goods immediately. But on the other hand, I do not associate myself with those who maintain that it is only necessary to demonstrate that something is desirable to prove that it should be done immediately.

There are many things we should all like to see done sooner or later, but which ought to be postponed at present. For instance, I do not suppose that any Member in any quarter of the House would deny that it is extremely desirable that, sooner or later, a statue should be put up to the right hon. Member for Bishop Auckland, but it is much more questionable whether this would be a desirable time to divert labour into doing such a thing. In general, the point about diverting steel to capital work is an intelligible point, but when four times as much steel is being given to the basic industries as to the finishing industries, we are entitled to ask for further substantiation before we are entirely persuaded that that is a wise proportion. Is there not a grave danger that at this time, when we are desperately short of finished articles, we shall not be able to produce enough and that we shall have the equipment to produce too many finished articles in a few years' time when we shall need them much less desperately? I wonder, too, whether the explanation that everything is going to capital works is a satisfactory explanation.

One of the great troubles about rationing and control is that once a commodity is rationed there is a natural tendency on the part of everybody to get hold of as much of that commodity as possible. Many of us never dreamt of buying chocolates and sweets in the days of non-rationing; now, we take our ration just because we think it is something to which we are entitled. There would he that danger under a system of control if the control was as wise as it could possibly be; but there is an even further danger in the present so-called system of control, when plans are changing with kaleidoscopic rapidity from day to day, when no manufacturer knows what he may be called upon to do or whether, when he is called upon to do something, he will have the wherewithal with which to do it. In these circumstances, it is a temptation—perhaps that is even a rather unfair word, so I will say it is "inevitable"—that people should take every opportunity to snap up and store all the raw material they can get hold of, even if they do not need it immediately. They will say, "There is no knowing when it will be needed." There is no doubt that in steel and other commodities increasing stocks are going out of use altogether.

It is enormously important that we should press ahead with a solution of the German currency question. There is a lot of scrap steel in Germany which must be moved to this country, otherwise there will be the gravest danger of unemployment. It is extremely difficult to get that moved until the German currency question is solved. I was questioning the Under-Secretary of State for Foreign Affairs about this the other day, and we should be glad to receive from the Government a statement as to the progress which has been made in this matter.

So much for steel; now about textiles, the target for which is to be stepped up. Some of my hon. Friends who have greater expert knowledge of textiles than I have will follow me, and will, no doubt, make some searching and valuable contributions to the Debate. I must deal with pure generalities. It is obvious from the Economic Survey and the Minister's Press conference that the whole future of the export drive depends, more than anything else, on achieving the textile target. We view this matter with a good deal of alarm. Success depends, to begin with, on an enormous increase of labour in the textile industry, and there is very little possibility of the Government being able to satisfy this condition. In 1947 the labour force in the industry went up from 615,000 to 652,000. By the end of 1948, in order that the target should be fulfilled, it must be raised to 760,000. As yet we have had nothing like a definite account from the Government of how they hope that figure will be achieved. It must be achieved because we must realise how far short we are now running of the targets which the Government have set.

For instance, in the cotton industry the original target, the estimate of last September, was £11,300,000 per month. The target has been stepped up to £13 million, but the monthly average for January and February was only £8,500,000. So with woollens and worsteds. The original target was £11,300,000, and this has been stepped up to £12,400,000. The actual running target in January and February was a little more than half—at £7 million. There is thus an enormous gap to be filled, which it is extremely necessary to fill if the whole programme is not to fail. At present it is difficult to see how the Government propose to fill the gap. The Minister at his Press conference gave the new and ominous warning that overseas markets had reached saturation point for certain types of clothing and consumer goods. We were told some time ago that we could go ahead in textiles because there was a unlimited market. The import prices of raw cotton are causing grave concern. They have risen very considerably, and the possibilities of a further inflationary rise of prices in the United States will greatly increase our own costs of production.

The whole question of imports is giving rise to great concern. We had an adverse balance for the first quarter of this year of £126 million, but, according to the Survey, the forecast of the adverse balance for the whole six months is only £87 million, and that is a matter for great concern. It may be true that March is a month of excessive seasonal imports. It may be true that the rise of American prices is purely temporary. There is this problem, as the hon. Member for North-West Hull (Mr. R. Mackay) has pointed out, of the terms of trade which has been responsible for so large a part of our troubles in the past, and which may be responsible for many of our troubles in the future. When American prices rose after the American Loan, the Government came to the House and explained that the Loan had run out because of the rise in American prices. They said that there was nothing they could do about that. Certainly, they were not responsible for it happening, but they were responsible for not having attempted to foresee it. I wonder whether we are not repeating that mistake of failing to perceive a coming rise in prices, which, if it takes place, will certainly make nonsense of all the export target figures.

Finally, some consideration should be given, even in planning a short-term policy, to the long-term picture of what sort of exports we can hope to make in the future. People say that we have to get through 1948 and then we can think again. There is a degree of truth in that. Nevertheless, it is nonsensical to build up our industries in one particular sort of pattern if that pattern is to become entirely irrelevant to the general picture of the world. The fact remains that predominantly in the future our exports must be quality exports. There is little with which we can supply the rest of the world which the rest of the world cannot produce for itself in some shape or form, but there is much which we can supply to the rest of the world which has a special quality of its own and which the rest of the world may appreciate.

If that is so, it carries with it the most important lesson which hon. Members should take to heart—the lesson against excessive economic Puritanism from the economic point of view. If our exports are quality goods we must also have an adequate home market for them. Firstly, we must have somewhere to "try it out on the dog"—to see whether the goods are useful or not. Secondly, to a large extent the only reason foreigners like our goods is that they like to have the sort of goods which Englishmen have at home. Americans make hats for themselves, but an American likes to buy a Tyrolean hat because he feels that by doing so he is half way to being in the Tyrol. If an American was not sure that there was anyone there who wore a Tyrolean hat, he might think that there was no purpose in buying it back in America. It is entirely the same with all our goods. We cannot expect to produce good whisky for the export market unless we sometimes drink whisky ourselves at home. One of the most vital and important ways of helping the export market is to consume a reasonable quantity of whisky at home.

Mr. James Hudson (Ealing, West)

The trouble is that people do not know when to stop.

Mr. Lennox-Boyd (Mid-Bedford)

That is better than not knowing when to start.

Mr. Hollis

Economic questions cannot be divorced from psychological questions. I would call the attention of hon. Members to the figures in the Gallup Poll quoted in this morning's "News Chronicle." I do not pay any special attention to precise statistics as given in Gallup Polls, but the general lesson of these figures is one of the most disturbing and disquieting things that I have ever come across. A poll was taken immediately after the war to find out what proportion of the people of this country wished to leave the country if they could. Immediately after the war, only 19 per cent. had that desire, but today 42 per cent, of the people of this country wished to leave it, if they possibly could. That figure is only exceeded by one other country in the world—Germany with 46 per cent. That is a very desperate and frightening thing, and it proves that the problems before us are not only economic but also psychological. I hope that we may have some assurance from the Government that there is a better hope of these targets being obtained than we can feel at present.

4.27 p.m.

Mr. Spence (Aberdeen and Kincardine, Central)

I beg to second the Amendment.

I am glad to have the opportunity of following the hon. Member for Devizes (Mr. Hollis) on this Amendment, particularly so as he referred to the necessity of having a home market on which to base our export trade. I have been looking at my notes, and that is note No.1 on which I wish to speak. I claim that the vital aspect of it is that the Government are not doing all that they could to help our export trade. I do not presume to lecture the Government on their political, doctrinnaire policy, but to deal rather with the faults of their administration. I hope that my remarks may be accepted in that light, as being suggestions which might be adopted and geared up with the ideologies upon which they are working.

One criticism which I have to make is that by having obsolete regulations and controls our maximum output of goods is not logged in the home market. Many of these controls have the effect of denying a home market to many goods for export. Secondly, by the legislative acts of the Government, the costs of our goods in the world market are being raised, until, eventually, they will reach an uneconomic level. Thirdly, the Government have failed to relate our export target to the, trade agreements which they are making with other countries. They are not relating the export target to the world market, and we may find ourselves in danger in the coming year of producing goods for which we have no outlet. Fourthly, the wrong goods are being exported. Goods are being exported which should be kept at home. Fifthly—and what is even more important—we are failing to bring home to the average working man and woman the extreme gravity of the situation by practical example, and we are not getting from our workpeople as a whole the output per head which we should be getting. I feel that very sincerely.

It is customary to disclose one's personal interest, and I disclose to the House that I am in the textile trade and an exporter. If some of my criticism concerns this facet of the export programme, I make no apology. I. quote the words of the President of the Board of Trade when he said a week ago: One of the things on which we stand or fall as a nation this year is the success or failure of our drive for increased textile production and increased exports of textile goods."—[OFFICIAL REPORT, 12th April, 1948; Vol. 449, c. 656.] To deal with my first point about absolute controls and regulations, the old axiom that an export trade can only be built up on a flourishing home market is as true today as ever it was. The effect of many of the regulations, especially those which concern utility textiles, is that the manufacturer making textiles has to have two production lines—one producing utility goods for the home market, and the other producing goods of quality and craftsmanship for export. A variety of bad results arise from that. The first is that it is difficult to build up new export markets. When we are developing a new export market at a long range, naturally we have to feel our way with our customers. If there is a production line going through the factory, the goods can be taken off it to satisfy early orders, which will enable the building up of connections for lasting trade. Where there is no outlet for export goods other than in the export market, this cannot be done.

No one is ever 100 per cent. successful. Orders may be booked and later on they may be cancelled. The man who is manufacturing goods for export, and who has his orders cancelled, cannot today find an outlet for them—they are frozen, they cannot be put on the home market except after a very lengthy process known as getting a declaration of frustrated export from the Board of Trade. I can assure the right hon. Gentleman that it is a very long process, and that the only thing frustrated is usually the manufacturer.

Mr. Stokes (Ipswich)

How long does this take?

Mr. Spence

About six to eight months. The final point on the question of obsolete controls is the bad effect of having two standards of workmanship in a factory. I do not say for a moment that utility articles are not good, but they were designed for a particular and specific purpose: they were designed to make the best of the very slender resources which we had in the war years, particularly with regard to labour. Although they may be good, they are definitely utility, and they are not the things which the overseas market wants. Today, in most mills we find two different set-ups—one, for utility and the other for export. The effect of present administration is even worse, for irrespective of the prewar record of many mills, all manufacturers are compelled to make a certain percentage or quota of utility articles, irrespective of whether they are high-class or low-class manufacturers. This a vast waste of effort. I venture to say that if many of these regulations were lifted the result would be an increase and, in many cases, a cheaper supply of goods in the home market, as well as freeing more goods for export and getting a higher output generally.

I now pass to the question of our difficulties in selling goods abroad. The Economic White Paper refers to the saturation of markets, and says: There are signs that in some of our most important markets it is becoming increasingly difficult to sell some of our products. That is so, but it is not entirely due to saturation of markets; it is due to rising costs. I do not specifically refer here to the question of wages—high wages can be offset by high production; I refer rather to the direct and indirect costs which fall on every producer, including rent, rates, taxes, power, coal and transport. All these things have gone up progressively and it is chiefly in the realm of taxation that the Government are to blame, because they have continued to lay on the load, irrespective of the fact that at the end of the day the burden of taxation rests fairly and squarely on the back, or, rather, on the price, of our finished merchandise. We must realise the fact that, if rising costs continue, market after market will be closed to our goods and, whether we like it or not, we shall have to cut our coat according to our cloth.

On the question of markets for our goods, it seems to me that the Government have been far too casual in negotiating trade agreements. It is only common sense that if, with a centrally planned organisation, certain totals of different articles are to be produced, it is the duty of the planning authority to see that there are markets in which those goods can be sold. It is of no use to produce goods for which we do not have a market.

I propose to make one or two direct quotations which I think will prove my case that sufficient attention has not been given to the particular aspect of planning. My first quotation concerns the recently signed Danish agreement. Denmark has always been a very good market for British goods, especially textiles. I have traded with Denmark for many years, and I was naturally interested to find out as soon as I could what were the new arrangements that had been entered into. I asked the Board of Trade what actual arrangements were to be made and in reply they said: We did not in fact itemise our prospective trade for 1948 and did not, therefore, establish import quotas for particular goods, but we secured from the Danes an undertaking that in administering their import policy they will have regard to our normal pattern of trade. That sounded all right, but I have also a letter from Copenhagen, despatched in the first week of April, from a big trader with whom I have dealt for many years. He writes: We much regret to inform you that it is now known that the trade agreement recently established between our two countries does not provide for any import of men's clothing, hats or other made-up articles. If that letter be true, then the Danes are not fulfilling the obligation that seems to be implied by the communication that I received from the Board of Trade. The fact that we did not specify what we expected from the Danes shows a certain casualness if our target for textiles has been raised by a certain percentage; but, surely, when our next trade agreement is being made, the thing to do is to say that we expect to have even more textiles to sell. That would be common sense and it is the way we should proceed. It has not been done, however, and towards the end of 1948 we shall have difficulty in finding markets for the goods for which we are setting up targets today.

In the trade agreement with Sweden, a strict price level has been imposed by the Swedish Government; nothing above a certain price is allowed into the country. That means to say that all our higher class products, which should show a far better conversion value in terms of raw material, are excluded. Of the new agreement with the Argentine, we do not as yet have very much information. I suggest, however, that this problem shows where central planning has broken down. If it cannot also provide the market, then it cannot provide a system on which to work.

I turn now to a matter which is very important to us in Scotland. I notice from "The Times" of Wednesday last that the right hon. Gentleman the President of the Board of Trade had given a Press interview and had said this: Commenting on the increased targets for cotton, woollens and worsteds, Mr. Wilson said there had been a world swing of fashion away from tweeds and woollen piece-goods in general. The increases required in woollens and worsteds would be concentrated on wool tops and woollen yarn. I hope that that is a correct record of what was said, because what I now wish to say is based on that assumption. The point I wish to make is this: if we find it difficult to sell tweeds abroad—and that is a thing with which I disagree—and if, instead of selling those tweeds abroad, we now sell the wool tops and the woollen yarn, what is going to happen to all the people in the weaving and hosiery trades? It depends on the degree to which this selling of tops and wool is to go on, and I hope that the right hon. Gentleman will deal specifically with this point, because great uneasiness has been caused.

There is the fact also that our yarns and wools are characteristic of this country. We have been selling textile machinery abroad at four times the rate at which we did in 1938. Now we are going to sell the raw materials to go on to those frames to make the characteristic materials which have been made by us in this country. We have not only given our competitors abroad the machinery, but we have given them also the lifeblood with which to run those machines and so enable them to undersell us with bogus British tweeds in the markets of the world. There is one other point. I do not understand why, if there is a swing away from piece goods and tweeds, there should still be a demand for wool tops and wool yarn. What are they going to be made into? If there is a market it means there is a market for someone who is going to make things more cheaply than we can and, therefore, the argument does not seem to me to hold water.

If we can produce finished articles in this country that system must have absolute priority. We should not deliberately sell articles which are part processed. The more we finish a product the better it will be for us, and I hope the President of the Board of Trade will deal with that point when he replies to the Debate this evening, because if we are going to give away our lifeblood we had better give away the factories and allow the work-people to emigrate rather than keep them on the dole. When we look at the monthly figures, we find that the wool tops figure has already gone up from a quarter of a million to over a million a month and for yarn from a quarter of a million to half a million a month. In textile machinery, which is a matter of great concern to us, the figure has gone up from £700,000 to £2,900,000; the monthly figure has increased four times.

Mr. Stokes

Since when?

Mr. Spence

I am taking the 1938 monthly average figures and the 1947–48 monthly average. Finally, I want to refer to the question of a national effort. It is time our people—and by that I mean the ordinary man and woman in the street—realised how desperate the need is for more output, more work, and better value for money, not necessarily in wages but on what we bring in for ourselves, if we are not to become a pauper nation. The Government have missed opportunity after opportunity to bring this home. In speeches from the Front Bench the position is brought home, but when there is a simple opportunity in the country the facts are not rubbed in. This Government is never wrong. There is one instance of which I can think, namely, the Argentine agreement. That was put forward as a fine bit of commercial diplomacy, whereas it was nothing more or less than a hard bargain entered into by force of the existing critical circumstances. We should use these examples to bring home to the people the position in which we are, instead of issuing White Papers, which the average man does not read or understand; we should strive to get a realisation of how the individual can play a part in this great effort. I have made a number of suggestions which I hope will be considered. I do not presume to suggest that they cover any more than a small part of our problem, but I believe that, if they were acted upon and adopted, we should come nearer to fulfilling our export targets of 1948.

4.44 p.m.

Mr. Bottomley (Secretary for Overseas Trade)

We all sympathise with the hon. Member for Devizes (Mr. Hollis), who had good fortune in the ballot and who wished to talk on the subject of exports, if he has not got out of this the value he had a right to expect. The views which he expressed this afternoon must be considered, particularly one or two with which I shall deal, but I am bound to draw the conclusion that the hon. Member wants to have it both ways. To give one illustration, he urged that we must push up exports in order to come nearer to a balance of payments and thereby avoid the economic difficulties which will arise if we do not. On the other hand, in the case of one or two commodities, he suggested that we ought to put more on the home market. He cannot have it both ways. He said also that unless we consumed some of the things ourselves, our reputation would suffer. That may be true, but it is correct to say that our past and present experience shows that our reputation stands good. I have a feeling that the hon. Gentleman does not delight in the skill and ability of the British people, and if he does not at the moment, I hope he will before the Debate ends.

Mr. Hollis

I did not pass any reflection on the skill and ability of the British workers in which we all take a pride. My argument had nothing to do with skill but with the necessity for them to have some of their goods so that they could test out what was palatable. I did not pass any reflection upon the skill of the workers but asked for the circumstances under which the skill could be developed.

Mr. Bottomley

Once again, the hon. Gentleman shows that he wants to have it both ways. If we are to overcome our ills we must export. The hon. Member for Central Aberdeen (Mr. Spence) spoke of central planning and asked whether this was the most efficient method. Last year, the Chancellor, when dealing with exports, said that the targets would have to be reviewed and revised. That has taken place. The hon. Member for Central Aberdeen said that there was not any consultation with industry, but I can assure him that there is. The production Ministries are constantly in touch with industry and the targets are adjusted as a result of that continuous consultation. The present target is fixed at 150 per cent. above the 1938 figure. It would be wrong to fix too high a target, because that would make for disappointment if we failed to reach it; and it would be wrong to adopt a target which could be too easily reached. We have fixed a target which we believe will be achieved by greater effort, and the evidence suggests that we can reach 150 per cent. For the last quarter of 1947 we had an average of 117 per cent. of the 1938 figures. In January it was 128 per cent., in February, 121 per cent., and in the month just ended the figure reached was 130 per cent. The reason the production for February was smaller was that there were fewer working days in that month. In view of all the circumstances, the figure of 150 per cent. is the right one.

The hon. Member for Central Aberdeen referred to the fact that we have had to reduce the target in some cases. That was because of steel. The target for the steel industry is high, but there is still a shortage owing to the concentration upon building of factories, providing equipment for the mines, and building ships, industries which we thought might he slackening off. There has, in fact, been a very large demand, and we have put the steel there as well as into the light and other engineering industries, in which we fixed a target which was higher than was possible. We have now reduced that target by 9 per cent. We expected somewhere about half the exports, 46 per cent. to be exact, to come from that category. When the September target in engineering was given it was expected that there would be savings on industrial building and capital equipment to enable us to attain that higher target. Experience showed us that that was not possible.

There also has to be a constant endeavour to send steel into productive industry. Very often hon. Members opposite have asked us why we should export such goods as textile machinery when it could be more usefully employed at home. In that connection we have been active. Some of the steel has gone into the production of textile plant which will be used for the purpose of producing textile goods, which we hope we can send overseas. It has been necessary therefore to revise the export of this commodity on that account. In September last, we did not have all the circumstances before us, and it would have been wrong to have fixed a target definitely. It was a provisional target. Everything had to be taken into account before we decided to change it.

I agree with the hon. Member for Devizes that it would be better to get more steel scrap from Germany. We are doing all that we possibly can to get it. Nobody would be more pleased than His Majesty's Government to overcome the bottleneck which exists, and we shall try to do that. We hope that we can get to a position in steel which will enable us to reach the highest target when the next review takes place. The fact that there has been a reduction in the amount of steel available has affected the production of agricultural machinery and tractors, textile machinery, private cars and commercial vehicles. It is still important to remember that the machinery target is 206 per cent. above the figure of 1938, and the other targets are 260 or 255 per cent. above the volume in 1938.

What we have actually done in this connection is to reduce the amount of the exports expected from metal manufacturers generally from 46 to 44 per cent, of the total. I should like to pay a tribute to the industry for the high export figures they have reached, and to congratulate them upon that achievement. It has also been necessary to reduce the targets of goods which we find it not quite so easy to sell in overseas markets. Jewellery is no longer considered an essential commodity; nor are mechanical lighters and other miscellaneous goods. In spite of our pressing such goods in the bilateral negotiations that take place, we are having to reduce targets until we can adjust the situation.

Reference has been made to two particular countries, Denmark and Sweden. I had an opportunity recently of going to those two countries and of talking about the difficulties confronting us. When we are making bilateral arrangements we try to balance essential goods with essential goods. If we are compelled to balance less essential goods against less essential goods, we try to make sure that we send as many as possible of the traditional less-essential goods. In the case of Denmark, the feeling is that their butter, bacon and eggs are the highest class in those commodities. They wanted, in turn, that we should export our capital equipment and our coal and steel which are the most valuable goods that we have.

Last week I told the Danish Minister of Commerce and other members of the Danish Government that bacon, eggs and butter happen to be not quite in the same category as the essential goods that they wanted from us. I pointed out that unless some regard was had to the fact that the less essential goods that we have always supplied had to go into their market, we might have to make some kind of schedule, and to say that unless they took those goods an agreement could not be concluded. We are very much alive to the points made by hon. Members. I hope that as a result of my personal intervention the Danish Government are under no illusion about where we stand in this matter.

Sweden has for a long time been in a favoured position. It is, therefore, inevitable that as soon as that country sees a swing in the opposite direction, she wants to put on all kinds of restrictions. In this case, I saw the Minister of Commerce and told him that to put on restrictions against British trade because there was a slight swing, and at the expense of less essential goods, when they were already getting our more valuable commodities, was undesirable. For the moment we were going to take the whole of their commodities, and the balance would then swing the other way, but we were intensely disappointed that import difficulties were being put in the way. I hope that, as a result of my intervention, there may be some relief for the industries which have been mentioned.

In connection with these bilateral deals it can be argued both ways as to what is the best form of trade. We have expressed from this side of the House the need for multilateralism. That must be our ideal. Very often hon. Members opposite have given the impression that the restrictions in foreign trade are the fault of His Majesty's Government. It may therefore be interesting if I give some examples of what the position was before 1938. I got this information from a very reputable banking journal.

I find that in 1938 the Argentine had a regulation to the effect that any subject who wished to buy goods abroad had to apply to the control board for a prior exchange permit, and then he could give his order for the goods. Argentine exporters were required by the law to surrender to the control board all exchange resulting from their sales abroad. It is from the fund thus obtained that the country's imports were paid for. I have here many other examples. I will cite one or two more. In Chile, exchange was granted only as it became available from the country's exports, and then in the order of (1) first necessities, (2) second-grade goods and (3) non-essentials. In Denmark, essential raw materials were permitted free ingress. All other goods were subject to import licences.

These difficulties existed before the war. Nobody will deny, however, that the difficulties confronting the countries today are more acute. Because of that situation we have to go into battle armed in the most formidable way. We can truthfully say that each time we go into negotiation we go armed with material provided by the industrial organisations and by the excellent services inside the Board of Trade and other Government Departments. I would be prepared to match our methods now with those before the war and to say that ours now are on a higher level.

Major Haughton (Antrim)

In regard to the difficulties of our trade with the South American States, Argentina, Chile and Brazil, would the Minister say what the figures were in 1938, for textiles, despite the regulations which he has mentioned?

Mr. Bottomley

I cannot do so without notice. My right hon. Friend the President of the Board of Trade will reply to the Debate and will deal with textiles. I am sure we have the information asked for, and my right hon. Friend will no doubt be able to give it. I could cite other similar regulations, but it is unnecessary to do so, as I think the point has been made.

Mr. Spence

Does not the Minister agree that in prewar years there were none of these particular difficulties? If one wished to export goods abroad, it could be done. There may have been such regulations, but everyone in the export trade knows that they were not strictly enforced. There was not great restriction, provided that certain regulations were complied with.

Mr. Bottomley

The position in 1938 was grave in some ways. It was because those countries had their difficulties that they had to impose those regulations. I do not think anyone will deny that if the difficulties which exist today had existed in 1938, the regulations would have been applied most rigidly. Bilateral trade negotiations are not new. They are something that we were compelled to face earlier and they would have been more difficult at that time had the general conditions not been easier. The present situation has been created by war. My right hon. Friend will deal with this more fully. We must try to produce the kind of consumer goods and other commodities which these nations are prepared to take.

It is, therefore, most important that we should concentrate upon the goods that can be sold readily. I have referred to textiles. It is not only important that we should send out textiles for the purposes of our trade talks, but we also ensure that those goods go into the right markets from the currency point of view. Textiles are urgently required in Canada, and we can still get them into the United States, as well as other countries. In order to build up this production, we have resorted to the typical British method of appealing in a democratic way to management and workers. Only last Saturday the Lord President of the Council, the President of the Board of Trade, the Minister of Labour, and also the Minister of Education, who has a special connection with Lancashire, attended a very large meeting and stated that it was necessary that that kind of production should be developed. I am told that there was quite an enthusiastic response from that meeting. In another connection the hon. Member for Darwen (Mr. Prescott) made a similar appeal.

We are asking the management and workers in the textile industry to do all they can to force up the rate of production so that we can reach our target of 150 per cent. over the 1938 rate.

Mr. John Lewis (Bolton)

The hon. Gentleman said that an appeal is being made to the workers now engaged in the textile industry to increase their efforts in order that we may achieve our targets. Surely, he must be aware that it is useless appealing to people in the industry to increase their efforts when they can see 40 per cent. of the mill machinery standing idle because of the lack of workers?

Mr. Bottomley

We are, in particular, appealing to the workers to go back, and it is useful to know that many thousands of people who had gone out of the industry are now returning. I ask the hon. Member for Bolton (Mr. J. Lewis) to add his appeal, as I am sure he has done, to the appeals of others to increase the number of recruits to that industry.

With regard to our targets, hon. Members may get some consolation in a note which has appeared in the "Financial Times" in which some support was given to the view which I have stated that in only a minority of cases are there really grave doubts about our coming somewhere near the targets provided that no big unforeseen events intervene. I am glad to have that support. Our target is the right one and we hope to reach it; if we do so, it will enable us to go a long way to meeting the difficulties that confront us—

Mr. Hollis

Can the hon. Gentleman say what sort of labour target he has envisaged?

Mr. Bottomley

Perhaps my right hon. Friend will deal with that later.

In addition to dealing with targets, the hon. Member for Devizes also mentioned invisible exports. I share his view that they are most important. The Government are not lacking in their endeavours to build up invisible exports. In a recent Debate I talked about the endeavours of the British Tourist and Holidays Board to assist in getting more and more people to this country as a means of adding to our invisible exports. Last year the number of overseas dollar visitors was 75,000 and the dollar earnings were £5 million. This year there are the Olympic Games, and we are aiming at 500,000 visitors. We hope that there will be a very great increase in the dollar earnings as a result. Indeed, we should not aim at less than double the amount obtained last year.

The President of the Board of Trade has referred to the hospitable welcome that we shall give to visitors. Our own economic difficulties make it rather hard for us to give them the same standard of comfort and provision we did before the war, but visitors will find that we are not lacking in our characteristic warmth and hospitality even if we cannot always give the same material help. We hope that hotels, shops and entertainments generally will continue at the high standard which obtained last year—we have no reasons to doubt that that will be done—in order to encourage still further visitors. The Government themselves must do everything possible to encourage visitors. As I reported in an earlier Debate, we have released 94 per cent. of the hotels which were requisitioned for war purposes It is hoped to reduce requisitioning in other directions. We are trying to proceed as speedily as possible, but there are national considerations which necessitate our retaining requisitioned premises until those considerations no longer apply. However, hon. Members will agree that the figure of 94 per cent. of hotels derequisitioned gives reasonable satisfaction.

We hope that the tourists will buy our goods. We hope that they will see them in the shops and that that will be some kind of inducement. To that extent we will make a show. If the visitors compete with the average British person, I expect that it will displease the hon. Member for Devizes, but to the extent to which we can get more dollars, the sooner will it be possible to put more incentive goods into the shops to satisfy our people. We have decided to make it even easier for visitors to get goods from our shops. They can go to certain shops for the goods, and if the goods are sent to their ship or aeroplane, the visitors will be released from obligations such as Purchase Tax and coupons. We also hope to give each visitor the opportunity to get a certain amount of goods without coupons upon production of a chit to a shop. We hope by this means to earn still further dollars and other currencies which are desirable—

Mr. Spence

Can the hon. Gentleman say whether this new arrangement will cut out the use of the form C.D.3 which has to be completed for purposes of Customs and Excise? The filling up of this form is the one fly in the ointment at the moment because it takes too long.

Mr. Bottomley

Visitors who go to the banks and get on their passport the necessary authorisation, will be able to go into the shops and get the goods they require, and that will do away with this form.

Mr. Stokes

On the matter of Purchase Tax, why will those people not have to pay as much as we do? Is it because they are so poor?

Mr. Messer (Tottenham, South)

No, it is because we are so poor.

Mr. Bottomley

If the goods go to the ship—in the way we ship goods overseas—there will be no Purchase Tax on them. Shipping is a very valuable invisible export, and the Government, realising its importance, decided long ago that we must do all possible to concentrate on shipbuilding. I would like to correct what has been stated inaccurately time and time again. I thought it was clear from what the Economic Secretary to the Treasury said earlier that we have not reduced the amount of steel allocated to shipping. What happened was that of the amount available, more was being consumed than could be spared. To that extent there has been a restriction, but there has been no reduction in the amount allocated for shipbuilding.

Last year the shipyards of the world launched 837 vessels of 2,111,886 tons gross. Of that output no less than 56.9 per cent. came from berths in Great Britain and Northern Ireland. Of the world output last year of 2,111,886 tons gross, the amount launched abroad was 909,862 tons, and the amount from British berths 1,202,024 tons. Omitting comparison with world totals during the war years for obvious reasons, the British percentage of 56.9 compares with 53.3 per cent. in 1946, but the figure for 1938 was only 34 per cent., in 1935, 38.3 per cent. and in 1932, 25.8 per cent. So I think the Government can show that they have put great emphasis upon the need to develop again our shipping industry, recognising its great value as an invisible export, and we are rapidly making headway to overcome the great losses which we suffered during the war.

We have in mind, of course, that there are other invisible exports, and all of those are being considered. We should have made a handsome profit last year on insurance, had it not been for an unusual collection of accidents, particularly in America, but in that connection, thanks to the skill of the insurance companies, we are looking forward to an increased reward this year.

So I think I can say that on the question of target production we have not over-estimated and that I have shown we are on the road to succeeding. If we succeed, it will go a long way towards helping to overcome the economic ills confronting us. I have shown that we are not leaving alone the field of invisible exports, we are watching them, and pushing them and hoping that we shall get even greater rewards. The Government have reason to believe that by their constant endeavours, by frequent debates—because one cannot talk too much about a good thing—we are concentrating attention upon the need for exports, for only by exports and getting in return the food and raw materials absolutely necessary to us, can we overcome our present economic ills. To the hon. Member for Devizes I say "Thank you for raising the matter," and I would again express sympathy with him for not having had the good fortune to get as much out of this Debate as he might have wished.

5.13 p.m.

Major Haughton (Antrim)

I hope in a minute or so to follow the Secretary for Overseas Trade perhaps a great deal more directly than he expected, as regards our overseas trade with the South American states; but to begin with I want to draw the attention of the House to the fact that the Chancellor of the Exchequer, the President of the Board of Trade and the Lord President of the Council, all Cabinet Ministers, have within the last week drawn attention to the fact that the export of textiles is the spearhead of our drive to close the gap of overseas payments, and it is little wonder that I, with most of my interests in textiles, and as one who has served my time in the textile trade, stand here with considerable pride and say that I endorse every word they have said. I hope most sincerely that that drive by the textile trade for an increase in exports will succeed.

I had intended to quote what the President of the Board of Trade said last week, but it has already been quoted by my hon. Friend the Member for Aberdeen Central and Kincardine (Mr. Spence). However, I will quote, for a particular reason, what the Chancellor of the Exchequer said in a remarkable message which he sent to the linen trade the other day. It was sent to the National Crisis Production Committee, which comprises representatives of the unions and the managements of all the textile concerns in Northern Ireland. He said: Linen is by far the greatest element in the item which is described in the Economic Survey as 'other textiles.' Its true importance, which, I am persuaded, is well appreciated in Northern Ireland, is as a direct earner of dollars and other 'hard' currencies both now and for as many years ahead as can be foreseen. He went on to say that the linen industry has given a good lead, and then he said —this is the most interesting and remarkable part of his message— the merchants have put themselves about to plan the production of goods appropriate for the most valuable currency markets and to make their products well known in all markets. I am grateful to the Chancellor of the Exchequer for having said that, because there are merchant houses over there which have spent a great deal of time, money and effort in developing the presentation of this British merchandise.

Then we come to Saturday, when the Lord President of the Council had a great meeting, so we are told. He is reported as having said to the "People of Cotton," as he described them, that pretty nearly everything depended upon their efforts. I noticed that in his speech the President of the Board of Trade—I hope he meant this—referred to textile production, and that the Chancellor of the Exchequer spoke about the production of goods appropriate for the most valuable currency markets. I am sure that when the Lord President was addressing that great meeting up North on Saturday he realised that he was addressing many workers, many spinners, many weavers and managements producing rayon in vast quantities as well as cotton.

It is well to realise that in Scotland and Northern Ireland there is a vast production at the present time of rayon in its different forms, as well as of the fabrics which are associated geographically with parts of these islands. We used to think of Dunfermline as a place which produced linen only, we used to think of Bradford as the place which produced woollens, and we used to think of Ireland as the place which produced linen only. Nowadays, however, these great textile districts produce a great variety of goods. It is about this great change and its importance in the export trade of which I want to speak because the Chancellor, time and again in this House when we have talked about the prices at which goods should be sold overseas, has made the point that it is by modernisation of machinery and by a better conception of management that we will produce more and reduce our prices.

In this particular realm, if the Chancellor will come to any of those areas of which I have spoken, he will find wonderful new mills, wonderful new factories and the most marvellous machines. It is interesting that this new plant is producing an ever-increasing volume of goods at an ever lower cost, and that has to be taken into consideration because it is a plea made by the Chancellor of the Exchequer, and it is certainly a matter which the President of the Board of Trade must realise. So we have established two points: that the Government set great reliance on textiles in connection with the export drive, and also the comprehensive nature of the composition of the textile trade. In my opinion the third aspect is that we are up to the neck in a buyers' market. If the Government take in hand the controls, they have to come right down into the cold opposing currents of a buyers' market with those of us who are spinners, weavers, merchants, dyers and printers. It is all too easy in a sellers' market for the Government to exhort and talk about targets. To me they are like the members of a supporters' club waving, shouting and cheering, but what I want them to do in this House this evening is to come down on to the pitch and see how very small is the goal mouth into which we have to aim our shots.

The House will bear with me if I illustrate one or two of the difficulties which confront the textile manufacturer in present circumstances. First, I take the case of a rayon specialist whose yarns are spun and whose cloths are woven in Northern Ireland, but which are subsequently dyed, printed and processed in England and Scotland. I am glad to see the hon. Member for North Lanark (Miss Herbison) present, because I have some samples of these things with me and would like to show them to her later and get her opinion on these very beautiful prints. They are manufactured from something which is known as long staple rayon, which has a vast future of great potentiality to this country, and something in which we are specialising to a greater extent in Northern Ireland probably than in Lancashire.

America is specialising in a different type of man-made fibres, continuous filament, but for the moment this fabric, with linen characteristics, is being woven in great quantities in Northern Ireland. Over there we are using 25 per cent. of the total amount of the raw material output from which these goods are made. It is known as "fibro" and we spin from it rather coarser and heavier yarns than are usually spun in Lancashire. The firm of which I speak participates in the periods in which the control is split—the four month periods—to the tune of a million and a half yards, which is no inconsiderable amount. This firm has to plan for many months ahead. Seven months elapse before the cloth emerges from the loom and at least three months are required for processing. So in this case the manufacturer has two long periods of eight months for which he must estimate.

In 1947 that firm shipped to Australia £300,000 worth of this fabric. In my view it was entirely justified in assuming that continuation of trade, but the bookings in Australia this year have been completely negligible. The reason is that the Australian Government have taken the subsidies off British merchandise and imports of rayon goods from America to Australia are exceedingly high. There was a very wet summer out there, in what is our winter, and although Australia is quite definitely our No. 1 market for that type of merchandise, with South Africa second, orders are absolutely nil. Other countries into which these imports are shipped are New Zealand, Belgium, Switzerland, Canada and small lots to the Scandinavian countries and the Middle East. Every country has been canvassed and every form of promotion has been tried, but at the moment while owing to the nature of the business it takes probably 10 months to produce, it is going to be very hard to sell.

I fear that unless we face realities and unless something is done the whole flow of production from the spinning mill and the weaving shed to the processer, the dyer, the printer, to the warehouse will be halted and a very serious situation will arise, causing dislocation and unemployment. I have already placed the facts of the case before the Board of Trade, and I wish to acknowledge the great courtesy and help shown by the Paymaster-General in submitting these facts and figures to the Board of Trade. Of course I am full of hope that I shall receive some satisfactory answer from the Board of Trade. But this is something which has to be faced and the Secretary for Overseas Trade spoke glibly as if it were a matter of production in order to get going in the South American market.

Let us take the case of rayon. Here is a fabric 36 inches wide and these beautiful prints are shipped at 54½d. a yard. The landing price in Rio today is 228d. Here I wish to quote from a letter from a Buenos Aires agent. The agent is dealing with the so-called Andes Agreement. I do not want to bore the House with a long citation. The letter says: Two months ago the so-called Andes Agreement was signed by His Majesty's negotiators and the Argentine Government and from the bulk of the sterling available for Gt. Britain from the sale of railways"— He is speaking for himself as an agent of textiles— a sum of £10 million was earmarked for the importation into the Argentine within 12 months of the date of the Agreement for beverages, textiles and vehicles. He goes on to say—it is pretty scathing, and I hesitate to read it out— All this looked lovely when on board the Andes with champagne flowing, but apparently from this moment Miranda put in his machinery of obstruction… I am sure the Board of Trade will not only work energetically but I sincerely hope your interests in general will be successful at last. It is now to full months since, for British textiles, this market has been hermetically sealed. In face of reports like that from textile agents in the South American markets, how can we stand up and talk about targets? We have to get down to brass tacks. Not long ago some buyers came to see my friends in the textile trades. I can speak quite openly about this. They came with a certain amount of money to spend in European markets. They have always been particularly favourable to our own markets but, as a result of their trip, they bought merchandise in France. I am told that they were able to buy cotton ginghams in France—lady Members will know what cotton ginghams are—at a shilling a yard below those sold in Lancashire, made from Egyptian cotton. I could give illustration after illustration, but I will end with a warning to the Government and with a couple of suggestions.

America is greedy for and would gladly part with dollars for fibro, which is the raw material for rayon production in this country. The temptation for the Government to gather in a few million easily collected dollars by return of post must be very great. That temptation must be resisted, as otherwise the raw material for our spinning frames and the yarns for our looms will have vanished. Nor must the mills be cut down in their allocation of fibro, just because they cannot immediately shift the stocks for the reasons I have given—because the markets abroad are closed. If these allocations are cut down the whole line of production in this country as regards textiles—and this is universal over all the geographical areas in which textiles are made—will be dislocated.

Finally, in this matter the controls are altogether too rigid. Here is an order issued by the Board of Trade on 6th April detailing minimum allocations to utility production, non-utility production, export production, so much per cent. of this and so much per cent. of the other. That is not the way a business firm would deal with matters. They would deal with the situation as they found it. Today, the controls are altogether too rigid and they must be made flexible. If they are made flexible the difficulties of the moment will be overcome. We must keep production going and we must keep our trade.

I ask whether the Chancellor and the President of the Board of Trade have got enough heart and enough sympathy to reorganise these controls for the moment so that these blocks of stock which cannot be shipped for the reasons which we all understand, can be shifted momentarily into the home market, where the housewife is longing to get these most desirable fabrics, for this, that or the other purpose instead of their being a clog in the whole machinery, tying up finance, running the risk of stopping production and breaking the heart of anyone who has anything to do with them. I make that appeal today and stress my point that the raw material upon which production depends shall not be shipped merely for the collection of a few easy dollars.

5.33 p.m.

Mr. Scott-Elliot (Accrington)

Like my hon. Friend the Secretary for Overseas Trade, I feel that the hon. Member for Devizes (Mr. Hollis) has done well to raise this important subject this afternoon. He will not expect me to agree with all he said; indeed, I was a little disappointed by some of his remarks. I am in complete agreement with him on the enormous importance of obtaining a German currency agreement as quickly as possible in order that shipments of steel scrap can be sent over to this country. I would like to say a word about the speeches of hon. Members opposite generally because I am pleased to see the way in which they have addressed themselves to the subject. After the really deplorable speech delivered by the right hon. Member for Aldershot (Mr. Lyttelton) last week—I am sorry he is not in his place—one feels inclined to retaliate with a rather strong debating reply. I feel, however, that this is a matter of such moment that it should be approached in an entirely different manner from the way in which the right hon. Gentleman approached it. I, therefore, propose to restrain myself and to try to be as objective as possible, although I may have one or two things to say about the right hon. Gentleman's speech in the course of my remarks.

It is obvious to anybody that the overriding need both for exports and for everything else is that we must have more production at lower costs. That will achieve four objects. There will be more goods for export; there will be more for the home market, which will help to fight the inflationary tendencies with which we are faced. It will increase the national income and thereby allow the Chancellor of the Exchequer to decrease taxation in his next Budget. Finally, it will reestablish foreign confidence in this country That has been severely shaken by the fact not merely that we have been living beyond our means during the war, when it was obvious that we must do so; not merely that we have been living beyond our means in a period of transition during which we have been trying to get our industries back to a peace time footing; but that we have inherited a system from pre-war days, when under the Government which was controlled by hon. Gentlemen opposite we were then living beyond our means. In 1938 there was a substantial deficit in the overseas balance of trade, and we have never had a surplus since then. This is a very serious point, which I wish to make quite objectively. I believe that Members on both sides can help to get over to the country the fact that for 10 years we have been living beyond our means and that something must be done quickly in order that we may be able to look our creditors in the face.

We need more production. When we look round to see how to do that we immediately run into the difficulty of what kinds of production we can increase, because there are shortages everywhere. There are three kinds of shortages. There is a shortage of productive capacity, as in the case of steel, of certain kinds of chemicals such as sodium compounds, and also very possibly of ball bearings. In addition to the shortage of productive capacity, there is shortage of materials affecting those industries which use steel and so on. Finally there is a shortage of labour, which affects the consumer goods industries as a whole, in particular the textile industries, with the possible exception of worsted, in which I believe there is a shortage of capacity rather than an excess.

Let us get a little deeper down into this problem. It may be said that this is due to a war-distorted economy. That is true to some extent, but that is an oversimplification of the case. I believe that our economy before the war was to some degree lopsided, and I will give my reasons for saying that. The right hon. Gentleman the Member for Aldershot made a tirade against Government planning the other day. It seems to me that there has been some very poor planning in the past, otherwise we would have capacity for making steel that was commensurate with modern requirements. What did we do before the war? We had a capacity similar to what we have today. At the same time, we depended upon imports from the Continent for cheap grades of steel. Instead of going in for low cost production this country depended upon cheap steel imports from the Continent of Europe, which fact is recoiling upon us to a serious degree.

I think I am right in saying that in the semi-boom year of 1937 we had insufficient steel capacity, certainly not a sufficient amount of efficient steel capacity to fulfil the needs of that year. We need more steel capacity like the great project set up by Richard Thomas at Ebbw Vale before the war. I believe I am right in saying that it is the most efficient rolling mill in Europe and is producing sheet steel today at a price at which nobody else in Europe can touch.

Mr. Stokes

Or America either.

Mr. Scott-Elliot

That may be so, but I do not know. Why could we not have gone in for producing steel in exactly the same kind of way? I believe that that was perfectly possible. I do not wish to labour the point but hon. Members will be very well aware of what happened when Sir William Firth found he had over-estimated the cost. What happened was that the Iron and Steel Federation clamped down on that undertaking, put it in a kind of strait jacket and forced it to sell steel at prices far higher than it need have been sold.

Turning to chemicals, I believe that it is correct to say that we are using the capacity in this country for producing sodium compounds to the utmost, and yet we are terribly short. Why is that? I think it is a matter for research and inquiry. I do not propose to go too far into this matter, in view of the Bill which is coming before the House on Thursday, when I hope, Mr. Speaker, I shall have the opportunity of catching your eye and discussing the matter more fully. I venture to suggest to hon. Members that it is because of the grinding monopoly of the Imperial Chemical Industries which has in the past sought by every means in its power to discourage the production of sodium compounds by other firms in this country.

With regard to ball bearings, it is alleged—I may be wrong, and speak subject to correction—that they are in short supply and that this is hindering production. Before the war there were three major establishments in this country for the production of ball bearings. We used also to import a large amount from Sweden. During the war several dispersal factories were set up in different parts of the country. One of them in the West of England is still, to my knowledge, surviving. There was a large establishment in Dundee, which I believe has been abandoned, and also one in Northern Ireland, the fate of which I do not know. I feel that this is a matter for very careful inquiry. I know that ball bearing manufacturers allege that they are producing all that is wanted, but it is a matter of producing the right kind of ball bearing. As hon. Members may know, ball bearings can vary from something weighing two tons down to something about the size of a pin head. Therefore, it is necessary to produce the right kind of ball bearing and have it available for the people who want it.

Reverting to the question of target cuts, there has been the cut, to which the hon. Member for Devizes referred, in the machinery and vehicles target, due to the shortage of steel, because we cannot produce sufficient steel in this country, and we cannot procure it elsewhere. I wish to ask one question. Is the cut in agricultural machinery an overall cut, or are supplies being diverted from exports into the home market? It is a very important matter to agriculturists. A very large cut has been made in the export target for particular agricultural machinery. I believe I am right in saying it has been cut by about half.

What is to be done to make good these cuts? We have to step up textile exports and in particular send cotton piece goods to Canada, because the bulk of our food comes from there, and we have to send them also to the sterling area in order to replace American shipments and thereby save dollars. There is great need for further production in the industry. As a long-term question we obviously have to put in more up-to-date machinery, but that is a long-term issue and there are very great difficulties to prevent it happening for some time. Therefore, we have to look to the short-term question. How can we, from a short-term point of view, increase quickly the output of textiles, and cotton goods in particular? That can be done by putting in additional labour and by the re-deployment of the workers.

So far as labour is concerned, there has been a steady but slow increase in the labour force for both the spinning and weaving sections of the industry, but there is need to convince people in Lancashire that the cotton industry has better prospects than in the past. There are far too many people in Lancashire who still say that they do not wish to see their children going into the mills. I would like to testify to the excellent work done by the Cotton Board and by Mr. Gray of the Recruiting and Training Department of the Cotton Board in getting the parents in Lancashire to recognise that the cotton industry has a future. The input of juveniles is going up steadily, and I believe that he is putting over the right idea, especially that there are going to be entirely different standards of wages and conditions in the industry in future.

It is just as important to get in workers from overseas—E.V.W.'s and German workers who, I hope, will be coming in presently. It is important that the Government should get over to the people of Lancashire the safeguards which have been negotiated with the unions in this matter. I put a Question on the subject to the Minister of Labour not very long ago, and he rather turned it aside, saying that every one knew all about it. They do not know, and they are still apprehensive in Lancashire. Complete agreement has been reached between the Government and the unions that no more than a certain percentage of workers from the continent of Europe will be imported, and the fullest possible safeguards have been made, in the event of redundancy, for the foreign workers to go out of the industry. That is a point which ought to be put over to the people in Lancashire and I hope that the President of the Board of Trade may refer to it in the course of his speech.

As for re-deployment, it will increase output, increase the workers earnings, thereby bringing more workers into the industry, and finally it will reduce costs. My right hon. and learned Friend the Chancellor of the Exchequer and I attended a conference at Buxton last autumn to which a great deal of publicity was given. At that conference the Shirley Institute produced a paper, which we discussed for the whole of one morning, showing that if all the mills could attain the average of efficiency of the best 25 per cent. the output of yarn would be increased by no less than 20 per cent. That figure, events have proved to be, in certain conditions, an under-statement. The House will be aware of the experiments which have recently been carried out in the Musgrave Mill in Lancashire, where, as a result of re-deployment and the putting into force of motion and time study, the actual output of yarn has been increased by no less than 4o per cent. and the earnings of operatives have increased substantially at the same time. That is one example of what the spinning industry in this country can do. Similar things can be done in cotton weaving and other textile industries and in engineering. Today time does not permit, but I hope that on some future occasion I may have the opportunity of addressing the House on this tremendously important question of industrial efficiency.

5.49 p.m.

Mr. Edgar Granville (Eye)

I agree with the hon. Member for Accring- ton (Mr. Scott-Elliot) that we are grateful to the hon. Member for Devizes (Mr. Hollis) for having initiated this discussion. The more we can have of these Debates on this vital topic of exports the better it will be for the Board of Trade, whom everyone will admit has an extremely difficult problem to solve. It helps to keep them up to their job. I think that the President of the Board of Trade is doing his best to solve this problem, which is a changing problem the whole time and which we hope, that, as the hon. Member for Accrington said, more people in Lancashire will be able to help solve. I hope that a good many of them listened to the broadcast speech yesterday of the President of the Board of Trade, because I think he put the case very clearly. Perhaps the opportunity will be taken for a repeat of this speech, which was one of the best of its kind, setting out the whole problem. My only qualification for taking part in this Debate is some contact with the export market. I was a little surprised to hear the hon. Member for Devizes say that he thought the sellers' market was diminishing. I should have thought that the sellers' market was absolutely finished.

Mr. Stokes

In what way?

Mr. Granville

On consumer goods and certain types of capital goods. There was a period after the war when there was a glut export of consumer goods, some of inferior quality, all over the world. I should have said that that period had gone in most of the old competitive markets, and that we were now in a position when price and quality will he the determining factors. I believe it would also be true to say that the exporters' backlog of orders is rapidly disappearing. After the war manufacturers and exporters had, of course, a very big backlog of orders, as the hon. and gallant Member for Antrim (Major Haughton) said, but I think they have caught up on that, and are now taking current orders. That is where the difficulties begin.

I am sure that the Secretary for Overseas Trade must know that today there is a tendency for importing countries to make cancellations left, right and centre, and the lists of goods upon which licences are given are getting smaller and smaller. Even the quota lists, from which a quota of the goods imported before the war is allocated, are getting seriously smaller. When the President of the Trade replies, I hope that he will tell the House, and manufacturers and exporters, something of the facts. From what one hears and sees when visiting importing countries the lists of general consumer goods which can be imported into most importing countries have been decreasing steadily, until they are now extremely small, and exporters in foreign markets find it more difficult than ever before to obtain import licences for their goods upon which irrevocable letters of credit are issued. The right hon. Gentleman knows the reason, which is shortage of currencies due to adverse balance of payments. I am afraid that the importing countries just have not got the currencies. The trade departments in those countries have to discriminate; they have to use their available currency, which is short—perhaps because of their adverse balance of trade—and issue licences for those goods which they simply must have. For us this is serious in the hard currency areas, and that, frankly, is where the trade agreement comes in. Our problem is to see that we use the maximum production of raw material and manpower available in this country so that we can send our exports to those countries from which we must import our raw materials and food.

While the Marshall Plan will help—in that it will give credits to those importing countries which at the moment are standing back and wondering what will happen—as the hon. Member for Ipswich (Mr. Stokes) will agree, it will also help them to import and to establish the manufacture of important capital goods in their own countries—with, I hope, our technical help and "know-how." But all of those countries which will benefit from the Marshall Plan are short of steel. I suppose they, as well as others, are shorter of steel than of almost anything else. And, of course, they are all looking to us to try to export some coal.

The hon. and gallant Member for Antrim referred to the attempts of the Government and the Board of Trade to increase textile production for export to dollar areas. For two years we have been saying, "Export Bradford wool and Lancashire cotton to Canada and America —the dollar markets." I say to the Government: "You must have a special plan for that, because I think you are now a bit late." I know that the Board of Trade have been working very hard on this problem, but, frankly, its approach is too late, and I will tell the Government why.

The hon. and gallant Member for Antrim referred to the export of rayon to the United States. What is the position in the United States and Canada when it comes to importing worsteds, cotton and so on? The salesman calls upon the buyer and says, "I want to sell you some very good Bradford cloth." The American or Canadian buyer asks, "When can you deliver?" The salesman says, "I think seven months"—or nine months, or even a year. The buyer will say, and is saying, "I can get it delivered immediately from mills in America. It is not of the same quality as the British cloth, but I can get it by return, and I know now what the delivery price will be." But they do not know the price which will be operating when the British goods are delivered, because all kinds of factors have to be considered.

Some of the well-established British exporters are exporting British quality textiles to warehouses in dollar markets so that the salesman in those markets can call upon the buyers and say, "I have the goods. You can come and see them in the warehouse, if you like. They will be delivered tomorrow, and you can see the samples now." I think that the Board of Trade have tried very hard to remove controls. I am sure that the Board of Trade have tried to give the utmost freedom to producers, manufacturers and exporters here, in this emergency problem, but I wonder what effect the general cancellation of licences will have? A little while ago the Chancellor of the Exchequer said that it might be necessary for manufacturers and exporters to send the goods to our own docks and leave them there. If this situation develops, I wonder whether the Board of Trade will not have to assist with a scheme whereby exporters to those countries can export the goods to warehouses and our salesmen can sell direct from actual supplies in the warehouses? Maybe the Board of Trade have given this serious consideration, but I know that some exporting firms are doing this, and I hope that the Government will give all the assistance they can, by means of credit and other methods, to enable this to be extended as far as possible.

I turn now to quality. I do not think that we can compete with the United States automatic looms, or mass production, and I do not think that we ought to try. Because of the war, of course, this country suffered a big blow to its trade, and I could not help thinking of that when the hon. and gallant Member for Antrim was telling us of the splendid efforts that are being made to try to repair the damage done. But we ought not to try to compete with the United States automatic looms or cheap fabrics. My own opinion and most people's experience show that it would be better to concentrate on quality goods, because if we export Yorkshire and Lancashire quality goods to the United States they will take all that we can deliver, provided we give them firm deliveries and at the right time. We are well known for quality cloths and get good prices.

The question of new designs is also important in competitive markets, and many new designs and ideas are appearing, and will appear if encouraged. Who is responsible for allocating raw materials to new firms which have a new design or idea which will assist the export trade? What is the position today? Is the allocation kept entirely to those firms which were manufacturing and exporting before the war? Does that mean that new firms with new ideas cannot get in? Let us suppose that a new firm can produce goods with a minimum of wool yarn which will produce the maximum dollar exports. Will the right hon. Gentleman tell us who is responsible for the allocation of yarn quotas? Is it his own advisers at the Board of Trade? If so, I am satisfied, because that is a fair deal; or is it from the trade?

The President of the Board of Trade (Mr. Harold Wilson)

If the hon. Gentleman will give me full details of the particular materials he is talking about, I will tell him, but, of course, it will be a different answer in the case of different materials.

Mr. Granville

I quite appreciate that, but I had informed the Secretary for Overseas Trade and given him some details about this. I appreciate that we want to get the maximum exports for the wool we are using, but I would say, for heaven's sake do not shut the door to new ideas and new designs which would help us in the competitive market against the United States. Before the right hon. Gentleman the President of the Board of Trade came in, I said that he has tried extremely hard to take off controls, and that is recognised in the industry itself. I would like to ask whether our consuls or commercial attachés abroad have any special responsibility for informing his Department as to the exact conditions in foreign markets as they change from time to time. Are our producers here given the latest, up-to-date information about those markets by our commercial attachés?

Finally, I want to say—and I am sure the hon. Member for Ipswich will agree with me—that we are all worried about the consumers goods export market. Frankly, we have got to switch to capital goods as soon as we can. That means a tremendous operation, possibly even more controls during the change in manpower and materials, and all that that means, a planned economy, and planned exports; but whatever it means, I think that, in the end it comes down to this currency shortage throughout the world, and the tendency of all importing countries to restrict their consumer goods imports. The sooner we face up to the fact that this is not short term, the better. If we are to close the gap and pay for our imports, we shall have to get new plans and concentrate more on capital equipment and good quality exports. I congratulate the President of the Board of Trade, because I think he is doing a good job at an extremely difficult time in facing a changing problem in changing markets. We wish him every success in this extremely important task.

6.3 p.m.

Mr. Stokes (Ipswich)

Like the hon. Gentleman who opened the Debate, I do not propose to occupy the House in reviewing again all we have reviewed in the past few weeks, but there are one or two points I should like to make. I suppose I ought to take up the argument where it was left by the hon. Gentleman who has just spoken. I was surprised to hear him saying that the whole situation has now changed over into a buyers' market. While that may be true of one range of goods, I do not think it is by any means true over a very considerable range of capital goods and raw materials, which are the two fundamental parts of our problem of the export trade.

Mr. Granville

I said it was mostly in consumer goods.

Mr. Stokes

Yes, I understood that, but the House also understood that the sellers' market was rapidly disappearing, and that was, in fact, endorsed by the junior Member for Antrim (Major Haughton), who started off in the most optimistic mood, and I felt much better. I have always felt that the export targets set for textiles were absolutely "cuckoo." The hon. and gallant Gentleman said he welcomed what the President of the Board of Trade, the Chancellor of the Exchequer and the Lord President of the Council had said, and I supposed that he meant that the production quotas could not be maintained, but he suddenly turned round and said that he did not know where on earth to get rid of the stuff. He did not use those words, because the hon. and gallant Gentleman has not got my rapid slow of cockney, but that is the effect of what he said. It is, as the hon. Gentleman has just said, and I have believed for a very long time, that the market for consumer goods, even textiles, is going to close in on us, and we shall have the greatest possible difficulty in closing the gap by that range. I believe that the only way in which that gap can be closed is by capital goods, steel and coal. If we can get coal up to 4i million tons, I think we are practically home, and I hope that that will be emphasised on every possible occasion by my right hon. Friend.

The matter that troubles me most, and it was raised in the first instance by the hon. Member for Devizes (Mr. Hollis), is what has happened about our steel. I have been astounded at what has happened in the last few days, concerning Ministers' statements, which have caused a good deal of bewilderment in the trade. In 1947 our output of steel was 12.7 million tons. The target for 1948 was fixed at 14 million tons. In January and February of this year, according to newspaper reports, which appear to be authentic, the rate of output was 15 million tons. What on earth has happened to it? Here we are, after indications by the trade that we were doing all right, and now we are told that the target will have to be cut. How does my right hon. Friend explain that to any manufacturer who has planned his output and who is now to be told that we shall not have enough steel for our 1948 targets. Is it that more steel is being exported, or that more steel is being switched into the armaments industry? If so, it is most important that we should be told what is the Government's view.

I take it that one of the possible difficulties is scrap from Germany. On this I have a suggestion to make. At present, we send barges full of coal from the Ruhr down the Rhine to Antwerp and other North Sea ports, but all the material coming into Germany has to go to Bremen and has then to be transported to the Ruhr on an incapacitated railway transport system. Could not something be done with the idea of getting our friends across the Atlantic to have their imports to Germany sent to Antwerp? At present, the barges are going back empty to fetch more coal from the Ruhr when they might be taking some of these imports back with them. Shortage of locomotives is the real difficult part of the transportation of scrap from Germany. The real trouble is not the disinclination of the Germans to sell it, but the fact that the rolling stock is not there, so that, even if we had it, we cannot cart it away.

To turn to the question of capital improvement, though I do not pretend to know the figures on which the Government are working in insisting on the necessity for restricting capital improvements, I feel some alarm about what is going on in the machine tool industry. It may be that it cannot be helped and that it is necessary at present to increase the amount of machine tools sent abroad, but the figures which I am going to give really ought to cause hon. Members some concern. In 1947, we exported from this country 44,023 machine tools, worth, approximately, £13,690,994. During the same period, we imported 7,769 machine tools of a value of £3,991,791. We sent abroad fro million worth more of machine tools than we imported. That may be all very well for the export statistician, but it does not seem to me to be doing the industry any good. The situation is getting worse, not better, because, in January, 1948 the export of machine tools was 4,164, or a total value of £1,362,006, and, if we go on like that, our exports this year will be nearly £3 million more in 1948 than they were in 1947. Imports in January were 396 machine tools at a total value of £276,000, which is about £r million less.

What about the poor engineering industry? We are getting into a frightful state. To start with, many of us have depended on Germany for getting some of our bigger and heavier tools and, owing to the insane policy which has been followed in the Rhur and elsewhere, many of the factories on which we depended not only for the tools but for the spare parts have been pulled down. In the case of the four Schiess Defries factories, they have been pulled down simply from French jealousy. The extent to which this country depended on Germany for its machine tools was enormous. My right hon. Friend may say that the tools can be built here, but I doubt whether that can be done in the time. I hope my right hon. Friend will look into this matter, because if that trend continues, we shall be left in a very bad state.

Is my right hon. Friend satisfied that we are getting enough for our capital goods? I have been raising this point for some time, but I never get a satisfactory answer. We hear, "You must not make too much profit." I do not think that is necessarily a good directive when dealing with exports and trying to fill the gap. I know perfectly well that there are certain classes of textiles the prices of which have to come down, but the same does not apply to capital goods. I am certain from my own examination of the markets with which I am in contact, that the particular type of products with which I am concerned could fetch about 15 per cent. or so more, but nobody has been told to charge more. We have been told in a general way that we should get as much as we can, but it is no use telling people to get as much as they can, and at the same time tell them that they must not make any money because if they do so, they will be naughty boys.

I am not suggesting that manufacturers should put too much money into their pockets—I am perfectly willing that some of the money should go back to the Chancellor—but this has a psychological effect. No manufacturer wants to charge more than he absolutely needs beyond his balance sheet policy, because he knows that the cheaper he sells abroad, the more likely he is to maintain his markets. Why should he charge 15 per cent. more if he is going to be cursed for doing it so far as the Inland Revenue authorities are concerned, when by charging less he can assure his export situation in the future? Nobody has said that that point of view is wrong, and I hope my right hon. Friend will assure me on this point tonight, because I am sure it will do a lot of good. I do not say that he should shout from the housetops that we should "rook" the foreigners, although some of them are "rooking" us all right.

I would like my right hon. Friend himself, or with the Minister of Labour or the Lord President of the Council, to make some pronouncement about labour restrictions. I am talking particularly about foreigners. Everybody got the wind up when the White Paper announced, as it was quite right to announce, that in the absence of Marshall Aid there would be some difficulty in keeping all the workers of this country employed. That was headlined in the papers. Naturally it was taken out of its context by the Tory Press. They cannot be blamed for doing that. We should probably have done the same the other way round, if we had had the chance, But it had a very bad effect. Everybody felt that we were right up against it. People said, "We have now got enough work to do; let us go slowly, do not let us get foreign labour in or we shall have unemployment." The ordinary man in the street does not understand the situation. I would like my right hon. Friend or the Prime Minister to make a statement explaining that the fear of large scale unemployment is off for the moment.

Mr. Granville

The President of the Board of Trade made a very effective broadcast about it yesterday.

Mr. Stokes

I am glad he did, but it does not necessarily follow that everybody listened to the broadcast. I do not listen to the wireless any more than I can help. I think the right place for such an announcement is in this House, and if the right hon. Gentleman repeats his statement on this point tonight, it may put matters straight. We have got lots of these foreign volunteers in this country who cannot come into industry. What ought to be impressed upon the workers of this country is that if we do not succeed in making a real "go" during these three or four years in front of us by employing every single man we can lay our hands on, large scale unemployment is before us four years hence. That point ought to be emphasised.

Now I come to my overall conclusions. The first point is that the reason why we are in the "jam" in which we are, is that all through the war nobody had the slightest idea what we were fighting for. They knew what we were fighting against, but they had no idea what we should do when peace broke out. That is at the bottom of all our troubles. It led to all sorts of nonsense. All through the war people were wondering what would happen afterwards, and, of course, the moneylenders "got cracking" first. What my right hon. Friend ought to realise now is that people naturally expected that we should have a bit more when the war ended than we had when it began. In fact, they were told so by politicians of every party. My first point of emphasis is that we should allow more consumer goods to the home market. This would help to avoid inflation —that is an obvious effect—and it would stimulate output.

What the hon. Member for Central Aberdeen (Mr. Spence) said just now is so true. It is no use saying, "Let us wait until we see whether the goods are thrown back on the market." We know that a lot of this stuff is coming back on us, but when it is thrown back it is not released. There is a "jam." There is an ugly constipation in the Government departments, and it continues for eight months before the goods are released. Will my right hon. Friend see that the machinery for releasing goods which are not sold immediately on the export market, works quickly so that we can have the immediate advantage of stimulating production by offering more goods to the workers in this country? They will not work to save money. Sating money does not mean anything any more. People see the pound wandering around all over the place, and say, "What is the use of saving?" Men will not save in the present circumstances. I need not continue with that theme, because I have raised that point several times before.

Secondly, psychologically this conception of putting money first, instead of goods, is wrong. Again I have dealt with that point before, and will not detain the House to repeat it today, except to this extent that the London School of Economics nonsense of "too much money chasing after too few goods" is all very well for those people who call themselves economists, but it is absolute nonsense and psychologically wrong to the ordinary working man. He says, "If there is too much money chasing too few goods I had better not earn too much money, because it will make things worse." The right approach is to impress upon everybody, not that there is too much money but that money does not matter and what matters is output. The people should be told, "What we want is more goods, and if you produce more goods you can have a share of them." Of course, if we say that to them we have got to give them some goods. It is no use offering them money which they cannot spend on goods.

In a broader sense may I emphasise to my right hon. Friend and to the Secretary for Overseas Trade that bilateral arrangements are of no earthly use in the long term. I shall not go into that point, because I have already done so. We want a wider area of mutual exchange in Western Europe—an economic union. I am not a federal unionist; I think it is ideal but it is too far away. We want a Western Economic Council to start with. During the war, when I could get anybody to listen to me, I always advocated that when the war ended Lend-Lease should be continued. Lend-Lease is really giving away your surpluses. In war-time we did it willingly, because we thought that by beating the enemy we would be better off. In peace-time it should be possible to follow the same policy. I agree it may not apply so much to us here but generally the nations of the world, like ourselves and the Americans who are capable of producing, must not measure wealth in the ridiculous monetary symbols but in terms of goods that can be produced.

In summing up, I would refer the House to a letter written and published in "The Times" on 21st December, 1940. It was signed by the Archbishop of Canterbury, the Archbishop of York, the Moderator of the Free Church Federal Council and the Archbishop of Westminster. Some of them are now dead, but I am sure the present holders of those offices would sign the same letter. The tenth point of that remarkable letter—of which no notice was taken in this House, and very little in the country—said that the raw materials of the world must be used as God's gifts to the whole human race. I would take it further by saying that unless we get clean out of our system this idea that we have to add up figures all the time and make things balance we shall get nowhere.

Christ had to chase the moneylenders out of the Temple and we shall have not only to chase them out of London—we have half done that, but we shall do even better yet—but out of Wall Street, before we get nearer to the peace and plenty which the world and all mankind has a right to expect.

6.22 p.m.

Mr. Odey (Howdenshire)

It is not an easy matter, as a comparative newcomer to the House, to follow the hon. Member for Ipswich (Mr. Stokes) with all the fluency and cogency that he has at his command, but I would like very strongly to support the view which he has expressed, that there is only one cure for inflation, and that is an adequate supply of consumer goods in the shops. It is the only way to provide the incentives which the workers of our country need and require if they are to give us that additional production which ultimately is the only cure to our ills.

This question of export targets varies very much in different industries. There are some industries where the sellers' market is not yet finished, but there are other industries where the sellers' market has entirely finished. I would like, if I may, to examine the reasons in one particular industry with which I am acquainted—the leather and footwear and allied industries, industries in which, I may say, I have taken an active and intense part in the export drive, beginning from 1940. Through the war years, for obvious reasons our export drive in these goods was one long story of frustration. Our export trade was practically killed. Leather was a material which was in short supply and it was not possible to maintain, let alone develop in any shape or form, our export trade.

When the war finished, we at last hoped that steps would be taken which would enable that export trade to be revived. Today we have reached the stage where the supplies of leather in the country, in general, are quite adequate. By and large, we have in the country today a very adequate supply of leather, but it is an astonishing thing that, having at long last reached this stage, our export trade has almost entirely disappeared. What are the reasons which have brought about this remarkable state of affairs?

The first point is this. Our export trade in leather, in boots and shoes and manufactured leather goods, went very well until the end of 1947, and one of the reasons was that during that time there was a very heavy subsidy on leather, as the President of the Board of Trade knows. That subsidy enabled many manufacturers to export leather, and goods made from leather, at prices which were in point of fact a loss to the nation. They were an actual loss. I know full well that it will be argued that it proved impossible from an administrative point of view to collect that subsidy, and therefore the exports had to go out subsidised. Be that as it may, the fact remains that many of these exports, as I have already said, were a loss to the nation, and in point of fact were no contribution at all to our problem of the balance of trade.

Now what happens? At the end of 1947 this large subsidy is withdrawn, and withdrawn overnight, and now the industry begins to feel the full effect of the Government's bulk purchasing of supplies. The position is that the tanners in this country at the present time are being supplied with heavy hides at a price of is. 6d. a pound when twice within the last 12 months the North American market has been down to the level of is. As a result, tanners in this country are not in a position to compete with North American tanners.

The President of the Board of Trade will ask what is the solution to this problem. The solution which I would like to see applied—and hon. Members opposite are always putting the question to us, "What controls would you do away with?"—is that the Leather Control should be abolished, for the simple reason that it has entirely outlived its usefulness. If hon. Members opposite suffer from the delusion that the continuance of controls, such as the Leather Control, keeps prices down, I would like to say that in my view the effect is entirely the opposite, because I have no doubt that the next step that will be taken will be to say, "We have an adequate supply of leather, we will now reduce the import of hides and recreate a scarcity."

The result of the recreation of that scarcity is to continue to eliminate all competition amongst home manufacturers. As a result, to all intents and purposes, we are encouraging manufacturers in this country to work on a guaranteed profit margin. If the President of the Board of Trade would open the door to a reasonable measure of competition and let the fresh air blow into this situation, I am convinced that he would very soon see an alteration in the price level. As it is, in this industry, as in industries up and down the country at the present time, manufacturers are getting increasingly into a position based on cost-plus. I say that in the long run it will wreck our economy, and will prevent us from obtaining and retaining our proper share of the world's export trade.

6.31 p.m.

Mr. Follick (Loughborough)

I think I agree with what the hon. and gallant Member for Antrim (Major Haughton) said about the sellers' market, that it is very rapidly declining. People are getting far more "choosey" about the goods they buy. They do not snap up everything as they did a year or 18 months ago. They want quality today, and they are very interested in prices. As this tendency develops we shall have to see, not where we can push our goods in quickly, but where we can establish definite and permanent markets. Up to now—and even now we are doing so—we have been pushing out our exports to bring in dollars. The term "exports" seems to be synonymous with "dollars." We are told over and over again that we must earn dollars, and that to get the dollars the majority of our exports must go to the United States.

I have recently visited a part of the world which is not discussed very much in this Chamber. I have been to the 12 Republics of the Caribbean. Altogether there are between 6o million and 70 million people in that part of the world. That is a very large aggregate. Those people are very definitely drawn to this country, and would give us every possible preference to do business with them. At the present moment there is only one other competitor in the Caribbean—the United States. The United States, for many reasons, are riot liked either politically or commercially among the 12 Republics of the Caribbean. In the past they have interfered far too much, according to those nations, in their domestic policy. For a long time, especially under President Pierce, there was the policy of domination of the Caribbean by the United States, and those nations have never forgotten this. They have very long memories. As one arrives in Venezuela, and people see that one is British they say "The British helped Bolivar to free Venezuela from Spain." In Santo Domingo they say, "Britain was the first country in the world to recognise the independence of Santo Domingo." So there is this long-established, old-fashioned friendship in this part of the world for Britain, and it is a very solid basis on which to do trade.

I would urge the President of the Board of Trade to direct his attention more to this part of the world, to see what we can do there, because any markets we establish there will be permanent markets, whereas this drive towards the United States is only a temporary thing; as soon as they themselves can supply their own markets they will have no time for our exports, whereas if we establish these markets in the Caribbean they will be permanent, and we shall always be able to keep them.

We cannot obtain or retain those markets merely by giving them things we do not want. There are goods that we produce that they do want, and I shall presently go through a table of some of the things that have been detailed to me as being things with which those nations can do. If we are to obtain this trade we have to learn to trade with them in their language and system of calculations. The whole world trades on the metric system, whereas we do not. It is very difficult for a Mexican or a Haitian or a Guatemaltecan to work out our yards or inches, or our farthings or pence. In our export trade we have to understand that we must quote our prices and measurements in standards that they understand. In addition, if we send out catalogues they must be in the language of those countries; or if we send travellers they must know the language, so that they can talk to those peoples in their own language. It is of no use to expect them to speak English when, perhaps, they do not speak it. Our travellers should see that they know the languages of the countries they are to visit, and they should know something about the countries they are to visit and their requirements.

As far as invisible exports are concerned, I shall mention only the services of the Mauritania. She has done five cruises this year from New York to the Caribbean, each time carrying between 750 and 800 passengers at a minimum rate of £100 each. Those are dollar-winning cruises, and by such cruises we can bring in a lot of money to this country.

With regard to visible exports, in Mexico they told me that they can do with hydro-electric equipment, port equipment, and machinery of all kinds. They want our textiles, also. Peculiarly enough, wherever one goes in those countries one finds that the people want English biscuits. In Honduras the British Minister, Mr. Fowler, told me they wanted very cheap textiles, but I explained to him that we could not possibly compete with the cheap, commercial textiles from Mexico or Brazil, and that they would have to pay more and have quality textiles, for we could not supply them with the very cheap articles. In Santo Domingo they want agricultural machinery from us. They have asked also for two destroyers, and I believe that there are negotiations going on about the buying of two destroyers from this country. They want British naval officers to go out with the ships to train their people aboard them.

In British Honduras, where all the trouble has been lately, there is a very big dollar winning substance, chicle, that goes to the United States for making chewing gum. It is a big item. It could be produced in much larger quantities than it is being produced at present. They say that we have done nothing whatever to develop the production of this very valuable product. It is really a disgrace the way the Colony has been handled, especially as the 6o,000 negroes who are the inhabitants of Honduras are to a man loyal to this country and would not be separated from us for anything.

Throughout the Caribbean the people want our films. We are trying to impose our films upon the Americans, and the Americans do not want them, but in Central America the people like our films. In fact, in different countries, by different representatives of the film industry, I was shown lists and analyses which show that there is a preference for British films over American films. Instead of trying to get a small profit in dollars from the United States, let us go after the big profit in dollars from the Caribbean. We must not forget that all the Caribbean countries are dollar-paying countries.

Mr. Beverley Baxter (Wood Green)

The hon. Gentleman says that they like our British films—and we are all glad to hear that—but, as he said a moment ago that they did not speak our language, are the films presented done with Spanish and other sub-titles?

Mr. Follick

Yes, they are done with sub-titles. The hon. Member did not quite listen to what I said. I said that they showed great preference for our films over American films. There is a similarity of language between Great Britain and the United States.

Mr. Baxter

I suggest to the hon. Gentleman that he did not listen to what I had to say either. We have all been listening here very nicely. He said that they did not speak English over there. I think that the word "English" must include American. The hon. Gentleman said that we should send salesmen who could speak a language which they understood. Now, apparently, they speak American but not English.

Mr. Follick

The hon. Member asked whether there were sub-titles. The films are sub-titled in Spanish.

In Venezuela there is a very great British undertaking, the Venezuelan Oil Concession. That organisation wants pipes but they cannot get them. As a result, they cannot develop to the fullest extent their oil production in order to earn dollars. They cannot get anywhere near the amount of pipes they require. Of the oil concession, we hold one-third and the United States hold two-thirds. It is proposed to build a refinery in Cabo Cardón. At present all the British oil goes to Curacao for refining, but it is hoped that it will be possible to do that in the future in Cabo Cardón. That work is held up because they are unable to secure sufficient steel.

I know quite well that in the past these central American countries have had a bad name. They were pauper countries in the world, but today they are immensely rich. There is an enormous amount of wealth in the 12 Caribbean States. They are all dollar-paying countries and they are all in a terrifically prosperous condition. There is no reason why we should not capture the markets and get dollars from them instead of pushing goods into what are more or less only temporary markets in the United States. In Colombia is the biggest platinum mine in the world. Recently, there has been "a bit of a do" out there in Bogota, but there again the Colombians like the English and show great affection for us.

I now leave the American countries in order to say a few words about the Bahamas. As I said in the Adjournment Debate on Thursday, there are one or two dollar-earning projects which we could pursue there with great benefit. The Bahamas, especially Nassau, are a pleasure resort which caters for the wealthy. They are frequented by 90 per cent. American and wealthy Canadians. If a priority could be given for the erection of a large hospital there with all the necessary sanitary arrangements supplied from this country, it would be a great scheme. Americans and other wealthy people would go there for treatment. There is a complaint from the Bahamas that there are not sufficient British goods in the shops. If that complaint was remedied, Americans visiting the Bahamas would find there a British shop-window. They would be able to purchase our products and they would get an idea of what we produce in this country. Those are the points which I wished to put before the House. This is a great market of between 6o and 70 million people who are begging for our goods. It is a market which we could easily supply and which would bring to us the dollars which we so sorely need,

6.46 p.m.

Mr. Maclay (Montrose Burghs)

Inevitably this Debate must be staccato inasmuch as speakers jump from subject to subject. The subject for discussion is very wide, and I hope I shall be forgiven if I leap firmly away from the Caribbean and come to some remarks made by the Secretary for Overseas Trade today. During his speech he paid tribute to the great achievement of British shipbuilding yards in turning out last year 56.9 per cent. of world production. That is a great achievement. It should be realised, and possibly it is not fully realised, that that has been done in the face of tremendous difficulties.

There have been shortages of steel and of components; the people responsible for planning the work have been subjected to frustration at almost every turn. Great credit for this achievement is due to the men in the yards, the foremen and the yard managers and, above all, to the office staffs, the managers and directors. It is on the latter that the full responsibility falls for finding out where the material is, trying to get it forward, bringing it to the yard and arranging for the process of production to flow with reasonable smoothness. One has heard stories of ships in the building of which the whole yard has co-operated in order to get the vessel launched and the delivery date maintained. Then, with the hull ready and waiting to be launched, the whole project has been held up for three weeks because one small piece of material needed in the stern tube of the ship has been missing.

It is no small tribute to everybody concerned that the output has been achieved. Unfortunately, it is not only in shipyards that we find difficulty about the flow of material. It is quite relevant to quote from a different type of undertaking—a firm manufacturing agricultural equipment almost exclusively for export. This is what they write about the difficulty of maintaining the flow of production: Manufacturers of steel components commonly used in industry, such as nuts, bolts, washers, springs and medium pressings, are failing to meet industry's requirements through lack of standard steel. Another comment is: An equally serious waste is the constant changing of designs and jigs to accommodate alternative material. A further extract says: The net result of all these shortages is that we have to waste production, men's time, in looking for materials; for example, go telephone calls to get enough half inch nuts for 35 machines. It is puzzling to know what is going wrong. During the war there were great difficulties and shortages, but I do not think that there was the same interruption in the even flow of material. I can only comment, in regard to shipbuilding, that the record is extraordinarily good, but if the problem of getting a steady flow of material and of components running through the pipeline can be solved, the output of ships will be very much greater than it was even with that record performance. It is difficult indeed for an Opposition Member to make constructive suggestions on how to solve that problem. It happens that I have had enough experience of working inside a Government Department, under war conditions, to know that the answer lies only in having full access to all the information available. Therefore, I do not apologise for not making constructive suggestions. While recognising the basic shortage of raw materials, I can only wonder whether there is not something seriously wrong. If something could be done about it, there would be a tremendous increase in production.

I now turn to the operation of ships. We have here one of the most important invisible exports the country can possibly have. In his Budget speech, the Chancellor of the Exchequer made these remarks: If we had as large a shipping tonnage as pre-war we could have earned a net income several times the pre-war level of Lao million, but owing to our shipping losses, the amount of tonnage available for the profitable cross-trade routes is less than before the war. Astonishing as it may seem, the British Mercantile Marine is very nearly rebuilt to the pre-war level in terms of tonnage, although the actual number of ships is substantially less. I have not the Lloyds Returns with me, but it is a fact that we shall have rebuilt up to the pre-war tonnage figure in the very near future. What is wrong with our merchant shipping is not so much the shortage of ships, but the fact that we are still meeting with fantastic delays in turn-round in all ports in the world. I have referred to this subject in previous speeches in this House, and I made particular reference to stevedores in a speech about a year ago. The fact is that the average time a ship spends in a British port is even today one-third longer than before the war, and that there are few signs yet of improvement, although this matter was discussed, as I have said, a long time ago in this House. In fairness, it should be made clear that working parties, composed of employers and union officials, have been on the job and that these reports are now coming in. I sincerely hope that the Government will do everything they can to bring home the importance of these reports to everyone concerned in the ports, and that some- thing will really be achieved in getting ships turned round faster.

The Chancellor of the Exchequer, in his speech on the Budget, also said: In addition, oversea expenses of British ships have gone up, as has the cost of repairs in foreign ports.—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 39.] It is true that British ships are having to go abroad to get repairs done, but that it not remarkable when we realise that the working week for ship repairers, for example in the Bristol channel ports—and I think this is pretty general—finishes at 3.3o p.m. on a Friday, and that from that time onwards until Monday morning it is very difficult to get work done by overtime, which is extremely expensive and seldom possible to arrange. A Newcastle shipowner, recently commenting upon this problem, made this statement: At the present time, when increased output and lower costs are necessary, it does seem a pity that in many trades the men have pressed for, and secured, a five-day working week. On two occasions recently, my firm have had ships in this river at weekends when it was desirable that certain small repairs should be carried out. To keep their commitments, the vessels were unable to wait, and therefore these repairs will have to be done at a foreign port. All this means that ships are having to leave home ports to have expensive repairs done in Canada and the United States. The Chancellor of the Exchequer is right in saying that the cost of these repairs is substantially reducing the value of our invisible exports from the shipping services. I am not going to argue the merits or demerits of the five-day week. I know that it is a highly desirable thing that there should be a five-day week in a civilised State if it can afford it, but I cannot believe that if the facts in this shortened form of the Economic Survey were brought home to the men in the shipyards and in the repair yards, and they were made aware of the acutely dangerous condition of this country, they would not respond and be prepared to reconsider the agreements which were freely negotiated and entered into during the last three years.

During the Easter Recess, I had occasion to speak in three different parts of the country, as widely separated as the East of Scotland, the West of Scotland and Southampton. At each meeting I referred to this document, and I found that no one had ever seen it. I know that the Government are doing their best to push it around, but they will have to make even greater efforts. One of the most effective methods of bringing home the facts to the people is to use the Walt Disney cartoon technique. They have been used to great effect in the United States. I suggest that the Government employ some of our film studios, which are not in production for reasons I do not understand, to produce this type of feature to bring home the gravity of the situation, which is so necessary if we are to get the output we need and are to meet the targets which the Government have set.

6.58 p.m.

Colonel J. R. H. Hutchison (Glasgow, Central)

I understand that my remarks will be interrupted in a moment or two, and therefore I apologise if they may appear to be somewhat truncated. I was glad to hear the references which have been made to shipping, because it is upon our invisible exports that I should like to focus attention, if, in fact, it is possible to focus attention upon something which is invisible. As is shown from the White Paper, there has been a grave change in these invisible exports.

The first question I wish to raise is in regard to the last column on page 3 of the White Paper, where there is an analysis of what are called "Other Payments," which shows a net figure of £100 million in 1938, and a deficit of £20 million in 1947. There is, therefore, an apparent turnover of £120 million in the country's finances at stake. I spoke recently about the attitude of the United States on this shipping question. I beg the right hon. Gentleman, in negotiations which take place, to resist the point of view held in places in the United States that when we have built up our fleet to its prewar level, we have done all we are entitled to do, in view of the gap caused by the disappearance of the German and Japanese fleets. I heard it said that although the whole purpose of E.R.P. was so that we could get on our feet, that they should be entitled to choose in which industries and which activities we should be able to get on our feet.

It being Seven o'Clock, and there being Private Business set down by the direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 6, further Proceeding stood postponed.