§ 4.53 p.m.
§ Mr. A. G. Bottomley (Rochester and Chatham)
I beg to move, in page 1, line 9, to leave out "fifty," and to insert "twenty-five."
My hon. Friends and I wish to explain at once that this Amendment is not moved with the intention of dividing the Committee. But we do feel that there should be a discussion upon the contents of the Bill so that we can learn whether the Clause is absolutely necessary.
Since we discussed it initially, there have been the cuts in the import duties and they, in themselves, have limited the prospects of exports generally. There are many things which require fuller consideration. In connection with dollar exports, for instance, because of the limitations placed upon us in sterling markets, is it still the policy of Her Majesty's Government, by providing the amenities for traders, to force themselves into the dollar markets, not only the United States and Canada, but also the Latin-American countries? We should like to know something of what is happening as a result of the policy which has been followed to date and whether it is intended that special facilities shall be continued for those who are prepared to be adventurers and go into the very difficult dollar markets.
Can we be told whether these endeavours are successful? Can we be informed how successful they have been and, if there have been failures, whether they are very great? We should like to be told something of the difficulties encountered. Can we be told how many dollar exporters are insured through the Export Credits Guarantee Department, so that we can see to what extent the moneys given to the Department are being spent in urging dollar exports?
I should like to know whether the credit facilities are spread in one direction or in many directions, and to what degree. I should like to know, for instance, what are the credit risks in the Commonwealth 2587 countries; what are the credit risks in Asia, excluding the Commonwealth countries; what are the risks in Europe as a whole and the risks in Eastern Europe? I have already asked for details about the export facilities to the dollar markets. Perhaps they could be broken up into Canada, North America and Latin-America.
My right hon. Friend the Member for Huyton (Mr. H. Wilson) has a great interest in the Middle East and in that I think we can all join with him. In the Middle Eastern countries we got in and built up our trade and established ourselves, especially in the field of machinery, communications and electrification, with the result that, having laid down that plant and machinery, there is a continuation of demand for our goods, which is a very profitable thing for our industry and the country generally.
Now, as a result of the limitation of credit facilities, we find that the Americans are getting in and establishing their plant and machinery with the consequence that, in due course, it will spread, they will have the long-term markets and we shall be pushed out.
That would be a very bad thing for British industry. I think that further consideration should be given to credit facilities for Middle Eastern countries, and in this connection I emphasise the case of Israel, where they are experiencing the greatest difficulty in the sense that they will have to make up their minds whether they will buy from Britain or from the United States.
I should also like to know something about the restrictions on trade in Hong Kong, which is damaging our economy. It is particularly difficult at this stage, when we find that the Americans are helping the Japanese and the Japanese are getting markets which rightly belong to us and which we should endeavour to keep. I trust that the President of the Board of Trade will be able to tell us something about trade and present restrictions in Hong Kong and whether there is any hope of their removal.
In moving this Amendment, I am bound to say that we feel that the policy of the Government at the moment does not encourage optimism. I should like to be reassured by the President and to have some answers to these questions so that 2588 we may have an opportunity to make up our minds.
§ The President of the Board of Trade (Mr. Peter Thorneycroft)
I rise very readily to reply to the remarks which were made by the right hon. Member for Rochester and Chatham (Mr. Bottomley), as I understand he does not wish to press his Amendment to a Division. I think it would be a mistake—and I think he agrees with this—to seek to bring down the level of guarantee for which we are asking in this Bill. I am quite confident that he has at heart, as much as Her Majesty's Government, the belief that we should do everything within our power to foster our export trade. Clearly, this is one of the ways in which that export trade can be fostered and assisted
The point he raised immediately and which, I think, was a perfectly fair one was that in view of the import restrictions which have been imposed have we the same need for an increase in our level of guarantee as we had before? I think the answer to that is, "Yes." It is true that the imports cuts imposed by the Australians cover a very large extent of our export trade. I think that 13 per cent. of our total export trade is affected or comes within the scope of the Australian cuts. It would not be possible to say at this stage how much trade will be lost, because the precise details of the quotas, methods of restriction and the contracts and so forth have not yet emerged; so I think it would be a little early to make an assessment of them at the moment.
Another point raised by the right hon. Gentleman was that in view of the possible reduction there should therefore be some reduction in the ceiling—at least that is, as I understand it, the broad way in which he put it. What we must try to do is to maintain the sum total of our exports at a high level. The right hon. Gentleman asked was it still the intention of the Government to foster by all means within their power exports to the North American market. Again, the answer is, "Yes." That is the object of all policy, and I think the Committee will agree that if we are to solve our balance of payments crisis, then one of the ways of doing it will be by breaking into very difficult markets and seeking to hold them, sometimes against very severe competition
§ 5.0 p.m.
§ Mr. Leslie Hale (Oldham, West)
Could the President of the Board of Trade help us here in a difficulty? One difficulty which we had in the Second Reading debate was that those who were not acquainted with the working of the Department could not find out what is a special area within the meaning of Section 2 of the main Act and what is a normal area. As we have two Amendments down, it would assist if the right hon. Gentleman could say now whether the North American market is generally regarded as a special area. On the Second Reading, for instance, Cuba was quoted on the one side and Poland on the other side. Could the right hon. Gentleman say what is the line of demarcation?
§ Mr. Thorneycroft
The division is between the two Sections. The Section of the main Act to which this Amendment refers covers the ordinary commercial case under which a guarantee is given if the Advisory Council approve it as an ordinary commercial method. The next Section—and I will not elaborate the point; we shall reach it later—deals with the difficult case where the Advisory Council take the view that, as a matter of ordinary commercial prudence, it would not be a proper project but that it might be in the national interest to have insurance of that type. We can go into the reasons later. We might find guarantees of trade with the U.S.S.R. on the one hand and North America on the other—and both can be included under Section 2.
The right hon. Gentleman opposite asked whether it was our intention to break into the American market. He further asked me whether I would break down the information about Canada and the United States. I do not suggest that I can answer all the questions he asked—it is not easy to do so at short notice—but I can give him the breakdown between those two countries. We insure approximately 10 per cent. of the Canadian export trade and very nearly as much—about 9.2 per cent.—in the case of the United States of America.
I assure the right hon. Gentleman that I appreciate the spirit in which he moved the Amendment. The points he raised are perfectly proper points for examination. Although we are meeting 2590 with these difficulties in certain of our export markets, that does not lessen the need for an increase in the level to which our export guarantees can be carried.
§ Mr. R. T. Paget (Northampton)
I was in some agreement with the President of the Board of Trade when he said that the ceiling of the money available for our export trade should not be lowered because of the policy adopted by the Australian Government. I hope we shall succeed in persuading them to change that policy, for I cannot believe that the problems of the Commonwealth will be solved by a process of throwing out each other's washing, which is what their present proposals rather resemble.
The point I want to make to the President of the Board of Trade is this—and I do not know whether it comes under this subsection or the next. There is a type of export which is important in that it opens up to us an alternative to dollar area sources of imports. I have been in correspondence with the right hon. Gentleman for a considerable time about Syria. A relatively small amount of exports there, some of obsolete armaments which are required in that part of the world, not primarily for making war but for prestige purposes of the Government, are being supplied at present by the French, which gives the French control over that economy. Owing to its finance arrangement with France, the Syrian Government cannot control its own economy. Consequently, a relatively limited amount of exports—about £4 million worth—from us would enable them to get control of their own cotton crop, which is a very valuable alternative to dollar sources of cotton.
I do not feel it would be appropriate to go into this sort of matter in detail on the Bill, but I draw the right hon. Gentleman's attention, in particular, to what seems to me to be an important matter so that he may see whether he can get something going in that area. We have been in difficulties in the Middle East. In the instance I have mentioned, we have a Government which is a little short of friends and which is very anxious for a friend in the West. With a little sensible commercial management, I believe we could be on very friendly and profitable terms with the new Syrian Government.
§ Mr. Walter Fletcher (Bury and Radcliffe)
I want to support most of what my right hon. Friend said, but I think it is right to point out the difficulties which exist when we are quite clearly at the moment of switching in industry, which was recommended rather glibly the other day by the hon. Member for Gloucestershire, South (Mr. Crosland). That switching is about to begin. The whole pattern of exports is in a state of change and the figures we have had up to date for this export credits scheme may be no guide at all to what will happen in the future. We must not rely too much upon them.
One thing is quite certain. If we have the combination, which we face at present, of a change-over for physical reasons—to do with trying to close the dollar gap, to do with a shortage of certain raw materials from the dollar areas and to do with re-armament—and of a shiver going through the export world because of the act of the Australian Government, then we meet a situation which needs careful attention.
The action of the Australian Government has a two-fold effect. The change which will take place because their future pattern of imports is to be changed is one thing; but the change which will take place because they have unilaterally cancelled existing contracts and are not sufficiently willing to appreciate what that involves, will be much deeper. It is quite clear that when people are in a state of doubt in the commercial world, the first thing they do is to increase their insurance.
Indeed, we may see something which I had hoped we should never see—the need to take out insurances within the British Commonwealth of Nations. So far, almost all Commonwealth business has been conducted not even on an irrevocable credit, but by waiting until the goods are ready to be exported and then asking for the credit to be opened. Now we may get a queue waiting outside for insurance, in the way we had for areas outside the Commonwealth. That may be the result of the creation of this doubt. Doubt can be resolved to a great extent, but the easiest and shortest way to resolve it is by taking out insurances.
In parenthesis, may I say that possibly one of the best ways to extend the export drive would be for this organisation to see that its rates are kept as low as 2592 possible? If there is one way in which confidence would grow again—and confidence is a delicate flower which withers very easily—it would be for the very competent and sympathetic officials of the Board of Trade, whom I know from personal experience, having a new type of business brought to them, not making their rates prohibitive. It takes a long time to build up confidence and, apart from what we hope will be the action of the Australian Government, that is one of the best ways of building it up.
It is a Parliamentary paradox that I should raise this matter on an Amendment to reduce the sum, but it is obvious that the tendency must be to increase it, because the real essence of insurance is one thing only: that those who write the risks—and this has been the strength of British insurance over hundreds of years—must always be in a position to meet them. That is the reason no private group companies can cover war risks—because they are so unlimited as to be beyond calculation.
Here we are to have an uneasy period of new risks. Owing to the atmosphere in which the debate has started, I am certain that this matter will be looked at sympathetically, and I hope that, under the switch in the export trade, those who go to those markets will be treated sympathetically.
§ Mr. Geoffrey Bing (Hornchurch)
If there were any special reason for congratulating the Front Bench opposite for putting this debate on at this convenient time—convenient as compared with the time at which we had the Second Reading debate—it would be that it has given us an opportunity again to hear the hon. Member for Bury and Radcliffe (Mr. W. Fletcher). He has always spoken in these debates, except on that occasion of the Second Reading, when it seemed fit to the Government to take an important matter, which affects the whole export future of the country, at about 3 o'clock in the morning, after trying to switch it in after some other business late in the evening.
I am very glad that right hon. Gentlemen opposite have seen fit to put the Committee stage of the Bill down as an early Order, to give us the opportunity, when we are all fresh, to think about the various problems which face this country in the export trade. I am particularly 2593 grateful—I think the whole Committee is—to hear again from the hon. Member for Bury and Radcliffe. We always think he talks sense. We may not agree with him, but we believe he knows what he is talking about. As there is an atmosphere of harmony prevailing at the moment, I will not say any more on that point.
I would say to the President of the Board of Trade that I was sorry that the Second Reading debate began to resolve itself into a contest, as it were, of prestige and courtesy, which appeared to confuse the issues which were before us. I spoke for some three-quarters of an hour. I do not want to weary the Committee by doing the same thing again. Fortunately, my speech was printed in HANSARD, and I know that the President will try during this debate to answer the points in that speech which are relevant to this Amendment which is before us.
The Amendment proposes a nominal reduction for the purpose of discussing—if I may use the term which, I think, has been generally used in the Committee—the ordinary risks as opposed to the special risks. It is said—it has been said—that this increase is required because more money is needed to cover the normal risks. As I said in the Second Reading debate, that can arise in one of four ways.
First, the volume of the risk which may be covered may remain constant, but there may be a general larger volume of exports, and, therefore, the total amount which is required will be more. That is one possibility. Second, irrespective of the volume of exports, the actual cash price of the exports may go up, and, therefore, while the same volume of exports, or even fewer exports, is covered, the amount of money required will be more.
Third, while the total volume of our exports may remain the same, or may be anticipated to remain the same, there may be a desire, for various reasons, for traders to cover a larger proportion of the risk. Suppose that at one time there was a situation in the world in which such traders, normally speaking, did not go to the Export Credits Guarantee Department at all, but that matters changed, so that a great many more people had to go.
But there is a fourth reason, that the credits and the exports revolve, and, therefore, the global total of cover re 2594 quired may be greater, depending upon the speed at which they revolve and the type of credit that is given. That will also affect the total.
Put shortly, those are the four reasons why, as things stand at the moment, it may be necessary to increase this total, and it would really be of value to the Committee if we could now be told in what proportion these are divided up. The right hon. Gentleman was kind enough to answer a question by me which, unfortunately, so far as I can see, has never been in the Index of HANSARD. When I looked it up I could not find the figures, and I am quoting them now, not from the answer which the right hon. Gentleman was kind enough to give, but from my recollection of them. It appears, if I recall correctly the figures the right hon. Gentleman gave, that the alteration in the percentage of cover is a comparatively small one—1 per cent. or 2 per cent.—in the proportion of our exports by volume which are in fact covered.
What we should like from the right hon. Gentleman is, first, some indication in regard to the present events. Does he think, for example, that the events in Australia will mean, as the hon. Gentleman the Member for Bury and Radcliffe, for example, suggested, that there will be a considerably greater percentage of the total volume of exports requiring cover? Next, what does he think is likely to be the total volume of exports as compared with last year? Does he expect, as we were constantly expecting at one time, a rise in the volume? I am not talking about a rise in cost. Third, what does he think the average sort of rise in prices is likely to be?
Then, is there any change in policy? Because I should have thought—and I do not know whether this is so or not—that a big increase in a total of this sort would suggest, at any rate, a hope that the type of export which was to be underwritten would be the type of export on which the turnover was slow, and as we were increasing the proportion of that type of export in the total, that that would involve a great deal more money being tied up.
As I understand it, that type of export is the products of the engineering industry. If the President of the Board of Trade could give the Committee some indication why at this stage we feel we are going to be in a position to export 2595 this increasing quantity of capital goods—if that particular calculation is the right one, as this figure would suggest—I think it would be a help to the Committee in considering this matter.
I am about to conclude because I want to give the Government a chance to deal with these points, but I should like to say a few words in regard to this particular shift in the economy. We all paid tributes in the early hours of the morning to the work of the Export Credits Guarantee Department, and I think that in the early hours of the evening we might repeat those tributes. But so far as the proportion of materials is concerned, it would seem to me that what they concentrated on was selling consumer goods, and selling consumer goods in the unplanned economies.
In respect of the dollar drive countries there is a pamphlet "Sell more, risk less," which is directed to and wholly designed for and altogether concentrated on the problem—the larger problem—of the packaging and marketing and selling of consumer goods in the dollar areas. It was the first act of the Secretary for Overseas Trade in his office to write the preface to that pamphlet.
That is, in a sense, inconsistent with this great increase of total, which, I should have thought, was an increase in total designed for selling capital goods where long-term credits are required. I want to ask the President of the Board of Trade what plans we are making for a similar type of pushing of goods which go to planned economies. I do not want to suggest an ideological trend. People often talk of these things in terms of East-West trade. I think it can very often be simply expressed in that way, but it is not altogether true, because there are other countries which, to some extent, have planned economies.
The Export Credits Guarantee Department are trying, where it is not outside their sphere altogether, to allocate and assess the value of the risk in respect of those markets. It is quite a different problem to say, "Here is a buyer who is good for three months," and to say to someone, "You can start, and we will underwrite, while you are constructing and building, something which will have to be delivered in two or three years 2596 time," to form part of the plan of the planned economy of some country. It is, therefore, necessary, I should have thought, for the Department to give the same sort of service to this sort of exporter as it gives to the people who are trying to sell consumer goods with a quick turnover.
There is one more question which I think should have been put by the hon. Member for Bury and Radcliffe, but perhaps he knows the answer and is not going to tell us. I am not certain, but a thing which I—and I say it with all humility—consider as important, is the question of off-shore trade. I am not certain how far there is a desire to build up off-shore trade.
We have in this country considerable experience of world trade, and if we can use that experience for the development of the trade of the world, we should, I think, be doing a great service to the world as a whole. I would say to the hon. Gentleman that this is a service which we should not pass on to those who are less well-equipped for it than ourselves. Therefore, it is no use trying—or it may be of use to try, but it will certainly be very difficult—to secure a result if we try to perform this sort of service, for example, to the U.S.A. The people for whom we want to do it are those countries which are growing up and just re-establishing themselves. How far, to take one country, such as Indonesia, are we in a position to help those people who are organising off-shore trade in the Far East—I do not know about China because anything said about China might be controversial, but let us say the countries of the Far East which are new and rising countries?
§ Mr. W. Fletcher
If the hon. and learned Gentleman is talking in terms of developing a big hydro-electric scheme in Indonesia, then surely this Department is not the right means to employ, because that is a question of long-term credit, not a question of insuring goods. This is a very satisfactory credit system for the insurance and exchange of goods, but if we are to guarantee a number of long-term public work developments in that area, surely that means that we shall be going in for a very long period, and no credit such as we are contemplating could go very far in that direction.
§ Mr. G. R. Mitchison (Kettering)
Is not this exactly what was suggested by the right hon. Member who is now the Minister of Works, as reported in c. 712 of Vol 460 of HANSARD, on the occasion of the Second Reading of the Export Guarantees Bill, 1949, when he specifically referred to the risks attendant on setting up a factory in France today, a project which he suggested should be insured, although it would take about five years to get that factory going?
§ Mr. Bing
I am much obliged to the hon. and learned Member for Kettering (Mr. Mitchison) and to the hon. Member for Bury and Radcliffe for their interventions, both of which are helpful. In the first place, I think that I was not making myself absolutely clear. I had in fact left that point concerning capital equipment, but I will return to it in a moment.
I agree that that has always been urged upon us, as the hon. and learned Member said, if we were in agreement that the Export Credits Guarantee Department should be used for that purpose. But I appreciate that there must be a limit to the length of credit, and we may be told, perhaps by the President of the Board of Trade, what is the maximum length of credit which can be given under the scheme and whether he has any views on lengthening that period any further.
As I understand the position, there is a view that there should be an increase of the so-called medium-term credits. I understand that these medium-term credits are to cover exactly the point raised by the hon. and learned Member for Kettering. They are for the purpose of covering the export of capital goods and of incidental risks which someone incurs while manufacturing goods and sending part of those goods abroad; and while they have to incur the continuous liability of the purchaser of them not being able to purchase the completed goods for which they have tooled up their whole factory. I was under the impression that the scheme covered such projects, but perhaps the President of the Board of Trade will deal with that point, because I may be mistaken.
The point I was coming to is that, quite apart from capital development, there is an off-shore trade which we might very properly underwrite through the Export Credit Guarantees, but it is not, 2598 to my mind, sufficient to underwrite it; it is also necessary to promote it; not only in regard to the dollar trade, but in other parts of the world, and to bring to the attention of traders shipping and storage facilities, etc. What are we doing to bring to the attention of those concerned in such trade the advantages of the export credits guarantee?
I do not want to make a very long speech, and therefore I will conclude. Everybody in the Committee realises, as the hon. Member for Bury and Radcliffe so rightly says, that the Australian decision means there is a considerable change in the situation. There will have to be a new departure and new thinking in regard to the whole policy of export credits guarantees, and the whole policy of our foreign trade. When we are making a new departure and persuading traders to go into a field they do not know, they may require a guarantee which they do not require when they are trading in the traditional areas in which they have previously traded.
I say in defence of myself and of the rather long speech which I made on Second Reading that I did then specific, ally call the attention of the House to the Australian position before I had any indication of the measures which the Australian Government were going to take. I do not think that anyone had any indication of them, and certainly not the back bench Members on this side of the House.
Of course, the situation in Australia does not exist there only. I suggest rather diffidently that it might exist to some degree in Egypt. There are a number of areas in the world where the advent of insolvencies involving the export credits guarantee arrangements ought already to give us warning. Here is the smoke before the fire bursts out. I suggested to the House on that occasion that the position in Australia, because everyone was buying wool, was that there were all sorts of people with immense amounts of money to spend and it looked as if there would be a wonderful market, but it collapsed and disappeared.
The sudden demand for consumer goods and the sudden collapse of a raw material market may be particularly acute in Australia; but does it not mean that we have to look at the position in regard to trade in other parts of the world? When we are looking at the 2599 fund, it might be a good thing to seek to underwrite trade in other parts of the world.
To take one example, on this side of the Committee we often speak of trade with the Soviet Union. I believe there has never been an insolvency over a payment from the Soviet Union. Therefore, all the trade which can be underwritten with the Soviet Union is, in normal circumstances, likely to mean a profit for us. If the business is to be looked at from a commercial point of view and the fund is to be used for trade in other parts of the world where things are much more risky, a fair share of the business ought at any rate to be in those parts where up to now there has not been a single insolvency.
I hope that the right hon. Gentleman will tell us what he can about such considerations. I will repeat the four questions which I hope he will answer so that the Committee may look at this subject in perspective. Does he anticipate a bigger volume of exports altogether, and, for that reason, more to be covered by the scheme? Is he anticipating a greater increase in the prices of exports, and, if so, what does he reckon that will be? The figures look as if a slightly bigger volume is being covered, but does the right hon. Gentleman anticipate a much greater volume to be covered? Also, how far does he expect the shift in relation to consumer goods to be reflected in a shift from short-term credits to medium-term credits? If he will give the Committee all the facts, it will enable us to consider the Amendment more thoroughly.
§ Mr. David J. Pryde (Midlothian and Peebles)
I support the arguments which have been put forward by my hon. and learned Friend the Member for Horn-church (Mr. Bing), but I wish to speak principally about Australia's policy. Last week I heard the President of the Board of Trade tell the House that he had nothing but praise for Australia's policy. I should like to draw his attention to the great unrest which that policy is creating in this country, and especially in the carpet weaving industry.
In my constituency I have three great carpet factories employing weavers who 2600 can produce as much as 450 square yards of carpet in a five-day week. Before 1952, 40 per cent. of the output of the factories went to Australia and New Zealand. This year we have shipped none. That means that the 40 per cent. is being flung into the home market.
As yet those factories have not experienced any great degree of unemployment. In my constituency is the only firm in Scotland which weaves tapestry, which is about the cheapest form of floor covering. That carpet is now being put into the home market and it is natural that lower-priced products will do better in the market. The result is that unemployment threatens other weaving areas of Scotland and also the jute industry in Dundee.
I warn the President of the Board of Trade that he is creating a very dangerous situation. The people of New Zealand and Australia will require carpets and they will get them from the weaving looms of Yonkers and Springfield or even from the continent of Europe. If the President of the Board of Trade walks into any of the great stores in Oxford Street he will see, as I did this morning, carpets which were woven in Belgium selling at prices with which we cannot hope to compete.
I do not want to see unemployment in the carpet weaving industry to the same degree as I used to know it. The last Labour Member of Parliament for Peebles and South Midlothian had to get the authorities to provide a special employment exchange in my own town of Bonnyrigg to cope with the high unemployment in the carpet weaving industry.
As my hon. and learned Friend the Member for Hornchurch has said, there are various ways in which the Government can counter the problem. I should be glad if the right hon. Gentleman would explain how the policy of Australia and New Zealand can contribute to the alleviation of our dollar problem.
Should there be unemployment in our constituencies, we can point to the fact that, even under the Distribution of Industry Act, the Government has never taken any remedial measures against unemployment in Scotland. Two parishes in North Midlothian are scheduled under the Act, but still nothing has been done. There is a greater wastage of manpower and womanpower in North Midlothian 2601 than in any other part of Scotland. Hundreds of women have to travel each day from the West Calder area into Edinburgh to pack biscuits, and that means that each week each woman has to spend 7s. 6d. or 10s. upon fares. That is useless travel.
In the county of Midlothian are the finest oil shale measures in the world. In the county of Midlothian from the Forth to Peeblesshire are two seams of the finest ironstone, but as yet they have only had their surface scratched. Other fine minerals in the county have never been exploited because nothing is done to divert labour to them.
§ Mr. Pryde
I wish to draw attention to the fact that, having taken a census of unemployment figures in my constituency, all I can see is a steady rise in unemployment figures as a result of the policy which is being pursued. In one instance the figure is nine times greater than it was recently, in another instance four times greater, and in yet another it has doubled.
It is true that seasonal unemployment may have some influence, but, nevertheless, in the Valley of the Tweed there is only one industry, tweed weaving, and this has been cut out of the dollar market. As a result, the people there have no hope of employment unless they are moved elsewhere, as happened during the war when they went to munitions factories. I saw girls fainting at the machines rather than give in in order to provide the materials needed by our lads for fighting purposes. I do not want to see that again. Alternative industries should be brought to Peeblesshire so that Peeblesshire can play its part in solving the dollar problem.
§ Mr. Ellis Smith (Stoke-on-Trent, South)
This is a relatively narrow issue, but my hon. Friends have rendered a great service to the Committee and to the country by having initiated the debate. My experience of the Export Credits Guarantee Department goes back to about 1925–26, and as a result of that experience I wish to make a few observations.
The President of the Board of Trade and the Secretary for Overseas Trade 2602 now have a very great responsibility on their shoulders. It is obvious that the country is again running into a very serious economic situation. It is a situation which anyone responsible for the government of the country would have to face. The only thing is that in the last few months the problem might have been handled differently; we might not now be facing these difficulties in the Dominions and the Commonwealth generally if the responsibility had been in other hands.
As a result of this debate, I believe that the President of the Board of Trade will again have to get his experts together and consult industry to see if the Bill goes as far as is necessary. The hon. Member for Bury and Radcliffe (Mr. W. Fletcher) said that he did not want to make certain suggestions. I believe that he ought to have had the courage to make them. It may be necessary to introduce not only this sort of thing but also export levies. It may be necessary to apply this to a greater extent inside the Commonwealth itself.
It is well known that we cannot live except by maintaining the maximum amount of exports. If the world is prepared to conduct its business so that it segregates itself and partitions itself up, then it will be the responsibility of the House, and particularly of those in the Government, to consider this problem in all its seriousness. It will require greater courage on their part than in the past, and we may have to consider unorthodox methods in order that we may live.
§ Mr. W. Fletcher
It was not lack of courage that made me refrain from suggesting new remedies, but an unusual respect for the rules of order of this Committee. I think it may well be out of order on this Amendment to make practical suggestions of that sort.
§ Mr. Smith
There was no need for the hon. Member to make an interjection of that kind. Hon. Members ought to be aware of the rules of order, and they respect the Chair just as much as the hon. Member does. It is not for private Members to say what is in order and what is out of order. We can rely upon the right hon. Gentleman and the hon. Gentleman who have been selected to preside over our proceedings to keep us properly in order without interjections of that kind.
I was saying that it was my opinion that the amount contained in this Bill 2603 will not be large enough. The hon. Member, in spite of the fact that he claims to be well informed and is the spokesman for big business, by an interjection to one of my hon. Friends proved how ill-informed he is on this issue. Twenty years ago these credits were used for the purpose of guaranteeing the interest that would be required upon credits extended to many parts of the world. Firms like Metropolitan Vickers and the great manufacturing concerns in the Manchester area would never have been able to keep going in those times had it not been for these export credits. It is on record, and can be checked if necessary, that the scheme which the hon. Member mentioned received benefits from the kind of service provided in this Bill. We have now reached a situation where we shall have to consider extending it to similar contracts.
I remember some years ago that large electrical development was taking place in Russia and China. Germany was going all out for this kind of work. The Germans financed capital through guaranteed credits for the A.E.G. and similar industries, while our own firms could not obtain similar credits. As a result of the Advisory Committee giving the Export Credits Department all the advice that was necessary, further facilities were provided and we were able to obtain contracts for some of this large-scale electrical development work in Russia, Poland and China, which provided many men with employment for years. That was primarily due to the service that was given by this scheme.
In my view the President of the Board of Trade needs to consider very carefully what is being said in this debate, so that he can go, if necessary, to the Treasury for even larger sums than have been mentioned in this Bill. In my opinion, greater amounts will be needed to enable us to obtain a greater share of the available world trade than we are now having.
My final word concerns the situation which we are facing in North Staffordshire. For six years we were called upon to make our contributions to the export trade by producing the maximum amount of pottery. It is to the everlasting credit of the home of the pottery industry that all sections work night and day in order to make the maximum contribution to the nation's export drive.
2604 5.45 p.m.
A serious situation is now arising. Decorators are becoming unemployed; others are going on short-time. There is consternation in the area about the developing situation. I am not going to speak too critically about this, because it is easy to talk. It behoves us to be on our guard and, while not speaking too critically, to remember the serious economic situation which has recently developed. If Commonwealth planning had been organised six years ago this situation might have been avoided, and therefore every hon. Member who was not prepared to be a party to the planning that was necessary six years ago has some responsibility for the present situation.
The pottery industry has made its maximum contribution to the export drive. The Australian markets have now gone for the time being, and I am pleading with the President of the Board of Trade, who I know has a special interest in this matter, as soon as possible to examine whether sufficiently adequate facilities are provided by the Export Credits Department.
Let me add a word by way of digression here. That Department has rendered great service to this country ever since it was set up. Its officials have taken a big view of things, and industry generally greatly appreciates what they have done. Their difficulties will become greater now because the amount at their disposal is nowhere near enough to enable them to deal with the situation.
May I suggest that the services of these officials should be placed at the disposal of the pottery industry, and that the representatives of all the interests in that industry should be got together as soon as possible so that we can in various parts of the world, by applying the principles contained in this Bill, make up much of the trade we have lost.
§ Mr. Hale
I am glad to be following my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), whose district is near the one I represent, and also because he represents an area in which I have still a passing interest. I agree that the pottery industry is facing a serious situation. I do not know whether my hon. Friend read recently that another 400 workers have been thrown out of work in the potteries due to the recession of trade with Australia.
2605 Everyone speaks with such commendation of the work of the Export Credits Guarantee Department that we must all agree that it is an excellent Department, but those who have travelled abroad have sometimes found that we got behind in marketing arrangements in the years before the war, and were always cut up. I was lucky to have had the opportunity of making inquiries in the property market in Australia in 1948 and of seeing some of the principal merchants and agents for British foods. One thing, apparently, that we have never learned about Australia is that there is no Australian market as a whole. Places like Brisbane and Perth cannot be dealt with through Sydney, and to think that they go together is a mistake. Australia is a federation just as much as the United States is, and the nearest town to Perth is 2,000 miles away.
We have to have agents and representatives in each of the five principal towns of Australia if we are to advance our trade. I can speak quite freely on this matter now, and I suspect that in this field the Board of Trade sometimes rely too much on the advice of the Federation of British Industries. I find that in most federations some of the most progressive manufacturers are outside it just because they are progressive. The thing often goes hand in hand, because they are not prepared to agree to price rackets.
For a long time the whole question of export rejects, which is vital in the development of the export trade, has been governed almost entirely on the advice of the Federation. I agree with what was said by my hon. Friend the Member for Midlothian and Peebles (Mr. Pryde), who speaks all too rarely here but who, when he does speak, does so with great effect indeed.
The debate has brought allusions to many matters which are important to our constituents. I find myself always coming up against curiosities of Parliamentary procedure. As I undertsand the position, we are discussing an Amendment to reduce the amount of money to be provided when we wish that the amount might very well be more, but we cannot move to increase it. We can only raise a discussion by this somewhat unusual means of moving a reduction.
The debate has gone on upon the basis that we are discussing the sum of £900 million. Perhaps we are talking ourselves 2606 into a certain state of misunderstanding in continually using this figure, which is not the amount which is to be spent but the amount which is to be insured. It is a very great tribute to the work of the Department. As I understood the Secretary for Overseas Trade, the amount which has been in question is not a £9 million loss, because £5,400,000 has been recouped since. Therefore, the total loss on the guarantees of insurance on this vast sum, which must run into much more than £1,000 million, over three years, is a matter of £3,600,000. That is a very great tribute indeed.
To give a complete picture we must say that there has been a revenue of something like £7 million available for deposits in one of those bottomless pockets of the Treasury into which money is so often poured and from which it never returns. It is a bourne from which no financial traveller ever will return. That is a magnificent financial statement to put before us, and gives the maximum encouragement for the maximum development of this scheme. Talking in figures like that, of an overall profit of more than £3 million, is much more impressive than talking about the Financial Resolution of £900 million, representing the amount to be insured.
I was very grateful to the President of the Board of Trade for permitting me to make an interjection. I am still not quite clear in my mind about it. As I understood him, there are five or six several heads under which insurances are guaranteed under the ambit of the export guarantees scheme, particularly under the Act of 1949. They are, I understood from the Secretary for Overseas Trade to say, the ordinary insurances. I gather we are now considering those which he divided into short-term and medium-term insurances, not of a special character. That, I take it, is the main ambit of the operations under the limit of £750 million which we are now discussing.
Then there were some very brief references to market research. So far as I have been able to gather, no one has ever told us how much research has been undertaken, in what circumstances, and on what basis. Is market research conducted by the Export Credits Guarantee Department, or how is it done? That is an important point.
2607 There was at one stage a suggestion that the offices which now are in London, Birmingham and Manchester, might very well be extended to cover the opening of departments abroad. I gather that that was intended by my right hon. Friend the Member for Huyton (Mr. H. Wilson) when he introduced the Bill in 1949, and when he made it clear that the Bill had been drawn in the widest possible terms to permit of the widest operations. In reply to one interjection, my right hon. Friend particularly referred to the fact that one could insure the rumble of machines operating abroad and supplied by this country.
The question of ordinary guarantees and special guarantees cannot be discussed on this Amendment, but will have to be discussed on the second Amendment. That was quite clear and does not need any argument from me. We are on the question of market research, the possibility of opening departments abroad for the development of trade relations, or indeed the sending of trade delegations to some of them.
Most important of all in my view—as I understand from Section 2 of the Act of 1949—it is possible for us to render economic assistance to countries abroad on the basis of this scheme. In other words, as one hon. Member has said, we have to do something about creating markets abroad as well as about supplying them. I gather that we have the legal power to do so under Section 2 of the 1949 Act.
During the rather spacious times of 1945 to 1951 when we were in office, whenever the word "planning" was mentioned there was a good deal of tittering from hon. Members who were then sitting on this side of the Chamber. I fancy that the President of the Board of Trade has already come to the conclusion that a good deal of planning will be necessary in the future.
Let me take textiles. I do not know just what assistance is rendered by the Export Credits Guarantee Department in respect of our main textile exports because the Cotton Board has its own very effective market research organisation and deals with some of the functions with which the Export Credits Guarantee Department would otherwise deal.
2608 The position in the textile industry, in both cotton and wool—I am talking mainly of cotton—is that there has been a sudden and almost inexplicable recession, so sudden that it cannot be explained away by talking about Japanese competition or about trade conditions generally. No one knows what has happened or why. That is borne out by the fact that if we take the figures for January last, we find they were showing something like record exports for textiles at a time when the merchants, whose information is much more up-to-date than the figures of exports, were finding that there was such a recession in orders that mills were closing every day. I am now having, for the first time for seven years, letters from employers in Oldham asking for some other industries to be introduced.
The most important thing about textiles is their location. The overwhelming percentage is now centred in the British Commonwealth and in the Colonial Territories. It would be out of order if I dealt with the question of the Congo, and it may be more in order to do so on the debate which will take place on Wednesday. What is vital in this connection is that we should consider the events which have happened in Australia recently and which are such a classic example of what may happen elsewhere and what, apparently, is foreshadowed. [Interruption.] The right hon. Gentleman interrupts me to indicate that this falls under a special heading. I can reserve my remarks till we discuss that special heading, but it might interest the Committee, if there is no close line of demarcation, if I can develop it here.
The first thing we have to remember is that the sterling area suffers nothing if we buy more goods from Australia and Australia buys more goods from us. These curious arrangements, whereby the various countries of the sterling area were sent back and told to balance their budgets without any reference whatever to the development of trade within the sterling area, seem to be one of the major mistakes in our commercial relations and in our economic planning. There are ample surplus exports from Australia which we need, and she has ample needs which could be supplied by us without 2609 the slightest effect upon the external position of the sterling area.
If we applied that to the Colonial Territories, particularly to Africa, there would be ample opportunity for the development of the market in Africa. It is a tragedy that our trade with Africa is constantly bedevilled by political disturbances and controversies. It is a major disaster that we have not been able to do a good deal more in relation to the development of our markets in Africa where an ample supply of consumer goods is an absolutely basic necessity to any major scheme of large-scale development.
We cannot embark on a project such as the Owen Falls scheme on the Tanganyika-Uganda border without having sufficient consumer goods to meet the high wages paid to African labour. They are a fraud and a delusion, because the labourers have nothing on which to spend their money and nothing to give them value for the money they are being paid. So the right hon. Gentleman should consider at once how far it is possible—if necessary within the ambit of this Bill—to provide for a stimulation of the African trade in relation to cotton textiles.
That brings me to the second point of great importance in this matter. In Oldham we have a large cotton-spinning section. We also have as our largest industry, and one of the best paying, the works of Messrs. Platt Bros. and Company, the textile machinery makers who are exporting textile machines. Unfortunately, Oldham has none of the really highly paid industries, but we do have textile machinery as one of our best. It is rather a tragedy that so high a percentage of that textile machinery still goes to export and so little goes into the Lancashire industry.
However, I cannot develop that now, and for the moment I am sure the President of the Board of Trade is glad to see that textile machinery is still ranking high upon the export list and still Is maintaining its prestige throughout the world.
At some time or other someone has to consider this problem. I think it was my right hon. Friend the Member for Huyton, who, in the Second Reading debate, said that at some time or other Lancashire has to consider the ambit of its export trade. We shall have to consider what are the long-term plans 2610 for the future and how they are to be developed. My hon. Friend the Member for Stoke-on-Trent, South, talked about the opportunities we had for supplying Poland and the U.S.S.R. and others of the eastern countries with large-scale electrical apparatus in the years before the war.
If we ever get back to a planned economy on the basis of the fact that the whole of our economy is not being bedevilled by a cold war and an overwhelming arms programme, the primary job of our planning must be the development of our constructional engineering facilities and the supply to the entire world of the constructional engineering that it so badly needs.
§ Mr. Ellis Smith
Will my hon. Friend forgive me for interrupting to make a point I should have made? In the Manchester area we were kept in full employment for years because of the services provided by the Export Credits Guarantee Department. We should have been unemployed if large-scale orders had not been obtained from all over the world as a result of that service.
§ Mr. Hale
I am much obliged to my hon. Friend, but I will go one point further and I am sure he will agree with me when I do so.
We have not merely to seek to supply the constructional engineering to the people who are crying out for it, but we have to exercise the powers available under the 1949 Act to consider methods for supplying the needs of the underdeveloped areas of the world in constructional engineering, thus contributing to the food needs of the world and contributing to our market for consumer goods.
I am sorry, Sir Charles, that I have to put this matter on that plane, because I would much prefer that we should do this as a matter of imperative duty and wholly without regard to the economic consequences, even if they did us harm. If it were in order, I would have maintained that point of view, but I can say with great sincerity that if we are to plan exports in future, a major part must be taken not by short-term or medium-term but by long-term insurance.
This is a matter on which I want to ask the right hon. Gentleman a question. He will know that in textile machinery, 2611 for example, a year or two ago it was about a four-year delivery date. I think I am betraying no secret in saying that we had to lose a wealth of orders because of that delivery date. There was no way out of it. We cannot develop factories for making heavy textile machines in a few months. We cannot expand rapidly an industry like that. And if we were able to do so, no one could forecast, without much greater international planning, how long the demand would last and how wasteful would be the rapid expansion of the industry. I think I am right in saying that the delivery date is now 18 months.
In a world which is becoming much more uncertain, in a world in which risks are being considerably accentuated by circumstances, some wholly outside the control of Her Majesty's Government and some not wholly either outside their control or their responsibility, I should have thought there might be a great deal in considering some method of long-term insurance as one of the vital matters which now ought to be taken into account. I know there would be difficulties, because if one is to insure people against loss of a firm order at a forward price, obviously the risk is higher than it is in the case of a normal sale. Yet it seems to me to be a matter which ought to be considered.
I have said that I do not wish to speak about special trade at the moment because we have no definition of it and we are all in great difficulty in not knowing what is the line of demarcation. However, I gathered from the right hon. Gentleman that it is not geographical. Certainly, if the observations of my hon. and learned Friend the Member for Horn-church (Mr. Bing) are correct—and I have come to rely so much upon his accuracy that I will accept them almost without hesitation—we never have had a loss in the Export Credits Guarantee Department in respect of trade with the U.S.S.R. So I should hardly have thought that trade with the U.S.S.R. could come in this special category.
The Secretary for Overseas Trade was not churlish, but a little sparse, in the information he gave us upon this subject. He mentioned, casually, herrings to Poland. He said, too, that special cases were sometimes long-term cases and that herrings should be long-term. I do not 2612 know, and I would welcome the sending of herrings to Poland as a useful exchange from the importation of red herrings from Moscow at Election time, which was one of the features of our import trade before the war.
But this question of East-West trade is one of really vital importance and I ask the right hon. Gentleman to face it quite frankly. My hon. and learned Friend the Member for Hornchurch and I had the opportunity, some weeks ago, of meeting a number of highly reputable Chinese merchants with long experience of the trade in China. It was a private meeting, but I do not think I am betraying any confidence when I say that although they represented all-party views, being traders interested only in trade, the one thing which they all said was that at long last there was a Government in China on which it was possible to have a chance of relying, with which they thought they could deal, by which they thought they would be paid, and which would produce an organisation of which they could be sure. If I develop that too much, I shall come somewhere near the bounds of order, but perhaps I may briefly, in two sentences, deal with one point on this which is relevant and which we ought to destroy at once.
I know at once that we shall get from somewhere in the Committee the old allegation, "Yes, but we are having a war with these people and we just cannot send to them rubber, which is a potential instrument of war, at a time when this is going on." That is, of course, an argument which can be made very sincerely and can be received very emotionally, and it can be put over from the public platform as a very impressive argument. There are, however, two troubles about that.
The first is that as long as we continue the present situation, the tungsten from China which we need is going to Russia, and aeroplanes are going back. The position is not helped by arguing that way. Much more armaments are going over to China in exchange for the goods that we need. I say as a matter of first importance, and in doing so, I think, I should have the agreement of nearly everybody closely associated with China, that if we really want to get something moving, we should start trading—that is the best way.
2613 Had we developed our trade with Iron Curtain countries and kept it going, had we kept the interchange of visits and associations and opened, perhaps, a branch office in Moscow, with such insurance upon the staff who went there as the Export Credit Guarantees Department might think was the appropriate risk, we would have made a contribution to international understanding. I think that that still has to be done.
§ Mr. Ellis Smith
Is my hon. Friend aware that behind Mr. Speaker's Chair, only a few days before his death, Ernest Bevin said exactly the same thing to me?
§ Mr. Hale
I am grateful to my hon. Friend for his intervention. I know that Ernest Bevin was keenly interested and always said that. It was one of the greatest theses of his life that commercial negotiations, business relationships, and so on, were the essential way. That brings me to another point of importance.
I have referred already to the fact that there is now power to give assistance to other countries. Perhaps one of the mistakes that we made in the past is the habit of trying to sell something because we made it, and not trying to produce something that other countries need. Even in our conduct of market research, we always seem to have gone out and said, "We can produce so many big teapots and so many brightly coloured cups and saucers, and they are needed. Where can we find a market for them?" Far too little time has been spent in studying the need of the areas and in trying to produce goods specially adapted to that need.
§ Mr. W. Fletcher
The hon. Member should not be allowed to get away with repeating a gross fallacy. If he had seen, as I am certain he and other hon. Members have seen, all over the world, particularly in the textile industry, the showrooms that are opened by all the big groups of companies to show what is being made and to have an interchange of ideas, so that we can do better than almost any other country and, consequently, manufacture what is wanted, the hon. Member would not repeat this quite unfounded charge.
§ Mr. Hale
The hon. Member is always cheerful and it is always nice to hear him, but when he gets up nowadays he always 2614 says something quite flagrantly without any knowledge of the facts.
I will take up the hon. Member on his own thesis. Look at our trade with Canada. I was out there since the war, and I have been to every State in Canada. The moment I got west of Ottawa and Toronto, I was told that the principal difficulty about buying goods, except when one got right across to British Columbia, Was that, certainly in Winnipeg and Saskatchewan and some of the western States, no consideration whatever was shown for their needs. I remember, in particular, that I was assured by merchants over there that they were very anxious to buy British boots and shoes, but that British boots and shoes suitable for the Canadian climate never seemed to come over and nobody seemed to have thought of designing them for that purpose.
That was in 1945. I do not doubt that things have improved since then, because my right hon. Friend the Member for Huyton made a special journey there to consider this matter. But the hon. Member for Bury and Radcliffe (Mr. W. Fletcher)—does he wish to interrupt?
§ 6.15 p.m.
§ Mr. W. Fletcher
The hon. Member has given one instance, which he has not substantiated. I was saying that in the textile industry, without any exception, throughout the world people of enterprise have opened not sales offices, but showrooms, so that those in other countries can see what is manufactured, can criticise it and can then have something else. In my view—I may not have been in central Canada—that is almost universal.
§ Mr. Hale
I am not doubting that for a moment. I am only trying to help, and not to criticise. At the same time, however, I will take up what the hon. Member says. Right through Canada, in a country in which 75 per cent. of the population live within 75 miles of the American border, there are practically no British magazines circulating which 2615 can advertise our goods and impress our trademarks upon the Canadian population. The whole of the Canadian population are buying American magazines and reading American advertising, and, in many cases, popping over the American border to do their shopping.
I am sorry if that information is causing some exacerbation to the hon. Member for Bury and Radcliffe, but it is' the fact. He has only to look at the relevant figures to know that. As I said before, the textile figures show that the overwhelming percentage of our exports in cotton textiles are to Dominion and Colonial countries. It is no use saying that we are developing tremendous exports in Continental countries, in the U.S.A. and so on, because we are not.
§ Mr. Fletcher
I do not like to be misquoted. I never said those particular countries. I said, "practically universal." In the areas in which the textile industry has been asked to sell particularly, they have developed very largely. In some areas they have not been able to do so, in many cases because of the very great handicap which they have owing to the bad buying of the cotton in competition with other countries.
§ Mr. Hale
I should not follow the hon. Member's last sentence, because I am anxious to keep within the ambit of the Amendment, but that really is not the position, as any consideration of the figures would show. I am not trying to attack anybody. We show up very well in this matter. All I am saying is that we can do better and can go on doing better, and that there are many markets that at the moment we have not developed at all.
I have tried so far as possible to deal primarily with the main objects of the sum in respect of which the Amendment has been put down. I hope, however, that the right hon. Gentleman will reply in detail on this occasion to the questions that have been put. This is, today, a very vital matter. It is a vital constituency matter. I do not want to develop the constituency point, but the textile industry does not quite know what has happened to it yet and it does not know what the future is going to mean.
I am told that today in Oldham there are 10,000 fully or partly unemployed 2616 people. That is a very large number, a number that was never envisaged a few months ago. I have had conferences with the representatives of the trade unions and talks with employers, and so on, and all that we get at the moment is about the cancellation of orders, that orders are constantly being cancelled, and no one seems to know what will happen.
I am sure that the right hon. Gentleman will have read the recently published survey of European Trade by the United Nations, with special reference to the trade with the U.S.S.R. It is true that in those countries that were producing textiles mainly for their own consumption and had a little export trade, there was a noticeable recession some months ago. That may well be a recession in confidence, and I suggest that when the right hon. Gentleman considers the whole question of the textile industry he should ask himself just how big a part confidence plays in this matter.
Stimulation of confidence is at this moment the most vital thing we could do immediately to stop firms which have had six good years from closing down suddenly because they think that 1923 may have come again. In considering that question of confidence, I do say that Her Majesty's Ministers really should not start playing up this crisis, which the Chancellor so skilfully ignored in his Budget speech, by telling us he was bringing in a Budget to deal with the crisis—
§ Mr. Hale
Yes, Sir Charles, I agree. I think it was the encouraging look of the President of the Board of Trade which led me astray.
The constituency point is a very important one. Lancashire today, curiously enough, seems to have to face many problems which do not have to be faced by other areas and it seems unfortunate that, although we now have a very much greater variety of trade than before, there are in that area so many of the trades peculiarly vulnerable at this moment and which are showing signs of very real difficulty.
With these brief remarks, I would ask the President to give the fullest possible reply, because I am sure none of us wants to extend the ambit of the discussion.
§ Mr. P. Thorneycroft
I think it would be convenient if I replied now to the large number of important points which have been raised. The hon. Member for Oldham, West (Mr. Hale) will not expect me to follow him in too much detail on the textile industry, otherwise I might find myself in the same difficulty into which he was getting. But I would say this on one matter—he was discussing with my hon. Friend the Member for Bury and Radcliffe (Mr. W. Fletcher) the question of market research. Of course the Export Credit Guarantees Department does not carry on market research. What it does is to guarantee the expenditure, as it were, that is laid out in North American market research so that prospective exporters can go into that market and spend money on seeing whether their products are suitable to the particular buyers, whether they are the type of goods required in the locality, questions of distribution and so forth. Then, it guarantees the exporter against the cost of those researches not being recouped by the subsequent orders which, I think the Committee will agree, is a sensible and useful contribution to trade of that kind.
§ Mr. Bing
I am sorry to interrupt the right hon. Gentleman, but perhaps it will be convenient to put this point now. He spoke of guarantees in the North American market. Is there any particular reason why such guarantees should not be given in another market, or is it the policy in that market and not in the others?
§ Mr. Thorneycroft
I would put it the other way round. The reason why it was used in the North American market was because that was a market of peculiar and particular difficulty into which we were most anxious to enter. It does not mean that technically it should not be applied to other markets, but it has, in fact, been applied in that particular form of insurance contract in this market.
The hon. and learned Member for Northampton (Mr. Paget) raised a point in regard to insurance in the case of Syria. If he will give me details of what he has in mind I shall be very happy to look into it, but he will not expect me to embark on the whole subject of Syrian trade in this speech.
2618 My hon. Friend the Member for Bury and Radcliffe drew the attention of the Committee to an important matter. That was that we should recognise that the problems of our trade were much wider than the particular Australian incident of the moment. In a sense, the whole pattern of trade in the world at the moment is beginning to change, and I agree with him that we should be unwise to try to pattern the whole of our policy of export credit guarantees on the statistics we have of what has happened so far. Therefore, I agree with him and other hon. Members that what is wanted is that people should be prepared to look at this anew to see where needs are greatest and seek to the best of our ability to meet them as they arise.
The hon. and learned Member for Hornchurch (Mr. Bing) reminded me of what he said on a previous occasion in the early hours of the morning, that there were really fair grounds on which one could justify some increase in the ceiling of guarantees, namely, the volume of the export, the cash price—increases in the price—the larger proportion of the risk, or the type of contract. I cannot divide this up statistically, but if we look at any one of these today we should be led to suppose that a higher ceiling was required.
The tendency has been so far for volume increases to go on. The increase in volume last year was 3 per cent. I will not forecast what success Governmental trading and industrial measures will have in expanding exports, but clearly we ought to aim to expand them, and our policy in this, as in other matters, should tend in the same direction.
Prices have tended to rise and there is a larger percentage of risk. Incidents like the Australian affair will tend to make more traders turn to the Export Credit Guarantees Department, and in an uncertain world in which import restrictions are imposed one would expect that insurance would play a larger part. As to the type of product, the Committee are aware that it is easier at the present time to sell capital goods abroad than consumer goods. To that extent, the rather longer period when one is standing out of the money would lead one to suppose that a much higher rather than a lower limit was required.
§ Mr. Bing
As I understand it, at the moment the amount of guarantees which are outstanding is about £397 million. We have a ceiling of £500 million. To raise it to £750 million does seem, without anything further than what the right hon. Gentleman has just said, not to be as urgent as one might think it. I wonder if he could follow up what he said in a little more detail to show why, when they are already £110 million or so below the previous ceiling, we need to go up by another 50 per cent? That is the point some of us on this side of the Committee have been trying to make.
§ Mr. Thorneycroft
The hon. and learned Member is quite right. Towards the end of the year there was a slight drop in the amount of guarantees outstanding, but a little earlier the figure had risen more than £400 million showing that a specific figure at a given date like 31st December might be misleading. There is bound to be a certain rise and fall in the figures, and, looking at the figures over the year, we see that they would certainly want a little more elbow room than is given at the moment.
The hon. Member for Midlothian and Peebles (Mr. Pryde) raised an important point on the question of the carpet industry. If one looks at the figures of the Australian cuts one sees there is no doubt that the carpet industry is one of those which, potentially, has received one of the greatest cuts, because 48 per cent. of the total export trade in carpets went in trade to the Australian market and any restriction such as is suggested would have a great effect upon that. One cannot go into the whole question of trade policy in this matter, but clearly one must try to find alternative markets so far as they can be found, and in that the work of the Export Credit Guarantees Department is certainly of some assistance to exporters who are seeking to do that very thing.
I said that 13 per cent. of our exports is covered by the Australian cuts. I put that wrong. I should have said 13 per cent. of our exports went to Australia. That is the more accurate way of putting it.
§ 6.30 p.m.
§ Mr. Cecil Poole (Birmingham, Perry Barr)
Is the Department of the right hon. Gentleman yet in a position to know just exactly what is likely to be the impact 2620 of the cuts in Australian imports upon the trades of this country?
§ Mr. Thorneycroft
I could produce a list of figures showing the total percentages of export trade covered by this type of cut. But it would be quite unrealistic if I read it to the Committee, because at the present time it is not clearly or specifically decided exactly how those cuts are to be applied or what the form would be. Discussions are going on and it would be much better that those discussions should be concluded before I start to jump to conclusions in this debate or make some statement.
§ Mr. Thorneycroft
Yes. I am only too anxious that the Committee should have all the information at my disposal.
§ Mr. Thorneycroft
Some of it is, but discussions are still going on.
The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), by quite a proper paradox, on an Amendment which actually asks for a reduction, did show that what we want is a rather wide extension of the Measure. I have no complaint about that; it is a usual Parliamentary procedure. But I would say to him that I am perfectly ready to examine any methods which may be suggested that would lead to giving greater confidence to the traders of this country. But we do not want to make this thing grow too fast. It has grown very successfully under successive Governments and successive Presidents of the Board of Trade by taking one step at a time and gradually building up, sometimes by an extension of external trade, and sometimes in other ways. That I think is the better form of approach, but my mind is not closed to such suggestions as were made by the hon. Member.
§ Mr. Ellis Smith
May I say that in the past I have found the Department of the right hon. Gentleman very receptive to suggestions for meeting new circumstances? In my view, we have now reached new circumstances which require suggestions of the character which I made.
§ Mr. Thorneycroft
I appreciate the point which the hon. Member has made. All the points which have been made in this debate will be carefully examined. They were all fair points directed to helping the work of the Department, and I am sure we shall try to benefit from them. I hope that when our discussions are concluded the right hon. Member for Rochester and Chatham (Mr. Bottomley) will fee/ able to carry out the intention he indicated at the start of the discussion and withdraw his Amendment.
§ Mr. Emrys Hughes (Ayrshire, South)
I feel that the President has given us a very fair-minded reply. If this legislation is carried out in that spirit, I do not think that any one will quarrel with it and we shall be able to give him our suggestions for finding the alternative markets so much desired at the present time.
Although the hon. Member for Oldham, West (Mr. Hale) referred to the problems of Lancashire, I would point out that it is not only Lancashire which is interested in textiles, although the great mass of the unemployment problem would appear to be the serious concern of Oldham. There are smaller industries, as was pointed out by my hon. Friend the Member for Midlothian and Peebles (Mr. Pryde), smaller textile and carpet factories which also have their problems. Though they may not be revealed in big mass figures, they represent a serious and growing problem of unemployment scattered over a large number of areas.
I wish to stress one important outlet which I mentioned at Question time, the need for developing the export credit facilities as they were before the war in order to improve our export trade of herring to Poland, the Baltic countries and the U.S.S.R. Before the war we did a very large trade in herring between Scotland and the U.S.S.R. and countries behind the Iron Curtain. At the present time there is a great deal of concern among Scottish herring fishers about the possibility of an improvement in the market. I ask the President not to be obsessed with ideological prejudices about the renewing of our trade with the countries behind the Iron Curtain. After all, we need—
§ Mr. Hughes
Yes, Sir, I was endeavouring to present my arguments within the scope of that particular figure. But I wanted to stress that the herring industry should not be overlooked. There has been in the past a great market which requires to be developed. The same applies to the export of agricultural machinery and of articles produced by a very large number of small industries. I ask that these small industries shall not be forgotten. Although in bulk they may not appear to be significant, they represent a considerable part of the total trade of this country.
§ Mr. M. Follick (Loughborough)
I should like the right hon. Gentleman to give great attention to the competition we might encounter from Germany in the electrical industry, and I speak especially for a great electrical firm in Loughborough, the Brush, which has conquered big markets, including the Australian market. We wish to prevent those markets being taken away—
The scope of the discussion on this Amendment does not permit a discussion about trade in Australia.
§ Mr. Bottomley
The President of the Board of Trade has given us a most reasonable reply. Although obviously not all the points have been covered, I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. Bottomley
I beg to move, in page 1, line 15, to leave out "fifty," and to insert "thirty."
The right hon. Gentleman will be aware that he has not had a chance of replying to the questions about which I gave notice earlier, and I am wondering whether he can tell us if the special facilities for the dollar export markets are to be continued, how successful they have been to date and whether there have been any failures? I am bound to give warning that there are other points of substance which other hon. Members are desirous of raising.
§ Mr. Bing
In a curious way this Amendment is almost identical with an Amendment moved by the right hon. Gentleman who is now the Minister of Works the last time a Bill similar to this was before the Committee. On that occasion he moved a reduction in the sum to be devoted for special credits for the purpose of inquiring into what were the special covers required.
Some of my hon. Friends have said, very rightly, that it has not been very clearly laid down exactly what are the subjects covered by this particular type of guarantee. The President of the Board of Trade, when speaking on the same subject two years ago, said that it laid with the Government to give very detailed reasons why they wanted another £40 million. That was another £40 million which we were going to ask for.
Now, the President of the Board of Trade is in, the opposite position, and is asking, not for £40 million, but for £50 million, and so we have moved the same reduction as the present Minister of Works moved in 1949 when he was seeking just the same kind of information. The Secretary for Overseas Trade, when dealing with this trade on Second Reading, said:These guarantees cover a wide number of projects, such as certain aspects of the dollar drive and such things as the export of herring to Poland and many other projects.He went on:They include trade with the Iron Curtain countries amounting to £13,240,000."—[OFFICIAL REPORT, 20th February, 1949; Vol. 496, c. 321.]He also said something about £10 million for buses, which he suggested my right bon. Friend the Member for Rochester and Chatham (Mr. Bottomley) would know all about.
§ The Secretary for Overseas Trade (Mr. Henry Hopkinson)
I also referred to trade with North America, including the dollar drive, market research, and so forth.
§ Mr. Bing
I am much obliged to the hon. Gentleman. I do not want to misrepresent him, but only to put the point as it appeared to us at that time. As I now understand it, what we are really discussing in this Clause are the dollar drive in North America and the special guarantees of various sorts—a hotchpotch, as it were, of special measures.
2624 I think it is probably an excellent thing that we are engaged in dealing with measures of this kind, but I want to detain the Committee for a moment by suggesting that we should look carefully at this sum to make certain that it is the right sum, not too little or too much, for the sort of trade which I think is likely to be before this country in the future.
It seemed to me that the switch in which we may find ourselves now involved may be a switch from the normal commercial guarantees to the special guarantees under Section 2 of the 1949 Act, and it is for that reason that I hope that we shall receive a little more detailed information about that aspect of the matter.
Before I leave the matter, perhaps the hon. Gentleman will allow me to say how I feel this trade might profitably be developed. We have had from my hon. Friend the Member for Oldham, West (Mr. Hale), some discussion of East-West trade, and I think that, under this section of the Measure we have an opportunity of underwriting those types of activity which are going to develop trade between East and West in Europe in particular, and, secondly, trade with the newly-developed countries, such as China, Indonesia and all the countries which have recently obtained their independence.
The President will no doubt remember—because he was kind enough to sit through the debate—that, speaking on this aspect of the matter, I dealt with the sort of promotions which I think we might well consider under this Clause. I interrupted the right hon. Gentleman to ask him why, for instance, we confined to the North American continent our insurance of people who went to promote trade, because, surely, there are a great many areas in the world other than the North American continent—
I am interested in the argument which the hon. and learned Gentleman is submitting, but I do not see how the form of the Amendment enables him to rove about on the question of trade.
§ 6.45 p.m.
§ Mr. Bing
Perhaps I might explain why I consider the matter to be in order. I think it will make the issue clearer. What we are now considering is whether or not we should give an additional £50 2625 million as an overall guarantee for the special types of guarantees, so that that would be the proper sum to give if we saw any particular reason why we should go above the present limits of £100 million, which is fixed for trade of this sort. We have not yet fixed a ceiling, but we are approaching it.
If we are to have another 50 per cent., there must be a great number of new projects, and I am only suggesting this to the right hon. Gentleman in the hope that he might tell us about these now projects and make it unnecessary for us to press this Amendment to reduce the sum. If, on the other hand, he says that he has none of this sort of project in mind, then the sum of £25 million in excess of that already allowed would, in our view, be sufficient, so that the object of the argument—
I do not think that the hon. and learned Gentleman can put forward any number of projects and go into detail to illustrate the difference with the £50 million or whatever the figure is. I do not think he can do that.
§ Mr. Bing
With great respect, Mr. Hopkin Morris, it may be possible for me to put this argument on the Question "That the Clause stand part of the Bill," and I will leave it at that, if necessary.
The argument I was putting was that the right hon. Gentleman when dealing with the earlier Measure, said that the special guarantees covered, for instance, insuring people who would be engaged in market research in the North American continent. If we need £100 million and we already cover the North American continent, it is pertinent to ask whether we could cover any other continent if we should have a 50 per cent. increase, and I was suggesting to the President that that might be a very effective course to pursue.
I do not want to abuse the facilities of the Committee or trespass beyond events, but on a previous discussion I have tried to put that argument. We had a very wide discussion on the subject, and we also had a wide debate in 1949, although I have not a copy of the OFFICIAL REPORT here at the moment. It was on this particular subject of the special guarantees, and, therefore, I hope I am in order in keeping my remarks within the ambit of what was said by the present Minister of Works in the 1949 debate, when he was moving a similar reduction to this one, 2626 and on this particular aspect of the matter.
However, to resume what I was suggesting to the right hon. Gentleman, I think he ought to lay before the Committee some outline of the plans which he has for the use of the special guarantees, and that he should, in particular, give us some indication of how he intends to use them in regard to East-West trade. This was a matter which we discussed on Second Reading, but, unfortunately, owing to the late hour and the fact that nobody from the Department was there to answer, we did not have a very adequate reply to the points raised.
What I am now asking either the President or the Secretary for Overseas Trade to do is to give an indication of what is the concerted plan. Reference has been made to herring for Poland, but, surely, we ought to have a plan for proper study so that we can see whether Poland needs something else as well as herrings, and be told whether, in developing East-West trade, we are to insure the trading losses of anybody who goes to the Moscow conference, to which I referred when speaking in the Second Reading debate. If we can insure under this Clause a visit of business men to the United States for the purpose of securing consumer exports in these markets, why cannot we insure, similarly, the visits of other business men—
The point of the Amendment is to reduce the amount of money being provided. That is the point of the Amendment, but the hon. and learned Gentleman is not now seeking to reduce the amount provided.
§ Mr. Mitchison
On that point of order. May I humbly submit, Mr. Hopkin Morris, that in 1949, at column 251 of HANSARD, the present Minister of Works moved an Amendment to leave out "one hundred" and insert "sixty"; that is to say, he moved an Amendment precisely similar in its tenor to the Amendment which we are considering today. In the course of his argument, he went on, without being called to order in any way, to consider the question, for instance, whether this was really a second kind of Marshall Plan—a method of giving aid to Eastern European countries.
2627 The right hon. Gentleman discussed that at considerable length—I see that it goes on for at least five columns in HANSARD—and he went into some detail later about the particular requirements in different cases. I submit that if the right hon. Gentleman the present Minister of Works did that on that Amendment then my hon. and learned Friend the Member for Hornchurch (Mr. Bing) is in order in saying at no inordinate length what he is now saying.
I do not think that the conclusion which the hon. and learned Member draws from his argument is necessarily the right conclusion. This Amendment is really a very narrow Amendment. Its purpose is to reduce the amount of money being provided.
§ Mr. Mitchison
Further to my point of order. With very great respect, Mr. Hopkin Morris, surely if this is a narrow Amendment, so was the Amendment which the right hon. Member the present Minister of Works moved on that occasion. He began at column 251 in HANSARD and was still discussing the matter at column 255. He discussed the whole question which has now become whether we are giving Marshall Aid to Ruritania. I think that is a figure of speech, but he did go into the matter of Eastern Europe and the kind of way in which this money should be used in very considerable detail on, with great respect, an Amendment no wider in any way than the present one.
I do not dispute the hon. and learned Member's facts. What I do dispute is his conclusion.
§ Mr. Bing
With great respect, Mr. Hopkin Morris, I am trying to follow the point of view of my right hon. Friend the Member for Rochester (Mr. Bottomley), who moved this Amendment in an exploratory sense. We should see whether or not this sum is justified, and, if as a result of the very friendly discussions we have had in the Committee, we found it was justified then my right hon. Friend would withdraw his Amendment. What I am now doing is to say to the President of the Board of Trade, "If you use these guarantees for covering this and this and this, I myself would be quite content to use what influence I possess with my right hon. 2628 Friend the Member for Rochester to suggest that he withdraw his Amendment."
The point I am on is that it all depends on what this money is spent on. I am hoping that when I put forward my argument on the way in which I think it should be spent and that it will be sufficient to cover that sort of activities, then I do not think it would be possible for us on this side of the Committee to contend that the excess sum asked for was too large. If, on the other hand, the President of the Board of Trade says that the Government are not intending to undertake any of the sort of activities I am indicating, then there might well be a case for saying, in those circumstances, that the money should not be granted.
With great respect, I have tried—appreciating the difficulties of the Chair in this matter—to model my arguments precisely on the lines of those addressed at that time by the right hon. Gentleman the Minister of Works, feeling that had his discussion been out of order—it proceeded for such a length of time and there was a change of occupant in the Chair during that time—one or other occupant of the Chair would have called the attention of the Committee to the fact.
§ Mr. W. Fletcher
In his explorations, has the hon. and learned Gentleman thought of persuading any of the Eastern countries to increase the number of irrecoverable credits which they have, because that lightens the burden on this Department? The great secret of using this money to the best advantage is to increase the number of irrecoverable credits.
§ Mr. Bing
I perfectly appreciate the point, and I am most grateful to the hon. Member for it. If I might say so, it reinforces from—I will not say an unexpected quarter because we have had great assistance from the hon. Gentleman, and always do in these debates—a valuable quarter the argument I was trying to address to the Committee.
What I was going to say—and I put it in the form suggested by the hon. Member for Bury and Radcliffe (Mr. W. Fletcher)—was that we should consider the problem of East-West trade from the point of view of how far it is to be financed by those countries themselves, to what degree they are to open irrecoverable credits here, and what type 2629 of market they are to give for those credits. I will not go into any detail, but I would suggest that we might expend a little money to insure people making visits to explore these possibilities, and it is for that reason I want to make this plea to the President of the Board of Trade.
In the Second Reading debate I spoke on the subject of what is the most effective method for exploring all these means of securing payments for our trade with East-West countries. It is quite obvious that, valuable as the export guarantees are, the very fact that we have to increase the total all the time—and I think I shall carry the hon. Member for Bury and Radcliffe with me here—
§ Mr. Bing
I should have no greater pleasure than to be able to achieve it. I hope, figuratively speaking, to carry the hon. Gentleman with me on this point.
However desirable it may be on general trading grounds to extend the credits, the very fact that we have had to extend them marks a degree of the uncertainty of trade, and anybody who has to obtain a credit has to bear a degree of overheads. Therefore, any scheme by which we can somehow or other manage to reduce the overheads which he carries is of the greatest importance and value. That is why, almost like King Charles's head, I come back by this circuitous route to the point at which I was when the various points of order were raised in the Committee.
Before I sit down, I want to make this plea to the President of the Board of Trade in regard to East-West trade, and, indeed, in regard to the trade of all planned economy areas. Do not let the Export Credits Guarantee Department put into two quite distinct compartments trade with the North American continent and trade with the rest of the world, 2630 because it may well be that the trade with the rest of the world will ultimately prove far more important to us than the trade with the North American continent.
Let us consider what insurance we can give to people who go to various parts of the world and let us, in particular, see what insurance we can give to people who go to such places as the Moscow Conference. I mentioned earlier a conference in Moscow. I think it is to be held on 2nd April. As I said in the Second Reading debate, I think both sides of the Committee have been a little at fault in this matter, though possibly for wise and obvious reasons for which none of us may be blamed, but the Foreign Secretary and the T.U.C. have condemned this conference out of hand.
Looking at our trade position, I am not at all certain whether we ought not to look at that conference again and consider whether it is not one, just like any other type of market research, which should be insured by the right hon. Gentleman's Department. It may be said that it is a bad risk. But is it a bad risk to go to those parts?
§ It being Seven o'Clock The CHAIRMAN left the Chair, further Proceeding standing postponed until after the consideration of Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business).
§ Mr. SPEAKER resumed the Chair.