HC Deb 30 May 1952 vol 501 cc1835-54

2.11 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

The subject I wish to raise is the prospects for the motor industry. I do not think it is necessary for me to stress the substantial importance of this industry. Obviously, its contribution to our exports since the war has been quite sen- sational. From an employment point of view, quite apart from the importance which, naturally, attaches to any industry in which 300,000 people are engaged, as is the case in the motor industry, there is the further special consideration in respect to this industry, and that is that it is a localised industry. Therefore, any difficulties arising in it have that much greater impact on the areas in which it is located. I think, too, that this is very much the moment when we have to look ahead to see what the prospects of this industry are likely to be.

As we all know, the motor industry has suffered a great deal from raw material shortages over the last year or 18 months, and those difficulties have kept production consistently below the maximum, and led to the total production in 1951, for instance, being substantially below that for 1950. In the first few months of 1952 the raw materials difficulties were still greater than they were in 1951, and certainly the problem of short time, and of laying workpeople off, were occupying a great deal of attention during that period.

As far as we can discover, during the last month or six weeks the position has somewhat improved from that point of view. There appears to be slightly less short time than there was. The first point that I should like to raise with the Parliamentary Secretary is the extent to which this slight improvement over the last few weeks has been due to the stepping up of production as opposed to the running down of the total labour force engaged in the industry. Certainly, the latest issue of the "Ministry of Labour Gazette," would tend to indicate it has been at least partly due to the diminution of the total size of the labour force engaged in the industry.

There is a difficulty here which, I think, will be familiar to the Parliamentary Secretary, for I remember that I served with him on a sub-committee of the Estimates Committee in the Session of 1950–1951, when we had a good deal of evidence bearing on this problem. Largely for historical reasons, higher wages are paid in the motor industry than are paid in most others—higher wages, for instance, than are paid in the machine tools industry. Therefore, when we have a position in which men in the motor industry are being laid off, even if they are re-employed quite rapidly in another industry such as that of machine tools, it is none the less the case that quite often the men are involved in a substantial cut in their weekly wage packets, and that involves individual hardship.

Nobody is going to deny that in present circumstances we need a certain amount of re-deployment of labour. Normally one is able to offer some sort of financial incentive to people to change their jobs. The difficulty about the present position is that, far from our being able to offer financial incentives to people to leave the motor industry for others, they have to suffer considerable financial disincentives.

I should like to ask the Parliamentary Secretary when he replies to tell us something about this problem. Is it still the case that if a man leaves the motor industry and goes into another industry located in the same area, within the engineering group of industries, a lower wage is likely to be paid to him? Do the same sort of considerations of which we were told, when the hon. Gentleman and I served on the sub-committee of the Estimates Committee, apply to the machine tool industry and the aircraft industry, which is to some extent expanding in areas where the motor industry operates? Is a similar loss of earnings involved in those cases?

As I was saying earlier, it appears at the present time that the raw materials shortages are slightly less, at any rate, in relation to the number of men using those raw materials, than they have been at some stages in the past, and I dare say it may be the case that this tendency towards an improvement will continue throughout the year. We should, of course, be extremely interested to hear from the Parliamentary Secretary any information he can give us about future prospects of steel supplies to the motor industry in 1952—whether there is any likelihood of there being any improvement over the present position, and to what extent there may be shortage continuing in the industry in this respect.

But, whatever may be the case here with regard to raw materials supplies, I think it would be extremely foolish to assume that the problems of the motor industry are at an end because there is some easing of the raw materials position, or that they would be at an end if there were to be some further substantial easing of this position; because I think it may well be that we are moving out of an era of raw materials difficulties only in order to enter a possibly more dangerous era of shortage of demand from overseas markets, whether a real shortage of demand because people do not want our vehicles, or an artificial shortage of demand because of import restrictions imposed by their Governments

The "Financial Times" a few weeks ago—on 11th April, I think—had a very interesting front page article from its correspondent in Birmingham on this whole question of the future prospects of the motor industry, and it said: Increasing restrictions in world markets have suddenly taken the United Kingdom vehicle industry into a buyers' market. They have also brought it to the point where it must entirely re—examine future prospects. especially for private cars I should like that quotation to be the starting point for the next series of remarks that I want to make. Before I come to the rather long-term prospects I should like to say a word about the short—term prospects—the prospects for the immediate future. The Government plan for the motor industry in 1952, as it at present stands, is that there should be a quota of 60,000 cars for the home market, as against actual deliveries in the home market in 1951 of about, I think, 108,000 cars—at any rate, something over 100,000 cars; and that quota of 60,000 is accompanied by the hope on the part of the Government that it may be possible to maintain the volume of exports at approximately its 1951 level.

I think we must realise to begin with that, if both these two objectives are to be carried out, and even assuming that the volume of exports is maintained fully at the 1951 level—I shall have something to say about that in a moment—this will involve a shrinkage in the size of the industry's output of 48,000 cars this year, and that that will come on top of a shrinkage of approximately equal size between 1950 and 1951; and, therefore, the industry is having about 20 per cent. of its total size lopped off it over a period of two years, even assuming that the volume of exports in 1952 is as great as in 1951.

Obviously, since that hope was expressed by the Government, a lot of things have changed in the export markets. One of the most importxant points which I have to ask the hon. Gentleman—I know that this is dealing in the realm of surmise, but in planning these things we have to make estimates and look ahead—is: what does he consider a realistic prospect for 1952 in the export market to be? Does he consider that the 1951 volume of exports can be maintained in 1952? Obviously any doubt that this volume will be attained raises the question of the size of the quota to the home market.

I would not urge a drastic change in this quota system for the home market for three reasons; first, because of the whole history of this industry since 1945. I began by saying that it had made a sensational contribution to our exports. But we all know it has made that contribution under a great deal of pressure from the late Government and that had not the late Government been prepared to be pretty tough at various periods and to impose this export quota on the industry we should not have had anything like that result.

Secondly, I would not put much reliance, quite apart from this, on any long-term solution of the problems of the industry by abolishing the home market quota itself; because I think that at present the home market demand for cars is much less big than it might appear to be from the waiting list. If one abolished or greatly increased the quota system one might find the home market saturated much more quickly than might be thought, and then the industry would be up against difficulties from the point of view of both exports and the home market.

Thirdly, I would not advocate any drastic change in the quota system because it is obvious that in the future this industry must be primarily an export industry. There is no conceivable possibility of this country, placed as it is in the world today, being able to afford a motor car industry of anything like the present size unless it is primarily an export industry.

I do not, therefore, believe for one moment that the problems in the industry can or should be solved by a great unloading of cars on the home market. Nevertheless, this question of a home quota is one which should be looked at carefully at the present time. It might be that there should be some increase in the total or, even more, some increase in flexibility so that at times the unloading can be at a higher rate than the total for the year. At any rate, I hope the Parliamentary Secretary will look very carefully at this question of the home market quota both from the point of view of increasing it and operating it with greater flexibility so that it may make some contribution to the solving of the difficulties the industry is facing at the present time.

I turn now to the question of longer term export prospects for the industry. The question we have to pose here is whether the world is likely to go on wanting to buy British vehicles at the rate of more than £200 million a year. One also has to consider whether parts of the world which will send us in return for these vehicles the goods we need will want to deal with us. After all, exports of cars, or any other exports, cannot be carried on by this country merely as a means of getting rid of goods which are surplus to home demands. These exports must be sent to countries who can send us the things we need.

Although the closing of the Australian market was a heavy shock to the industry and to this country, nevertheless we had been in the position for a year or two of sending to Australia goods that she could not possibly export in return. Our exports to Australia were running at an unrealistically high level which we could not hope to maintain in the long run. Will the countries of the world want to go on importing British vehicles at the rate of £200 million a year? I think the answer is that they probably will, but possibly not to the same pattern, and not the same type of British vehicles as they have been importing at this rate during the last two or three years.

I want to quote again from the article in the "Financial Times" which I mentioned earlier. It states: In future Britain may have to sell transport rather than comfortable motoring. … In general it is apparent that the ascending order of prosperity for producers is likely to be those making only private cars; private cars plus sports cars, commercial vehicles or tractors; and those making heavy lorries and buses. Notable exceptions to this generalisation are manufacturers of specialist cars. I would certainly agree that in future the tractor and commercial vehicle are likely to be a more important medium of exchange in the world than the ordinary private motor car. I should like to ask the Parliamentary Secretary whether he thinks that the motor industry is fully appraised of that and, if not, whether his Department are doing all they can to impress upon the industry recognition of these world trends and the need to adjust themselves to it.

My last point concerns the practice of exporting vehicles in what is known as "completely knocked down" condition. This is something which has developed since the war and now has grown to what I think one can call alarming proportions. It is certainly causing a great deal of concern among those employed in the industry, and apart from the employment point of view it is a practice which is bound to cause us concern from the point of view of our future national economy.

After all, if British exports are to continue at the present level and to be built up they must be exports which have in them as large a proportion of labour, and particularly skilled labour, as possible; and obviously the practice of moving towards the export of vehicles in a C.K.D. condition runs counter to this rule as to the nature of our future exports.

But it is not a subject about which one can dogmatise. Many countries abroad have import restrictions and it is better to export a vehicle in C.K.D. condition than not to export at all. But I think we should be sure that this practice is only reverted to where it is essential and that it is not done too easily and too generally. A case was brought to my notice the other day of a firm in the Birmingham area manufacturing jeep-like vehicles and exporting them to Belgium in this C.K.D. condition. Belgium, we are assured, is the great free enterprise country of Europe and I should have thought that the market there was still a pretty open market. I wrote to the Parliamentary Secretary about this matter some time ago.

I am not sure that it is necessary in the case of Belgium to take these measures, particularly as I was informed that the Belgians were proposing to assemble the vehicles there and then re-export them. Obviously, that would be a very dangerous development indeed from the point of view of the British motor industry.

Anything that the Parliamentary Secretary can tell us about this practice will be of great assistance because although, as I have said, it is not a matter about which one can dogmatise, it is causing real concern in the industry and is a matter which obviously might have serious implications for the whole future nature of British exports. I hope the Parliamentary Secretary will be able to clear up some of the doubts which I have expressed. Obviously, the importance of this industry and the contributions that it makes entitles it to very full help and guidance from the Government. I think it needs that help and guidance because it is going to face a fairly difficult time in the future. I hope the Parliamentary Secretary's reply will give us confidence that the industry will receive that help.

2.30 p.m.

Mr. Martin Lindsay (Solihull)

It is very useful that we should have this opportunity of a brief discussion on the motor industry and I am grateful to the hon. Member for Stechford (Mr. Roy Jenkins), who, were it not for our respective positions in the House, I should have called my hon. Friend, because he was my opponent in 1945 and a large part of his present constituency was in mine until the redistribution of 1950. As he has said, the motor industry has made an immense contribution to our balance of payments problem. Therefore, it deserves well of Her Majesty's Government.

I know that my right hon. Friend the Minister of Supply has taken the closest personal interest in the industry. I have had some negotiations with him on behalf of the Rover Company, which is in my constituency, and he and his hon. Friend have been most accessible and helpful, and I am sure that the industry is benefiting from their close attention.

The difficulty in which the industry finds itself today is that, because of the shortage of materials, production has been falling and this means—for obvious reasons, which I need not elaborate as they are so well known—that prices are rising. Competition all over the world is keener, production on the Continent is continuing to rise, and the price factor is extremely important.

I agree with the hon. Member for Stechford that there is a case for carefully considering whether or not the home quota should be increased. What we need today is volume of production, because only that can bring down prices. If we take 1950 as a base year and compare production in the first quarter of last year with that in the first quarter of 1950, we find that production fell by 3.1 per cent.; and if we compare the first quarter of this year with the first quarter of 1950, we see that it fell a further 7.2 per cent., making a fall in production in the first quarter of this year, as compared with that of the first quarter of 1950, of 10.3 per cent.

We know that at the beginning of this year the Government thought that, owing to the shortage of raw materials, it would be necessary to cut production in the motor industry by some 15 or 20 per cent. I am very glad that more steel has been produced for the industry and that it was not necessary to cut it back to that extent, but I suggest that a cut of over 10 per cent, is serious enough. Steel is the greatest difficulty. I am sure that the Government are taking all the steps they can to increase the importation of pig iron and scrap whenever possible, so that the general level of steel production can be raised as high as possible.

I look forward to hearing what the Parliamentary Secretary will have to tell us about the future supplies of steel to the industry later this year. I understand that it should be much easier shortly, particularly with the arrival of the million tons of steel we are expecting from the United States. I hope that we shall be given some assurance that it may be possible for the industry to get back to its production figures of 1950 in the latter part of this year.

At present, the national production of steel is running at approximately 16 million tons a year, and the industry needs only another 150,000 tons to get back to its 1950 production figures. The tragedy is that at present it is not possible for the industry to go even further than it did in 1950. In that year the total production of the motor trade ran to 785,000 cars and commercial vehicles; but the industry has a capacity for 1 million units, and what a wonderful contribution to the export drive it would be if only steel and markets could be found to make this possible.

Before the war, the industry used 7 per cent. of the total steel production in the country and it would need only 8.5 per cent. to be able to turn out 1 million vehicles a year. At the present time I believe that, although there is sales resistance in many parts of the world, it is possible to place these vehicles overseas; but, as the hon. Member for Stechford suggested, it may be much more difficult to do that in the years that lie ahead. I think it is vital, in this year and next year, to sell every vehicle we can, to establish new markets, and to retain those we have now, and it will be a tragedy if, because of a shortage of steel—a comparatively minor proportion of the national output—we cannot make those vehicles while we are still able to sell them.

I should like to draw the attention of the Parliamentary Secretary to a comparatively minor problem which is troubling the industry today. To fall in with the wishes of the O.E.E.C. authorities the Government, by order, prohibited the use of nickel plate on a large number of parts of cars, and this has made them less attractive and more difficult to sell in markets overseas. At the same time, however, the American car manufacturers and those on the Continent have not reduced their decorative plating by anything like the same amount, and the industry feels that Her Majesty's Government have gone somewhat too far in setting an example of austerity which has not been followed elsewhere. I hope that the Parliamentary Secretary will look into this question and see whether this trend should not be reversed.

2.38 p.m.

Mr. Julius Silverman (Birmingham, Erdington)

The House will be grateful to the hon. Member for Stechford (Mr. Roy Jenkins) for raising a matter of so great importance. Not only is it of vital importance to the export industry and the financial solvency of this country but it also affects the livelihood of hundreds of thousands of workers, not merely those who are directly engaged in the motor industry but many, as in Birmingham, who are employed in making accessories for the motor industry. Many hundreds of thousands of people are so engaged.

It would be interesting to hear the views of the Government about the future of this industry. If we want to plan an industry of this sort it is obvious that we must look ahead. We cannot base our calculations merely on a sort of hand-to-mouth existence. It is true that for the past 18 months the motor industry has been restricted by the question of the supply of materials—more especially the supply of sheet steel but not only sheet steel.

Up to the present time the shortage of steel has been a major bottleneck, but it seems as though this particular bottleneck is slowly disappearing and, without arrogating to myself the dangerous role of a prophet, I think we can expect, 'judging by present trends, that in another 12 months or fewer the main shortage of steel and non-ferrous metals may cease to be an important factor in connection with the production of cars.

Another question raised by the hon. Member for Stechford was that of markets and the sale of motor cars. That will be the bottleneck, and it is the problem with which the Government have to deal. They must look ahead if they are to deal with it.

What should be our present policy? In our approach to the Minister and in other ways, we have advocated an increase in the allocation of sheet steel and other materials to the motor industry, for several reasons. One is, of course, its importance, and another is that the motor industry sells its goods at a high conversion rate—that is to say, we get very much more for the amount of raw material put in than we do from other industries. In that respect the industry is well worth encouraging and deserves the maximum supply of raw materials.

There is also, however, the question of its future. We are encountering a great deal of sales resistance abroad. Everybody who knows anything about the sale of motor cars will agree that we are finding a shrinkage of demand while, at the same time, the new competitors, Germany and other countries, are introducing fresh difficulties for us. In those circumstances, there is one thing at least which we ought to be able to offer, and that is the earliest possible delivery. That is always an inducement to the buyer, and it depends on the quantity which we make and the amount of materials supplied to the industry. That is another reason why the industry should not be faced with any unavoidable shortages.

It is quite clear that sales resistance will not have diminished within another 12 months but will have become greater. If that is so, it is essential that we should seek as far as possible to retain our markets. We can do that only if the volume of motor car production is not diminished, if the skill of its workers is not dissipated through their being deployed into other industries, if the productive capacity of the industry remains intact and if the total of markets are retained. For those reasons, I hope that we shall hear from the Parliamentary Secretary that it is possible to give further encouragement and an increasing supply of materials to the industry.

There is also the problem of selling cars in the years ahead, and the Parliamentary Secretary has already been invited by my hon. Friend the Member for Stechford to tell us his views about the future sales and possibilities, and the future prospects, of the export industry. It is difficult, but it is nevertheless important that we should try to make some sort of calculation. Admittedly, all sorts of things can make such a calculation fallible, but it is far better to make a fallible calculation than to have no calculation at all. We need some idea of what the prospects are, because upon that we shall calculate what size the motor industry is to be and upon it, too, we shall base our production. I should like to hear the views of the Parliamentary Secretary and the Government on this matter.

I agree with my hon. Friend the Member for Stechford that at least temporarily there is a case for an increase in the quota of cars for the home market, so that we may keep the industry intact, keep the skilled people within it and help us with the future competition which will be so difficult. If only as a temporary measure, I believe there is a case for an increase in the home quota. What is the prospect of increased exports? I agree entirely with my hon. Friend that the motor industry is bound, substantially, to be an export industry.

Nevertheless, I think that in future the demand will be not so much for private cars, the world demand for which is shrinking in relation to the supply, as for commercial vehicles and tractors. What are we going to do about supplying these machines to areas where they are most needed—to undeveloped areas of the world, to India, to China, to the Far East, to South Africa and to many other territories? What is the prospect of an expansion of our sales to those countries? Obviously, if the traditional markets are to diminish, if not, indeed, to disappear, we must look elsewhere and trade elsewhere if we are to survive. All these are interesting questions and we look forward to hearing the Parliamentary Secretary's reply.

2.46 p.m.

The Parliamentary Secretary to the Ministry of Supply (Mr. A. R. W. Low)

We should all be grateful to the hon. Member for Stechford (Mr. Roy Jenkins) for the way in which he has initiated this short but useful debate on the future of the motor car industry. I noticed that both he and, to a lesser extent, my hon. Friend the Member for Solihull (Mr. M. Lindsay)—and to a greater extent the hon. Member for Erdington (Mr. J. Silverman)—tried to lure me into giving to the House a number of prophecies about the future.

One thing I have noticed about the last four or five years in connection with our economic affairs is the number of prophecies which have been made and which have been fallible. The hon. Member for Erdington even asked me to make some fallible calculations, but I think it will be much more useful to the House if I present the relevant facts and factors upon which we can all make the proper calculations.

At the outset, I must say that no one will quarrel with the importance which all three hon. Members have attached to the future of the motor industry. This is a great national industry, and hon. Members who have a particular and important constituency interest in it can be assured that the whole House shares their concern for its future, and certainly the Government share their concern.

As has been pointed out, the industry very big part in the of national exports since war. Since the war, the earned overseas £1,000 of foreign currency, and even in the first four months of 1952 exports of cars and commercial vehicles earned over £73 million worth of foreign currency. Of course, the industry also plays an important part in employment, for 300,000 people are directly dependent upon the motor car industry for employment and, as the hon. Member for Erdington said, there are others who are less directly dependent on it.

A number of questions have been put to me, but I regret that in some cases I cannot give a direct answer. As the House knows, there is the closest cooperation between the motor industry and the Ministry of Supply and there is a National Advisory Council for Motor Manufacturers which ensures that this co-operation and consultation is maintained. Recently, my right hon. Friend the Minister has been in consultation with the industry's leaders and some of the questions raised in the debate are under discussion with the industry. I cannot do more, therefore, than to give the background of the problem. One question which was mentioned, in particular, by my hon. Friend the Member for Solihull was that of nickel plate, and that is one of the points which is being discussed at the National Advisory Council.

In giving this background I must trouble the House with a number of figures, some of which will be familiar to hon. Members but which, I am sure, will be found to be helpful. Before I come to the figures, I must say that the first thing that strikes anyone who looks closely into the problem and performance of this industry is the large measure of success—one hon. Member referred to it as a sensational measure of success—which they have had in expanding their output and more important in expanding their overseas sales since the end of the war.

We should all like to pay a sincere tribute to both management and workers in the industry for the part they have played in this effort. I hope the House will not forget that the sale of such large quantities overseas means not only good production and good organisation, but a willingness on the part of the managements to take risks which require a high degree of courage.

The first question raised was the question of employment. The employment position in the motor industry has slightly improved in the last few months. There are now 3,000 fewer workers on short time than in mid-February and I find that redundancies from that time until mid-May amount only to 102. Unfortunately, there was a slight increase in short-time work in one of the important Birmingham firms. When we consider these figures, I hope it will be against the background of 300,000 workers who are working directly for the motor industry.

The hon. Gentleman also asked me a question about wage rates, which was raised on evidence given to one of the Estimates Sub-Committees on which we both served last year. In general, the facts are as stated by the hon. Member. We should beware of generalising too much about this matter. We should beware of generalising about the relationships of wages in the motor industry to wages in other industries mainly by looking at the statistics in the "Ministry of Labour Gazette."

I am sure that the hon. Member is not proposing that we should interfere in any way with the collective bargaining principle by which all these wage rates are fixed. My general reply to the hon. Member is that we should beware of generalising without examining very carefully not just the average wage rates and earnings between various industries, but also the number of skilled men who are included in the figures for those industries.

I should like to turn to some facts about production. First, as has been said by my hon. Friend the Member for Solihull, the level of production in the motor industry in the case of the bigger firms is ruled by competitive power, because it has a great effect upon prices and costs. One must, therefore, share the anxiety expressed by the industry at the fall in output which has taken place. In 1950 the total number of cars, including cars and commercial vehicles produced, was 780,000; in 1951 it had fallen to 730,000 and this year production is running at an annual rate of 706,000. That figure includes military vehicles which have become a larger element than hitherto. That is in line with the trend shown by my hon. Friend, and, as he said, the capacity of the industry is, of course, larger even than the production of 1950.

The cause of this reduction is well-known. It is due to the quantity of steel available for the industry. Sometimes the difficulty has been sheet steel, but at present the difficulty is the amount of general steel, particularly alloy steel, which can be made available to this industry. An increase in production depends on an increase in the total steel supplies available in this country. As the House knows, the Government are trying to ensure that there will be that increase, but I can make no forecast and no promise.

Within the limited supplies at present available, it is the Government's intention that those firms who increase their exports should receive a higher steel allocation. The number of cars exported by particular firms and the success which firms have had in exporting to hard currency countries have long been factors taken into account in making steel allocations. Reading some of the debates which have taken place on this subject, in the past, I observe that this point was made as long ago as 19th December, 1947, by the then Minister of Supply. In considering such increases we shall have full regard to the success of motor manufacturers in increasing their exports outside the sterling area.

Mention was made of the high conversion rate of steel in motor car exports. This can be over-emphasised. There are a great many other manufactures which have a much higher conversion rate, but the motor industry's ability to keep the industry's exports up rests upon a combination of high conversion factors and the very high percentage volume of cars exported.

I come to exports. Before dealing with the prospect it is as well to remind the House of the facts of the recent position. In 1950 the motor industry exported 550,000 vehicles in all, of which about 400,000 were motor cars. In 1951 they exported 510,000 vehicles of which about 360,000 were motor cars. In 1937 the industry exported only 98,000 vehicles, of which 78,000 were motor cars. That gives some measure of the achievement of the motor industry. I can also give some percentage figures. Of the total production of cars in 1950, 78 per cent. were produced for export and in 1951, 77 per cent.

What has happened so far this year? In the first four months the industry produced just under 150,000 motor cars and 76,000 commercial vehicles. The Trade and Navigation Accounts show that 127,600 cars and 49,000 commercial vehicles were exported during that period. This seems to show a welcome increase in the export percentage of total production; but, in fact, this is misleading.

Many of the cars exported during this time, were, of course, produced at the end of last year and more properly relate to that period. To illustrate my point I can tell the House that in January more cars were exported than were produced. The manufacturers returns show that production for exports in the first four months of this year declined to 73 per cent. of the total in motor cars and 53 per cent. of the total in commercial vehicles.

There has been much speculation as to what will be the effect on the total export of motor cars and commercial vehicles of the action taken by the Australian Government and some other Governments, too, in restricting the quantity of cars and vehicles which may be imported into their country. It is obviously too early to say whether the motor industry will or will not be able to find substitute markets elsewhere in the world. They know that the non-sterling markets are of very great value to the country at the present time. The industry had told my right hon. Friend the Minister of Supply that they have good hopes of doing this, but it is too soon to say whether the industry's hopes will be realised.

There is good evidence of welcome success in the North American markets recently. For example, the rate of export of vehicles to these markets in April was twice that of March. One of the largest manufacturers is at present shipping 2,000 vehicles a month to Canada and 900 to the United States, and hopes to sell 26,000 vehicles in North America this financial year, compared with fewer than 7,000 in 1951. We should beware of encouraging false optimism. It is right to remember that the reduction of the Excise Tax in Canada and the lifting of restrictions on hire purchase both in the United States and Canada are favourable factors, the effect of which has not yet been fully felt.

Now I would say a few words about the home quota, which was mentioned by one or two hon. Gentlemen. The hon. Member for Stechford said he advocated no drastic change, but both he and the Government place the emphasis on exports. On 21st April this year, my right hon. Friend the Minister of Supply said, in reply to Parliamentary Questions: The size of the home quota is governed by our pressing need to expand exports. The motor manufacturers have recently suggested that the home quota should not be a fixed figure, but should be calculated as a proportion of the industry's export trade. I am at present examining the implications of this proposal with them."—[OFFCIAL REPORT, 21st April, 1952; Vol. 499, c. 15.] He explained that the object of this proposal was to get greater flexibility.

The House will be aware that in the past two years the supply of cars to the home market has been between 110,000 and 120,000 and the supply of commercial vehicles about 100,000 each year. The quota given to the industry for supplies to the home market in 1951, was 80,000 each of cars and commercial vehicles, plus half of any produced in excess of 460,000 cars and 230,000 commercial vehicles. This came to a quota of 88,000 cars and 94,000 commercial vehicles. The quotas set in January this year are 60,000 cars and 60,000 commercial vehicles. So far this year cars have been supplied to the home market at an annual rate above the 60,000 cars. This high rate is, of course, largely due to the import restrictions.

Mr. Roy Jenkins

What has been the annual rate so far?

Mr. Low

It is slightly more than 100,000. This high rate is largely due to import restrictions. What matters, is not so much the current rate of sale in the home market as the total rate of sale to the home market over the whole year. We are still considering the industry's proposals, which we can only do in relation to export possibilities and the general steel situation. I can say that whatever decision we reach will be made with the broad aim of an increase in the proportion of cars exported in the latter half of the year. The reason is well known: the imperative need to export, and particularly to export steel manufactures.

Before I come to the major point of long—term prospects, I must touch on the completely knocked down vehicles, in other words the C.K.D. vehicles. The hon. Gentleman knows that this point has been brought up in the House on several occasions. The motor industry exports as many completely assembled vehicles as it can, but regulations of the importing countries make it necessary, as the hon. Gentleman will appreciate, for them to export C.K.D. vehicles if they are to take full opportunity of some export markets. The new Australian regulations are an example. I have not in mind the facts of the Belgian case at the moment, but I seem to recollect that there was a good reason for the steps which were taken at that time.

Before I sit down, I want to speak of long-term prospects. Those in the motor industry are confident of their future. Indeed, they have given proof of their technical ability, particularly during the last six years. Furthermore, during this time many of the manufacturers have shown great courage in pushing out into new markets. They have taken risks, as private enterprise must and does take risks if it is to succeed, in establishing sales distribution organisations and maintenance organisations in new countries.

I may be maligning the hon. Gentleman, but he appeared to think that in such circumstances the industry may not be prepared to take advantage of any changes in the pattern of demand. That is quite unjustified. I would agree if he put his point in this way: that the Government will continue, as in the past and as at present, to keep in close consultation and to ensure full co-operation between Government and the industry about all matters, including any changes in pattern that may come about.

Mr. Jenkins

I meant to imply nothing more than that the Government ought to have their own independent views about long—term prospects and see that they are brought to the notice of the industry.

Mr. Low

There is plenty of chance for that to be done in the National Advisory Council.

In the past there has been a great increase in the number of commercial vehicles we have exported. More recently there has been a great increase also in the number of agricultural tractors ex- ported. Whereas the exports of cars dropped between 1950 and 1951, the export of agricultural tractors increased substantially. I know that the industry appreciates those possibilities.

The Government are proceeding on the assumption that the industry has good long-term prospects, and will certainly do what can be done within the limitation of the national resources, and their proper use, to see that the industry is able to compete successfully with its overseas competitors.