§ Order for Second Reading read.
§ 7.55 p.m.
§ The Minister of State, Board of Trade (Mr. Edward du Cann)
I beg to move, That the Bill be now read a Second time.
This is a Bill authorising the Export Credits Guarantee Department in effect to continue its business and to increase that business. The Bill relates to the liabilities which E.C.G.D. is authorised to incur. When E.C.G.D. issues a policy it puts public funds at risk. Limits have always been set to the total volume of such risks which it may incur. As the Department's business has increased Parliament has successively raised the limits set by the Export Guarantees Act, 1949, as the right hon. Gentleman the Member for Battersea, North (Mr. Jay) particularly will be aware, and as will other hon. Gentlemen present in the Chamber tonight. Four amending Acts have been passed for this purpose, as the House will recall, in 1952, 1957, 1959 and 1961.
Very large sums indeed are mentioned in the Bill. We do not, however, expect this Measure to involve any cost to the Exchequer through loss. The Department, again as the right hon. Gentleman and other right hon. and hon. Gentlemen will know, has so far been successful in conducting its business on a self-supporting basis. The limits contained in the present Bill involve a projection for some five years ahead, to 1969. However, I think I should make it clear that the Department's increasingly important in the export field—which does involve increasing complexities and the development of new techniques; all the time contracts seem to be petting larger and more difficult—must always involve the possibility that 316 a further request will be made to Parliament for a new extension of the limits before 1969. If this proves to be the case it will, I have no doubt, be further proof of E.C.G.D.'s progress and usefulness. Certainly, I should not complain if that were the case; nor, I am sure, would the House.
I will now explain shortly the procedures under which E.C.G.D. operates, first, with relevance to Clause 1(1) of the Bill. The Department's insurance business is carried on under two Sections of the 1949 Act. Section 1 of that Act deals with the commercial business, so called because it is underwritten after consultation with the Advisory Council and is considered by the Council to constitute sound insurance. The Council is composed of eminent men from many sides of the banking and commercial world and constitutes a body of practical and informed opinion which has contributed greatly—I am so pleased to be able to say this here—to the soundness and financial viability of the Department's facilities. I should like on behalf of the Secretary of State to express the appreciation of the Government—and, I am sure of the whole House—to them for their services.
The limit of liabilities under Section 1 now stands at £1,000 million. This limit has been unchanged since the amending Act of 1959. At the end of December, 1963, the latest figures which are available, the actual liabilities amounted to £918.7 million. Although only actual liabilities count against the limit one must also take account of the potential commitments which, at the same date, amounted to a further£96.3 million. These consisted of offers of cover which, in the nature of things, are not all taken up. The House will, therefore, understand that so far as Section 1 is concerned we are very near to our limit. As I have said, estimating the volume of E.C.G.D.'s business five years hence can never be a precise matter. The actual liabilities under Section 1 have increased by £111 million over the last 12 months and there is certainly no clear reason at present to expect any important change in the rate of growth and certainly no diminution. Accordingly, we think it right to provide for future growth of some £100 million per annum. It is on this basis that the Bill provides for the limit on 317 business under Section 1 to be increased from £1,000 million to £1,500 million.
I now turn to Clause 1(2). Business not accepted by the Advisory Council, to which I referred a moment or two ago, can be insured under the 1949 Act—I quote it—"in the national interest" under Section 2 of that Act, although basic underwriting principles are still observed. The limit of liabilities under Section 2 now stands at £800 million. The limit was last increased by the amending Act of 1961 from £400 million to the present limit of £800 million. At the end of December, 1963, taking the same basis as I referred to in relation to subsection (1), the actual liabilities under Section 2 were £391.1 million. Potential commitments were a further £453.9 million. Again, as in the case of Section 1, we are theoretically nudging the limit, although in practice there is probably still some distance to go.
It is particularly difficult to make precise forecasts of how liabilities under Section 2 may be expected to develop. Several distinct classes of business fall under the Section. I know that the right hon. Gentleman is particularly interested in this point. Indeed, his speeches in earlier years have indicated this, and I hope that some of the things I shall say will be of special interest to him. The two largest classes of business under Section 2 are financial guarantees and economic assistance loans. The financial guarantees, which were introduced in 1961, are all transacted under this Section. At present they account for over £80 million of firm liabilities and almost £290 million of potential commitments. Calculating the rate at which applications for financial guarantees are being received—and we now have some experience of this matter—and again taking account of the fact that a number will not be firm business, we think that we should provide for the issue of financial guarantees to the value of some £50 million a year. So much for that.
Economic assistance loans are given to overseas Governments for the purchase of British goods or services. Although given under Section 3 of the Act they are required to be accommodated within the limit for Section 2 business. The future scale of this form 318 of economic assistance must depend upon two factors; first, upon Britain's capacity to provide economic aid, and second, on Government policy as to the form which such aid should take. Therefore, it is particularly difficult to forecast exactly the future volume of this type of aid. We consider it reasonable to provide for a further £50 million per annum. I must however—I think it is appropriate that I should do so—remind hon. and right hon. Gentlemen, for the record at any rate, that this cannot be regarded is a pointer to the composition of future aid, for these loans under Section 3 are, as the House very well knows, only part—at present about one-quarter—of our total aid effort, which has risen so very greatly in recent years.
The terms of repayment under both these facilities, financial guarantees and economic assistance loans, are such that the rundown of our liabilities on existing guarantees, and loans will make little impact on the figures. There is nothing, therefore, in the immediate future on the credit side. We propose, therefore, to provide for total future commitments under Section 2 at a rate of £100 million per annum—that is, £50 million plus £50 million—and, secondly, increase the Section 2 limit by £500 million from the earlier limit of £800 million to £1,300 million. Perhaps I should add that the other two classes of business under Section 2, business in weak markets not acceptable to the Advisory Council and new, experimental types of cover such as the small exporter policy, do not at present make up a large total of liabilities and we consider this to be accommodated adequately within this new limit. Thus House may incidentally like to know that in two and a half years' operations 1,581 policies have been issued to small exporters. I am sure this is a record of encouraging progress.
Although, counting in all potential commitments, we are, as I know such accountants as are in the House tonight will have rapidly calculated already, £15 million above our limit under Section 1 and £45 million above our limit under Section 2, I want to make it clear that we do not face an immediate prospect of having to turn away otherwise insurable business. Alas—I say it with feeling—our exporters cannot win every contract which they seek, and those which they 319 may get under offers of financial guarantees relate, of course, to large projects for which the usual commercial negotiations must inevitably be protracted. Nevertheless, I suggest to the House that it is right to consider the whole question of limits at this stage.
The level of potential commitments is large and it is growing. The House may think that it would be not right to delay the introduction of this Bill till we are clearly about to exceed the level which Parliament has so far authorised. Indeed, I would go so far as to say this. E.C.G.D. could not offer a continuous service to exporters, as I believe it must, if we had to wait till actual liabilities reached the statutory ceiling before Parliament considered raising it.
On a point of some detail, that is to say, relating to Clause 2, I should perhaps mention the new arrangements for the Channel Islands and the Isle of Man, under which exporters in those places will be able to obtain the same facilities as exporters in the rest of the United Kingdom. I am confident that any encouragement which the extension of the facilities provides to exporters in these islands will be to the benefit of the British economy. The House may again like to know that the authorities in these islands favour this step. There is, however, a corollary. It is this. Exporters in the United Kingdom will no longer be able, as they may now if they wish, to ensure with E.C.G.D. sales to buyers in the Channel Islands. This insured trade is small, and commercial insurance is, in any case, available for it. The balance of advantage, the House may think perhaps, clearly lies in making this change.
To summarise, the purpose of this Bill is to enable E.C.G.D. to continue its increasingly important work of helping and protecting British exporters and thereby further promoting our export trade. Having described shortly, and, I hope, clearly, the individual Clauses of the Bill, I would make, similarly briefly, certain other general points regarding the Department. I think I should say a word particularly on the subject of its reserves.
Reserves on commercial account are currently £41 million. This sounds a very great deal of money, but when considered in the context of the total of 320 E.C.G.D.'s business I believe it really a very small amount of money. Be that as it may, these reserves are not free reserves. Part consists of premium received on many transactions which have a considerable time to run and on which claims may have to be paid at some future date. I suggest to the House that the existence of a residuary reserve must be of real benefit to the British exporter, in that E.C.G.D. is enabled thereby to be, on suitable occasions, more venturesome in risk taking, particularly in the volume of risks which it can carry on any of the large and relatively unstable markets, by having this record of successful business to fall back on.
The real evidence of the value of E.C.G.D. to Britain's export trade is the volume of business it insures. I have spoken of this in general terms already. Now I should like to be particular. In the past 12 months it insured £1,100 million worth of British exports on behalf of no fewer than 7,000British exporters. For the first half of the financial year E.C.G.D. covered more than 25 per cent. of our direct exports, double the proportion insured 10 years ago.
I have no reason to think that this proportion will fall to any marked extent in future. Indeed, I would suppose quite the opposite. The E.C.G.D. is still the world's largest export insurer and the British export trade is still the most fully credit-insured in the world. The growth of business and the establishment of a reserve has in turn benefited policy holders. I have mentioned one aspect of this already. I now mention another. The average cost of insuring business on up to six months' credit has dropped during the last nine years alone from 11s. 8d. to 6s. 5d. per £100 insured—not quite a reduction of as much as 50 per cent., but, none the less, a substantial reduction.
I am glad to have the opportunity to give the House a progress report on E.C.G.D. for which, under the Secretary of State, I now have responsibility. As the House is very well aware, and as the National Economic Development Council has made plain, increased exports are fundamental to the progress of our economy. The work of the Government in facilitating the task of 321 exporters is assuming an even greater significance year by year and month by month. The precise figures of exports in 1963 are now becoming available and will be announced before the end of this week in the ordinary course. I imagine, however, that the House would wish to have the best information I can give during this debate.
I am happy to report that during 1963 exports were an all-time record at a figure in excess of £4,050 million, representing an increase of over 7 per cent. on the previous year.
§ Mr. du Cann
Yes. I was going on to say that by comparison with the early years immediately after the war, again in money terms—I recognise the distinction which the hon. Member rightly makes—this represents an increase of well over three times which, even taking into account the fall in the value of money, is a colossal achievement on the part of British exporters who work hard to achieve these results, and it is some compliment to the many and varied services which the Government endeavours to provide and of which the work of the Department is one.
I wish to make it plain—this is the first occasion that I have had the opportunity to speak on this subject in particular and on these subjects in general—I shall not hesitate to authorise improvements in the service of E.C.G.D. in order to keep pace with changing conditions. The House will realise that there are practical limits on what can be done. For example, it would be wrong for the United Kingdom to start a credit race from which no nation would gain. On the other hand, the conditions available to British exporters must be as good as any in the world.
One item which we are currently investigating is the Department's accounts, about which comments have been made in earlier debates, and related issues of policy.
§ Mr. J. J. Mendelson (Penistone)
Is it not misleading to talk about starting a credit race? Surely all that can be usefully discussed is how much we can do in order to remain in the race at all.
§ Mr. du Cann
I do not think that is altogether true. I agree that this question of competition between nations over terms of credit is thoroughly worrying and difficult. It is a matter to which we have given great attention both in our membership of the Berne Union and the work we have endeavoured to do in O.E.C.D. Senior officials of the Department have literally only just this minute returned from discussions in Paris on this point. I think that there is great substance in what I have said about the need to avoid leading a credit race, because it is plain that our techniques—and I hope that the hon. Member will accept this from what I have said—are as sophisticated as any. It is plain, too, accepting the fact that we are the most credit-insured nation in exports in the world, that other people are to some extent jealous of what we have done and will watch what we do in future with great interest. It would be easy for us to lead a credit race, but I am sure that no one would gain from it. I stand by what I said when I made the point that the facilities available to our people must be as good as any.
Officials of the E.C.G.D. and the Treasury are at present engaged in a thorough study of the detailed matters to which I referred—the question of accounts and related matters of policy. In the context of what I have been saying in general, this is perhaps a minor point, but I make it simply as an earnest of our intentions in the matter, to improve the efficiency, effectiveness and, from the point of view of Parliament, the clarity of the Department's work whenever this is possible.
I have spoken about the attitude of our overseas competitors. I think that perhaps the best possible tributes to the Department arise from time to time from our overseas trade competitors. It is, perhaps, ironic that the unusual number of cases when the Department facilitates business which would otherwise not have been done tend to attract less comment at home than the individual cases where the Department may find difficulty in meeting exporters' exact wishes. I always feel that this is rather like marriage. It is the difficult cases which hit the headlines but our own individual Dunmow flitches receive no attention.
323 The Department engages in a highly specialised business: export credit insurance against commercial and political-economic risks. It consistently conducts its complex affairs on sound commercial lines, and has a history, as the right hon. Member for Battersea, North will know, of 33 years of successful operation.
§ Mr. du Cann
The right hon. Gentleman questions my arithmetic. I made most careful inquiries to ensure that my figure of 33 years was correct. It is possible to argue a number of different dates, beginning, perhaps, with 1919. I am taking as a basis the Niemeyer Report, with which the right hon. Member will be familiar. Whether we argue about 33 years or 35 years does not matter very much. What matters is the service which is given today and the fact that the Department has an unparalleled record of success, about which I know we all agree.
§ Mr. Julian Snow (Lichfield and Tamworth)
The hon. Gentleman has referred to the relatively few cases in which the requests of exporters have not been met by the Department for good reasons. Has he any information about the geographical locations concerned in these rejections? I refer to this because I am particularly interested in difficulties confronting potential exporters to emergent countries where commercial and mercantile practice is, perhaps, not very sophisticated.
§ Mr. du Cann
The hon. Member does the House a service by raising that point. I cannot without notice give a specific reply to his somewhat technical question. An answer would require the collection of a mass of statistics. I am aware of the difficulties when perhaps less sophisticated techniques and less ordinary commercial understanding are current in some newly emerging countries, and these make difficulties for the Department; it is no good gainsaying it. Such experience as I have had in the Treasury and now at the Board of Trade prompts me to suppose that the attitude of the Department is to endeavour to be helpful. I should be satisfied that business is not refused unnecessarily 324 or wrongly. On the other hand, I recognise that the hon. Member has substantial commercial experience which makes his intervention all the more valuable. I invite him and his friends in commerce to let me know personally of any points of difficulty which I will be ready and happy to look into, as will officials of the Department. I will give him the information for which he has asked in the form of correspondence in the next few days.
The Department has steadily extended the range of its facilities by innovations which make it not only the leading credit insurer in terms of turnover but a fertile innovator whose techniques are widely copied by its overseas competitors. This is one of the most striking developments of all in recent years. The Department has a lead which it can and will maintain. I commend the Bill to the House.
§ 8.19 p.m.
§ Mr. Douglas Jay (Battersea, North)
We welcome the Bill for many reasons and we shall certainly support the Minister of State's request for another rise in the financial limit set for the E.C.G.D.'s activities. These two-yearly Bills—they have been two-yearly up till now, although, apparently, the Minister hopes that they will be five-yearly, but I think that that is nothing more than an aspiration—asking for higher limits are proof of the success of the Department in maintaining our exports. They are also, incidentally, a remarkable tribute by a Tory Government to a very important form of State insurance, for that is what export credit guarantee business is. This is from one point of view yet another example of the Government being forced either to extend the activities of existing Government enterprises or even to invent new ones as they have been compelled to do in recent times.
This State insurance Department, as the Minister says, has seen its limit for liabilities under Section 1 actually increase—these are remarkable figures—from £500 million in 1949 to £1,500 million under this Bill. I agree that this is not direct expenditure. It is a guarantee of liabilities but, none the less, it measures the Department's activities, and under Section 2, the so-called national interest guarantees, from £100 million in 1949 to £1,300 million under this Bill.
325 The Department guarantees, according to the latest figures that I can obtain, are £976 million of exports in 1962–63—that is the E.C.G.D.'s year—under Section 1, and another £50 million under Section 2. That seems to correspond fairly closely to the figure of over £1,000 million guaranteed in the calendar year 1963 which the Minister gave us just now. This amounts to 25 per cent. of the total exports of the United Kingdom. I think that the figure in our previous debates was more like 18 per cent. to 20 per cent. Therefore the proportion of our exports covered by the Department's activities is steadily rising. It also made, on the latest figures that I have, a revenue profit, a net profit, of something like £7 million over the 1962 to 1963, and I gather that neither the insurance companies nor the Aims of Industry nor the Institute of Directors nor even the Steel Company of Wales wishes to close down this Department or to denationalise it or anything of that kind. Everyone knows that private insurance dare not take these risks and that E.C.G.D. provides a large slice of our export business and without which our assistance to underdeveloped countries could not be carried on at all.
On the other hand, I am sure that the House is wise to examine the Department's operations every two or three years. I do not believe for one moment that it has yet reached final perfection, and I do not imagine that the Minister of State would argue that either. There has been a certain rhythm in these debates on this Department. We on this side usually suggest that the Department might go even further in providing services and meeting the competition of some foreign countries. The Minister usually tells us that nothing further is possible or desirable and then six months or a year later comes forward and introduces changes very much on the lines that we propose. I remember in the debate of July, 1959, the then Minister of State, the right hon. Member for Reigate (Sir J. Vaughan-Morgan), who has not stayed the course tonight although he usually does, had the job of explaining the Government's point of view that any further improvements were rather academic and that nothing further could be done along the lines which we propose.
326 But in the debate in November, 1961, the right hon. Member for Reigate was then on the back benches, and he spoke, as Stanley Baldwin once did, with appalling frankness. Commenting on my suggestions on certain bright ideas, he said this…the reason is that this Department, although supreme in its own sphere, is largely—dare I say it—at the mercy of the Treasury.…it is only within the limits allowed that the Department can relax its regulations and provide a better service."—[OFFICIAL REPORT 10th November, 1961; Vol. 648, c. 1305.]This was a most interesting revelation from the hon. Member who two years before had actually introduced the Bill. Perhaps the Minister would now tell us, as he has just come from the Treasury, and no one is better fitted than he to answer this question, whether he is now secretly yearning to make further improvements in the service of the Department but is being frustrated by the machinations of a wicked Chancellor. Are there more improvements which the Department would like to make in the interest of exporters but which the Treasury is blocking? The right hon. Member for Reigate also said two years ago, and I agreed, that the House had up to then been really given grossly inadequate information about the activities of the Department under Sections 2 and 3.
My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), who has stayed the course as we would expect of him, made the same point two years ago when he said that the Government's then explanation on this point was as clear as mud. We have been repeatedly told, for instance by the present Minister of Housing and Local Government when he was performing this office, that Sections 2 and 3 share a common limit, i.e., that the maximum of £1,300 million, which we are now being asked to approve under the Bill, covers both Sections 2 and 3 activities.
The hon. Gentleman said something about this tonight, but I am not absolutely clear what he means, for this reason. Section 2 is concerned with guaranteeing liabilities, and therefore presumably these large capital sums refer to liabilities guaranteed. Section 3, on the other hand, is concerned with actual loans. The words used are, I think, "acquisition of securities by the Department." I am not clear exactly 327 how one adds up the liabilities guaranteed for loans made by the Department. Can we be told what loans have been made, perhaps less repayments, under Section 3 for the last year or perhaps since the last Bill was passed?
I have studied the only statements made by the Secretary of E.C.G.D. and the rather obscure Civil Appropriation Account, which is published and which would appear to suggest—and this, strangely enough, gives us no more up-to-date figures than to March, 1962—that E.C.G.D. under Section 3 then had advances outstanding of something like £135 million, but for what period that covers or for what period these advances have been made I was unable to discover. I wonder whether the hon. Gentleman might give us this information. [Interruption.] If the hon. Member for for Willesden, East (Mr. Skeet) understands it all, no doubt he will explain it to us in a moment. There is plenty of time for him this evening to make the whole thing perfectly clear. In asking these rather critical questions, we are far from being unappreciative of the Department or indeed of the Advisory Council which, as the hon. Gentleman says, gives it invaluable assistance.
There are two quite strong reasons for inquiring whether more needs to be done. First, in spite of what the hon. Gentleman said in his quite interesting figures about our exports in 1963, I do not think that we can be too complacent about the movement of British exports and imports, taken together, during this last year, in a year when, after all, the United States economy and those of most other industrial countries of the world were booming and when the terms of trade were moving against this country, and when also the Government seem to be bereft of any other ideas at the moment for stimulating our export trade.
The hon. Gentleman gave us some figures which showed, as I understood him, that United Kingdom exports in 1963 in value were 7 per cent. higher than in the previous calendar year. I have the official figures for the three months from September to November, 1963, which show United Kingdom exports were actually 7.1 per cent. higher than in the corresponding three months of 1962. While the figures might seem 328 to correspond, the hon. Gentleman did not tell us the corresponding figures for imports which, in the three months' period, were 10 per cent. higher in 1963 than in 1962. When one looks at it from that point of view there is nothing about which to be too complacent.
Indeed, at a time when imports are rising at the rate of 10 per cent. a year in value, when the terms of trade are moving against us and when the Government refuse to do anything to limit imports—except, oddly enough, for food; the most essential import of all—the picture is not at all cheery. Nor do the Government appear to be doing anything else to stimulate or encourage exports. The Richardson Committee was appointed about a year ago to inquire into possible tax incentives, but we have heard nothing about its work in the last 10 months.
My hon. Friends and I have on many occasions suggested that to help the small exporting firms, which, on all the evidence, will not be able to do as well as most of the major firms, some form of Government co-operative export agency might be formed. The Government have not merely done nothing about that, but they have not even made any comment on the matter. We have now had the steel plant industry publishing a report on export credits in which it is suggested, for example, that a State guarantee corporation, independent of direct departmental control, might be useful for export credits. This suggestion came from industry and it would be interesting to know what the Minister of State thinks about the idea.
The Federation of British Industries, in a recently published and valuable report on the whole question of exports, export credits in particular, made a number of detailed and constructive suggestions. I will not list them all but merely mention one or two to see whether the Minister thinks they are valuable suggestions. I appreciate that he may turn them down today and tell us six months hence, if he is still there, which is extremely unlikely, that they are admirable and practical suggestions.
The F.B.I., for instance, argue that the E.C.G.D. has been too rigid. I appreciate that "rigid" is a word often used these days, but on this occasion it is an appropriate one to express the F.B.I.'s 329 view, which is that it has been too rigid in usually requiring what is called the spread of risk and thereby excluding credits for selective markets and customers. Does the Minister consider that this makes it harder for firms to break into new markets? I appreciate that there are selected market guarantees, but in the opinion of the F.B.I. the premiums in these cases are too high.
I notice that both the F.B.I, and the Radcliffe Committee, which made a fairly thorough investigation of all this, argue that the Department should be more willing to cover what are called split risks, that is, guarantees at appropriate rates, confined to, say, commercial risks, on the one hand, or transfer risks on the other. What does the Minister of State think about that?
There is another case where both the F.B.I. and the Radcliffe Committee believe that we can go further than we are. This is in the case of the minimum limit placed on medium-term business which, they believe, should be less rigid than it is at present. The F.B.I, thinks that the present limit of £100,000 might be lowered in appropriate cases.
Does the Minister agree with the F.B.I, that the E.C.G.D. should be able to cover more fully than it does now exchange risks which, I gather, are largely left to the exporter himself to cover—the risk of large alterations in exchange rates? It is still the F.B.I.'s view that British interest rates for export credits are higher even now than comparable rates offered by Italy, Japan and, even more important, the American Export Import Bank which, I suppose, is the E.C.G.D.'s greatest competitor. Surely in the matter of interest rates the British exporter should be put on an equal basis with his competitors.
It seems, whatever way one looks at it, that the export battle ahead of us is likely to be so stiff that we should press ahead on all these fronts—that is, unless the Minister and the Department have a much more convincing answer to the proposals that have been made than any we have yet heard from the Government. I agree that some of these suggestions are in many respects on technical issues affecting commercial export credits. However, I believe—and the Minister touched on this—that we need to do some rethinking on our 330 export credits policy on a more long-term basis find over a much wider sphere—that is, affecting economic assistance loans under Section 3, aid by way of Government loans to the less developed countries and special loans for the use of surplus capacity in this country in exports to the less developed countries.
In the course of visiting India and Pakistan last summer it was made clear to me how nowadays in exporting to the less developed countries trade follows aid. That has not been fully realised by many people. If anyone is inclined to doubt this, he should study another excellent F.B.I. report on the Indian economy. That shows convincingly that in the last six or seven years the proportion of aid to India from the United States and Germany has been rising while the proportion from the United Kingdom has been falling. The proportion of India's imports from the United States and Germany has been rising while the proportion of her imports from us has been falling. This throws a new light on a lot that has been said in recent years on the proportion of fall in our trade with the Commonwealth.
It has been argued that the proportion of our exports going to the Commonwealth is falling, but I do not believe that people have always realised that for India, Pakistan and similar underdeveloped countries in the Commonwealth this fall has largely been due to our aid and export credits policy—whether or not it is justified—to the fact that we have been offering less generous terms than other countries, particularly the United States.
I can give a concrete example of this and I do not know whether or not the Minister of State is aware of this. Last year the Pakistan Government decided to set up a single, large-scale lorry manufacturing plant which was likely to have a monopoly of the whole lorry market in Pakistan for 25 to 30 years ahead, because Pakistan cannot afford the foreign exchange for imports. Leylands put forward a complete scheme by which they would construct and manage this factory, and the Pakistani authorities were anxious to prefer Leylands' proposals to those of the American firm which was competing. But the American aid and credit authorities were willing not merely to lend foreign exchange, as 331 we were, for all initial equipment of the factory, but for spares and other necessary facilities over a number of years afterwards.
As a result of that, since Pakistan suffers from a famine of foreign exchange and is bound to accept the most generous offer which involves the lowest expenditure of foreign exchange from her side, the contract, the licences, and so forth, went to the American firm, and Leylands will be excluded for good. That means that the lorry market of a nation of 100 million people, which is likely to develop rapidly over the next 30 years, is virtually permanently lost to us. I understand that the same sort of thing has happened in the aircraft industry in competition between us and the United States.
This is a solemn thought, because if we are to go on like this in many countries over many industries it is quite certain that our proportion of exports to these extremely important countries, which may well be the developing export markets of the future, will fall. I am very familiar with the Treasury argument that we do not export for fun, as the previous Prime Minister once said, nor do we export to give the goods away, but to earn foreign exchange, so that we must not go too far in making our credit terms too liberal. That is true, but if we push that argument to the point of always lagging a little behind the Americans—or, perhaps, the Germans or the Japanese—we will see our markets in these under-developed countries steadily declining.
Here one has to take an over-riding decision of policy. Either we have to admit defeat—as, in fact, we are doing now—and lag behind the Americans, in particular, or we have to say, on a long-term view, that although we will not give our exports away we are prepared to see payment for them by the poorer countries deferred over a much longer period.
I believe that we should take the second course, because I am convinced that it is our only way of remaining a great exporting nation in the sort of world in which we live today, whether it be to the underdeveloped countries or the Iron Curtain countries. I would not advocate free gifts of our exports, except in certain accepted forms of special 332 aid, nor would I advocate interest-free loans, which are often demoralising to the recipient as well as to the giver. But I believe, and I suggest this to the Minister, that when we go from the field of ordinary commercial credits into that of economic assistance loans, Government-to-Government loans, tied loans for certain specific big projects, and so on, even when we are dealing with poorer countries like India and Pakistan we should be willing to accept long periods of payment—30 or 40 years, perhaps, in some cases—and low, though not negligible, rates of interest.
It may well be, we do not know—I am thinking, I admit, to some extent of India and Pakistan now—that those two countries will become economically viable in 30, 40, or 50 years' time. They will not be economically viable in 15 or 20 years, but may be in a longer period. Much more unlikely things than that have happened in economic history in the last 25 or 30 years. If that is true, or even likely, we would be wise to export to these nations, not for nothing but on deferred payment terms that would enable their economies to become viable, our exports to increase and payments to flow back to us—because, of course, we must have payment in the end—slowly at first, but on a growing scale as their economies develop.
I think that, when we look at it from that wider point of view, this would be in the highest interests, not merely of ourselves but of the developing countries. That, as far as I can understand it, is really the principle on which American policy is being conducted in its credit and aid relations with these countries. I know that the Americans have much greater resources than we have—that is the main difficulty—but that is the principle on which they are working, and unless we, too, adopt that principle, when we look at the hard facts of the situation and the figures of the last five or six years, it seems to me that we are likely to see the present comparative decline continuing, not merely in our exports to these areas and in Commonwealth trade but also in British economic and political influence over very large parts of Asia, Africa, and Central and South America as well.
§ 8.45 p.m.
§ Mr. T. H. H. Skeet (Willesden, East)
We ought to pay tribute to the E.C.G.D. for the remarkable work which it has done over recent years and also to the Government for the number of facilities it has introduced. The discounting facilities of the Bank of England over a period of 18 months prior to maturity is one of the useful things which the Government have introduced as also the assistance granted to small exporters.
When the right hon. Member for Battersea, North (Mr. Jay) spoke about interest rates I am certain that he was aware of the grouping of the London clearing houses, the Scottish banks and the insurance houses to make provision for long-term credit facilities at fixed rates of interest. This is one of the singular contributions which have been made and it goes a long way to meet the point which the right hon. Member had in mind. He also mentioned long-term lending at advantageous rates. Are these to be twenty year or thirty year loans? If they are, there is the immediate problem that the seller in the United Kingdom will not receive payments for a number of years.
A large part of the right hon. Gentleman's speech was concerned with the question of long-term lending as opposed to insurance not covered by the Berne Union. We can get into some difficulties about this. Under the Berne Union there is some law and order internationally although possibly it should be controlled under the auspices of the World Bank; but, on the other hand, long-term facilities which are outside the agency of Berne should also be subject to some sort of international control otherwise this sort of lending might well and truly get out of hand.
We have met our obligations in India singularly well. In loans for economic development India has received since 1949 no less than £193 million under Section 3 loans. If account is taken of total foreign investment in India, about 60 per cent. is British and therefore we are well placed there.
§ Mr. Skeet
The right hon. Gentleman has a point there, but it must be remembered that other nations, such as the United States and Japan, also operate in this business. The United States used to agree to an open-door policy, but it has gone away from that. As a great trading nation we should try to persuade other countries not to adopt this kind of procedure.
The question of Section 3 loans has been raised. For accounting purposes these loans are considered under Section 2. Total lending under the Export Credit Guarantees Acts 1949 to 1961, according to my calculations, was £344 million and of that 71.1 per cent. has been allocated to Asia, 14.2 per cent. to Africa, 6.6 per cent. to the Middle East, if the U.A.R. is included, 7.0 per cent. to Europe, that is to one country, Yugoslavia, and 1.1 per cent. to South America. Five nations, India, Pakistan, Nigeria, Iran, and Yugoslavia received 86.3 per cent of the total, and two nations, India and Pakistan, receive approximately 70 per cent. of the total.
Bearing in mind our world-wide commitments, are we right when Ministers go on global tours—and several have gone to South America—to allocate such a small figure as £3.8 million for economic assistance to South America which incidentally has gone to two countries, Bolivia and Chile? We should bear in mind that our contribution to the Asian Continent is £245 million, and to Africa £49 million where we have immense possibilities and the future is opening up in front of our eyes.
Is the Minister happy about this global distribution which has been going on since 1949? We have been told tonight that the total is to be lifted considerably and that my hon. Friend hopes that the average allocation per year will be covered by about £50 million under Section 3. I would have thought that this was a useful way of extending the exports of the United Kingdom, and I would recommend that the figure should be higher still.
Another matter to which I should like to refer, and to which the right hon. Member for Battersea, North referred, is the possible Treasury control of the 335 E.C.G.D. I think that we must be mindful of the fact that, as regards the financial guarantees, they are operated under Section 2 by the E.C.G.D. with Treasury consent. The right hon. Gentleman will recollect that a few years ago a consortium was established in London which raised considerable sums of money, but, because of difficulties with the Treasury—and I hope that my hon. Friend can explain this because he has had a foot in both camps—there has been some difficulty in utilising the funds available, and therefore in this respect the E.C.G.D. is not entirely in charge of its own affairs.
As I said earlier, I pay tribute to my hon. Friend's Department. It has export insurance, but I regret to say that over a term of years it has not developed investment insurance. In 1959 Western Germany introduced this for the first time, and she is not the only country in the free world which has been operating such a system. That means that a company not merely exports its goods under guarantee, but has a right to export its capital with a guarantee, viz. by direct investment in enterprises abroad and by participation in enterprises overseas.
Members on both sides of the House recommend that we should do our utmost to assist under-developed territories of the Commonwealth. The right hon. Gentleman said that trade is the best form of aid, and that aid brings trade to this country. If we try to encourage firms in this country to spend more abroad in the sense of building up investments there, they will make a direct contribution to that area, but so far the scheme I have mentioned has not materialised. Perhaps the Minister may have some rather good ideas on this point.
Not immediately relevant to this question of the E.C.G.D., but I think extremely relevant to the export industry of this country, is a matter which was discussed in The Times, when on 6th January of this year a correspondent dealt with the paper war which has been engendered over recent years by a number of the newer countries, and it may be that some of the older countries have got themselves into this kind of difficulty.
336 One of The Times'scorrespondents referred to the number of invoices made out in connection with sending goods abroad.
§ Mr. Skeet
This was in connection with goods sent to Brazil. The correspondent reported that 18 copies of the invoice had been demanded and sent. They were distributed as follows: to the London agents of the Brazilian customer 7; to the shippers, and some had to be authenticated, 6; to the bank 2; miscellaneous 3; making a total of 18. The same firm—and I have had an opportunity of looking into the matter more carefully and I hope the Minister will be able to do something about this—dealt with an order from France for delivery to Iran. The number of invoices required was 24. In an order received from Washington for delivery in Nepal, the number of invoices required was 20. With an order received from New York for Peru, the number of invoices required was 18, and in other orders for Bolivia. Brazil and Venezuela, the numbers were 18, 15 and 15, respectively, and these did not take into account the individual requirements of the firms in question.
Perhaps I may carry that a stage further, because I think it is important and is the cause of some of the difficulties being experienced by exporters. In The Timesof 10th January there was a letter in which the correspondent referred to the number of papers he had to complete. There was a total of 24, but the actual documents totalled 60. The correspondent wrote:While leaving out of account copies of invoices left with the Chamber of Commerce and the Brazilian Consulate, as well as those sent direct to the customers in Brazil, it may perhaps be worth mentioning that three copies of the list of items (21 pages) had already been sent to Brazil, to serve as a basis for obtaining an Import Licence.The Minister must be aware of the enormous burden that is being placed on our export industry while these sorts of things are allowed to goon. I would have thought that he would be in a position to influence the direction of this paper war. Perhaps he will be able to tell us tonight how the E.C.G.D. has fared with some of the new countries. I have a suspicion that its losses must be considerable, particularly in Brazil 337 if this is an indication of the States efficiency.
I should like to mention the type of document required of a company of this nature. The invoice has to be authenticated.We hereby guarantee that this invoice to"—and then the company is mentioned—is authentic and that the value shown thereon…is the actual selling price for the export of the goods based on local market quotations. Further we are not purchasing agents of the importers in Brazil. The material is new and not used or secondhand. We declare also that the goods are in accordance with the exchange cover certificate and amendment.It is extraordinary that documents in this form should be required. Ghana has regulations of its own. Amongst the documents which the Ghana Commercial Bank requires are three copies of manufacturers' invoices. I can understand the exporter supplying his own invoice, but why should he have to supply, in addition, the manufacturer's invoice—the man further down the line? Hon. Members will appreciate that in the case of the supply of components no allowance is made to cover fees for designing, overheads and similar items. My plea to my hon. Friend is to look into some of these commercial matters and to see whether it is possible to find a way through the wilderness.
In the past two or three years I have become rather concerned about the cash flow from the United Kingdom. The E.C.G.D. can do a lot by insuring our exports, but the best way to promote exports from the United Kingdom, apart from hard selling, is by investment. I have the figures relating both to public and private advances abroad, in relation to certain countries in 1962. For the United States of America it amounted to £1,370 million; for France it was £430 million, and for the United Kingdom, £298 million. We have therefore fallen far behind in this race. It may be that recent budgets have created a certain disincentive for money to migrate, but if this is to be so on the private front more should be done on the public front. I confess I would rather see more done on the private front, because in that case capital will be utilised to full advantage and commercial considerations will be taken into account.
338 A number or institutions have grown up recently. The Midland and International Banks has been formed—a private consortium to provide long-term credit. There is another body called the Atlantic Community. Development Group For Latin America for stimulating private investment in that region. I hope that the United Kingdom will participate in the second international organisation, which covers Japanese, European and United States interests. This would further our trade participations abroad.
The course is full ahead for the United Kingdom. We have an enviable system of guarantees, although we should not be too complacent about our position. The facilities and enterprise in certain European countries are as good as ours, and they have guarantees which extend beyond export insurance: they cover investment insurance. If we are prepared to do our utmost to see that our trade advances considerably this money, which is now being allocated over the years, possibly to 1969, will be fully utilised.
§ 9.0 p.m.
§ Mr. Julian Snow (Lichfield and Tamworth)
I congratulate my right hon. Friend the Member for Battersea, North (Mr. Jay) on a speech which I thought was a fair, constructive and critical analysis of the situation. This has been my right hon. Friend's day, because hon. Members will recall his devastating attack on the Minister this afternoon regarding retail price maintenance.
I wish to comment on one point made by the hon. Member for Willesden, East (Mr. Skeet). I agree that one matter to which we should direct more attention is the possibility of the export of capital investment. My attention was drawn to this quite recently through some information I received regarding the activities of Japan in this matter in relation to the new member of the Commonwealth, Malaysia. In the old days, those of us involved in normal manufactured goods exports regarded Japan as a formidable competitor, but never as a competitor in matters of capital investment. But what is happening in Malaysia is something to which this country must pay more attention.
339 I should like to thank the Minister for his courteous reply to my intervention in which I asked whether he had at his finger tips an analysis, or figures, concerning the territorial break-up of those cases where applications by small exporters have been rejected. I understand that he cannot produce this information straight away. But, nevertheless, I think that such an analysis would be worth while producing and I wish to enlarge on that a little.
Our main export drive is obviously a three-pronged drive. We must devote far more attention in the future to our trade with the so-called Iron Curtain countries. When we consider the record of Western Germany in this matter, we realise that this is something over which the Government have fallen down. Secondly, there is the question of trade with the sophisticated industrial countries in Europe and outside Europe and, thirdly, Commonwealth trade, which must include trade with sophisticated and industrially developed countries, and countries which are emergent or developing. I wish to deal with the latter in a moment.
Regarding the industrially developed countries, whereas the market is most important and must remain so for a long time, and therefore our competitive position regarding credit must continue to receive urgent consideration, in the long run in other manufactured goods, which form the substantial part of a small exporter's business, we shall get to the point where we shall be trying to export those things which the countries concerned are capable of producing for themselves. I may perhaps quote a remark attributed to Mark Twain, who referred to the precarious livelihood earned by the inhabitants of the Scilly Isles by taking in each other's washing.
It is the less sophisticated countries to which I wish to refer. I think that E.C.G.D. will have to instigate a great deal more investigation into the question of dealing with countries where the private enterprise mercantile communities are in a rather simple state, lacking in experience and not subject to ethics which are now accepted in ordinary highly developed countries. We have to face the fact that in certain countries in West Africa—and this goes for the West Indies as well—exporters are 340 frightened about getting involved, and E.C.G.D. is not always in a position to help. I heard the other day of a substantial confirming house which got into great difficulties in this matter. I do not know whether this is a case for trying to secure some form of agreement with the countries concerned or whether it involves allowing for a special risk. But unless we get our feet into these emergent countries and take, if necessary, a substantially added risk, in the long term this country will suffer very greatly, because other countries are taking these risks.
I am well aware that travellers' tales, the tales of Ministers and others when they come back from these countries, have to be examined very carefully. It is possible for one to have one's leg pulled—or perhaps I should say that the attempt is made frequently—about what our competitors are doing in respect of credit. It is very difficult—one of my hon. Friends was talking about this to me earlier on—to establish the facts. The only yardstick is: what are the results? We know, for instance, that in West Africa Germany has been securing a share of trade which is slightly alarming. Therefore, I say that this is a matter which will justify much more examination and the contemplation of additional risks.
I remember a tale which I picked up when I was in Tokio three years ago. I could not substantiate it, but I reported it to the Board of Trade. I was told that the German Government were accepting through their exporters Germany's blocked currency. I got my information from a highly reputable English trading house in Tokio. The general proposition was that such blocked currency would become a Government responsibility and that in their major inter-governmental complex it would be possible for such blocked currency to be absorbed.
We are all deeply concerned about what has happened over the failure to sell the Trident aircraft to Japan. Like most hon. Members, I suppose, I know only what I read in the newspapers. I know that we have lost a very important order and are getting to the point when the Trident is depending on sales to our own domestic airlines. What are the reasons for the loss of that order? 341 It does not appear as though there was a technical advantage on the part of the Americans. From what one can understand, there would have been a saving, if Japan had purchased the British aircraft, of about £1 million in the total outlay. Therefore, what were the reasons for our losing the order?
It is a matter which must imply some credit aspects. It may well be that there were additionally advantageous terms over supplies of spare parts. It may have been that because of the close links with the United States and the vast amount of aid given to Japan, including expenditure on the Japanese armed forces, there was a desire on the part of the Japanese Government to reciprocate in this way. But I cannot get it out of my mind that somewhere along the line there has been a credit element in the loss of this extremely important order. The Minister will no doubt be aware that on the tape tonight there is a report that our exports of aircraft generally have suffered a rather severe reverse.
There is another point about small exporters. I have a feeling—this goes not only for E.C.G.D. but for other Government agencies which try to help the enterprising small company—that the facilities available to small companies are insufficiently known in the provinces. I am talking not about the big companies in the big cities but about the smaller companies on the trading estates in the provinces, many of which are specialising companies which could contribute individually in a small way but collectively in a most important way to our exports. It is my impression that easily read and understood information about E.C.G.D. does not permeate down to these smaller companies. It has been said that exporting is not much fun. Indeed, it is hard work. Also, many of the smaller companies cannot afford the overheads of an export department. I appreciate that the debate is not about exports in general but about the financing of exports in particular. Nevertheless, I think that the E.C.G.D. has an important part to play and is insufficiently appreciated by the smaller companies.
My right hon. Friend the Member for Battersea, North referred to the history 342 of the Department and said that there had been these rather frequent changes in its administration and overall expenditure. I do not think he was putting that in a critical sense. It is axiomatic that it must be a developing situation.
The hon. Member for Willesden, East referred to the increasing part being played by private export guarantee organisations. I do not take the view that we should be doctrinaire in saying that the private sector of financing of guarantees is more important than the public sector. I believe that the two things are complementary, but the fact is that many of the emergent countries—it is to them that we must look for our long-term development—will tend more and more not only to buy in the cheapest market without a sentimental view about where they secure their principles and attitudes of mind, but will more and more tend towards a collective economy among the small nations, and Government agencies at this end will have to reciprocate—
§ Mr. Snow
I think that that is a slightly rigid reading of it, because in the emergent countries about which I am thinking, if they do not have it now they will soon be forced into some form of decentralisation of credit acceptance. At any rate, that is my view.
I should like to stress that the Government have continually underestimated the potential of the small exporter and the small manufacturer. When my right hon. Friend referred to some form of association of small exporters, I was reminded that I had made the same point in the debate on the Address—that there is room for a Government agency which could co-ordinate the potential of small exporters when they receive information of large orders which could be placed in other countries.
In conclusion, I pay tribute once again by the House to the most excellent work of the Export Services Department.
§ 9.15 p.m.
§ Mr. H. Rhodes (Ashton-under-Lyne)
My hon. Friend the Member for Lich-field and Tamworth (Mr. Snow) has put his finger on one of the important aspects of the subject which we are discussing tonight in saying that the powerful elements which are making arrangements to export to under-developed countries, particularly Malaysia, are making headway.
There is no doubt that the alliance of credit facilities, cheaper interest rates for manufacturers being prepared for export and the ease with which exporters can get their bills discounted in Japan all contribute to the ability of the Japanese to make a powerful impression on any market. This is precisely the point. The amount of export services which we have organised commercially as in E.C.G.D. to do a particular job is only a part of the whole as the Japanese see it.
Not only have the Japanese the facilitiese which I have mentioned, but they have the advantage of being able to export and import through a small number of hands. In fact, 5 firms look after 70 per cent. of the exports and imports in Japan and the remaining 10 firms look after the remaining 30 per cent. of exports and imports.
I do not blame the Japanese for this. If we are slow in getting off the mark, it is our own fault. When I was in Malaya a few months ago I found that the Japanese were busy as beavers offering a television service to the Malayans. They were offering not only to put it in but to run it, too. Think of the enormous advantages of the provision of services of that kind. I believe that the Japanese could make a great contribution in South-East Asia, and so could we if we were enlightened enough to have a go on similar lines.
As in the two previous debates, the hon. Member for Willesden, East (Mr. Skeet) spoke of the desirability of using the facilities which exist through E.C.G.D. or parallel facilities to export to South America. He mentioned various South American countries, including Brazil and Bolivia.
§ Mr. Rhodes
I did not intend to suggest that the hon. Member was throwing doubt on the efficiency of E.C.G.D.
Not all that long ago a previous President of the Board of Trade made a journey to Bradford to an industry which is certainly holding its own and which has had an export record of 70 million this year. We cannot claim too much credit for the increase because of a factor which also applies when the Minister claims credit for the fact that exports are up by 7 per cent. in 1963; the element which is making our figures bigger is the element which is making his figures bigger—the fact that the cost of our raw materials is up by 25 per cent. The President of the Board of Trade went to Bradford and told a room-full of people, including myself, what fun it would be for them to export to South America. We are not exactly slow in knowing what are the good places to export to. We have had experience of doing it since mediaeval times. We do not need the E.C.G.D. or the Board of Trade to tell small exporters in Bradford what is a good risk. We have had generations and centuries of experience in this type of transaction.
What happened in response to that suggestion of the President of the Board of Trade? The Romans used to turn their thumbs down when they condemned a fellow. The Yorkshiremen in that room imitated the action of the right hon. Member for Woodford (Sir W. Churchill) in putting two fingers upwards in a stabbing fashion; and he never did make any headway with the wool trade after that.
In a facile way, people say that it is good to export here or export there, and they say how marvellous it is that the E.C.G.D. has done this and done that. Why should not it have done it? The E.C.G.D. is staffed by intelligent people. Their conditions of work are better than most. They have excellent facilities at their disposal and they have funds provided by the Government. All the Government need to do is to come to the Box and ask for what is necessary, and we all say "Yes" as quiet as lambs. Why should not they do well? They 345 are not unusual or marvellous people; they are just ordinary first-class administrators who are doing a job well.
Are we doing as good a job in our own particular ways? The N.E.D.C. makes a projection or a forecast—whatever it be called—of 4 per cent. growth and then, because of Government action almost immediately afterwards through the failure of the E.E.C. negotiations, the forecast is altered from 4 per cent. to 5 per cent. This puts an additional burden on people engaged in exporting to keep up. Not only that, we must make quite sure that we hold our share in an increasing amount of world trade. The signs are that trade between industrial nations is on the decline. The comments in the December Bulletin for Industry bear this out, and it is very wise to warn the country about these things.
This is what was said:Exports of manufactures are of particular interest to the United Kingdom and the prospects are fairly good. World trade in manufactures may grow in 1964 at about the same rate as in 1961 and 1962".One can make one's own judgment on that. It goes on:This growth in 1964 is likely to have a different pattern from before. The rate of expansion of trade in manufactures between industrial countries will probably decline, reflecting the slowing down in the growth of imports into the main continental European countries. On the other hand, exports of manufactures to primary producers may be growing as fast as exports to industrial countries, a phenomenon which has not occurred since the recession in 1958.If that means anything at all, it means that the provisions for which the Minister of State is asking in Clause 1(2) may have to be increased before the end of 1968. If that kind of pattern is to emerge as one likely to continue from one year to another, undoubtedly he is quite right in asking for more under Clause 1(2) and could be right in asking the House for more later.
I come now to one or two questions to the hon. Gentleman. The first follows the comments of my right hon. Friend the Member for Battersea, North (Mr. Jay), who, I thought, gave a first-class analysis of what we are talking about. My right hon. Friend spoke of the bank guarantees. I think that it was the F.B.I. which made some criti- 346 cism about the minimum amount being £100,000. I put to the Minister of State a practical instance. If an exporter had, say, a £64,000 job for one destination and a £40,000 job for another, could those two figures be brought together in some way so that the facilities with respect to the guarantee could be taken up?
I had a comment about the simplified policy for the small exporter, but I think that that has been adequately covered. It was encouraging to hear from the Minister of State that 1,500 had taken advantage of this type of assistance.
I turn next to what are known as matching terms. It has been found, in days gone by, that there has been a considerable disparity between our terms and the terms offered by, say, America, Japan or Italy, which seem to be the three which are prone to go in for competition in this connection. Is it a fact that when a proposition is taken by a businessman to E.C.G.D. he has to prove off his own bat whether or not in the market to which he intends to export there are being offered better facilities by some other country? Has he to establish proof? Or do we have anything in the way of a reliable, first-class service which is gathering this information from abroad all the time?
I do not think myself that we get the full benefit out of this debate on E.C.G.D. It is a very prosy and self-congratulatory festival. All we do is come along and say how marvellous we all are: at last we have discovered that the Government can run a Department and make a profit. Now, if only we could build this Department into the kind of organisation which would match the Japanese in flexibility, in supplying information about world markets, about questions of the decline of the older industries or the acceleration of the new—whether, we are getting our share of exports in which world trade is growing. We should get down to methods to analyse these things, with a strong organisation alongside E.C.G.D. I am perfectly certain that unless we do we shall lose our place as exporters in the forefront of industrial nations.
It is not the job of the Department to do any of these things. I do not know whose job it is. When we have a debate on exports, usually the normal type of 347 export problems are discussed, with perhaps an occasional reference to E.C.G.D. I think it would be a good idea some time to discuss machinery which would lead to better exports. I leave it at that, because I feel I am getting to the end of my speech and my ability to keep in order.
I would finally ask the Minister of State whether he would from time to time publicly and firmly deal with statements in the Press that suggest the inefficiency of this Department. The British machine tool industry published a document in November last year and in one paragraph about export policy it says:It still remains true that in fair trading conditions coupled with the existing recognition by British manufacturers of the need for designs acceptable to the customer"—we could say something about that in another connection—there is every reason for the industry competing successfully on technological grounds. What frustrates the individual manufacturer is his all too frequent experience of political and non-commercial factors which thwart his efforts to export and simultaneously provide opportunities for his European competitors".That seems to be loose generalising, perhaps. We are entitled to be told whether it is or it is not. The document also speaks ofsources which have stronger governmental support than is given in the United Kingdom".and of theserious distortion of trade caused by the tying loans granted to the emergent countries".What is this? An excuse, perhaps, for some neglect of their own? It may be not.
The Financial Times yesterday on this Japanese Boeing deal said:Finance has also played a major rôle. Reports from Japan yesterday suggested that the British had offered financial arrangements to the Japanese airlines but Boeing had come back later with a better offer. Details of the financial plans were not revealed.I do not know anything about it. The Government may or the Government may not.
However, wherever it is possible to disprove some of these suggestions about our inefficiencies in this field I would ask the Minister of State to deny them.
§ 9.35 p.m.
§ Mr. John Diamond (Gloucester)
My hon. Friends who have preceded me have spoken with great personal knowledge of the problems of exporting, far greater personal knowledge than I could possibly adduce in this discussion, and it is always valuable to hear their comments at first hand. Like them, and like the hon. Member for Willesden, East (Mr. Skeet)—the only Member on the other side so far to have spoken in the debate—all are concerned with the same point, to help exporters to export. In order to put the matter in what I regard as its proper perspective, I want to say this, that the way to help exporters to export is not to encourage them to lean unduly on preferential assistance but to stand on their own legs, and to think about exports morning, noon and night. There is still plenty of evidence to show that the medium and smaller British firm does not think sufficiently about the need to export the whole time.
I was encouraged to receive only today—no doubt other hon. Members received the same publication—the official journal of the Institute of Exports which tells us two interesting stories. The first concerns a West Country firm which made it known that in future it would refuse to deal with any export inquiry unless it was accompanied by a stamped addressed envelope. This is an attitude which I accept exists. Those with professional responsibilities similar to mine know full well that the British attitude to exporting has still by no means caught up with the average German, Frenchman or Dutchman, who do not mind in the slightest whether they operate from, say, Holland or Britain, because it is all the same to them. Their markets are far flung and it matters not where the head office or centre of operations is.
The attitude in Britain is different. The man in the British firm has been encouraged for far too long by a solid home market and reliable export markets. He has not gone out for orders but has received orders. As the example which I have given shows, he will not deal with inquiries unless they are accompanied by a stamped addressed envelope. I appeal to the Government to continue with the work which has been done previously and which I hope will continue in encouraging in every possible 349 way the medium and small firm which has not made full use of available facilities to think about exporting more.
The second example is one in which hon. Members will be particularly interested. It concerns an advertisement for an export supervisor witha thorough knowledge of export procedures, including shipping, documentation and customs drawback claims".The applicant must be between 25 and 40 years of age and for this man, with all his experience—and his age obviously would be nearer 40 than 25 if he had accumulated all this experience—the salary offered is between £800 and £850, slightly more than the salary of a shorthand-typist or about as much as that of a good secretary; or, to put it in more homely terms, about the average net amount which a Member of Parliament receives after the deduction of tax, expenses, and so on.
I repeat that there is still plenty of evidence to show that more needs to be done to encourage manufacturers and merchants to realise that there is a market for their goods and that, although these matters are a bit complicated at first, they become easy subsequently. I go further and say that they should realise that the world is opening up in respects which they have not, perhaps, anticipated. There are many more areas to which exports can be sent than was previously the case.
I was surprised by a publication of one of our banks, Barclays, which is a perfectly reasonable bank. It made an objective assessment dividing the world into nine trading areas of export opportunities. It put the E.E.C. and E.F.T.A. at the head and next the Eastern bloc. It said with regard to the Eastern bloc that the immediate outlook was reasonably promising, which is a better estimate than applies in the case of the others, apart from the Six and the Seven. With regard to delays in payment, the word used was "none".
There are many people who do not realise that these possibilities are open. There are certain difficulties and technicalities, but it is because there are these difficulties and because people fall down when dealing with them that we have to encourage them more and more to realise that exporting is essential and 350 vital and that it is well worth while to overcome the difficulties.
Nevertheless, having said that, I share the view that every speaker has expressed that it would be utterly wrong for any of our manufacturers unnecessarily to be put at a disadvantage in terms of guarantees or interest with their overseas competitors. This is happening and a specific instance which I want to discuss, although figures are difficult to discuss across the Floor of the House, is the case of the aircraft industry, because I have had detailed figures supplied to me by the secretary of the Society of British Aircraft Constructors. They have already been supplied to the Minister of Aviation, and correspondence has been going on which has not reached a satisfactory or agreed conclusion.
I hope that the Minister, who brings experience both from the Treasury and now in his present position as Minister of State, will be able to look into these figures and see how we can help. Although there has been some contradiction by the Ministry of Aviation, it has not been fully contradicted. In comparison with America, which is exporting aircraft against us—and we have two very recent cases which my hon. Friends have indicated—although the agreed terms and the guaranteed terms are not known, they may have entered importantly into the unsatisfactory result. It is alleged that we are at an unnecessary disadvantage with our American competitors in the sale of aircraft to third markets.In the United Kingdom"—and I am now quoting from a letter of July, 1963, and the terms may have altered slightly since then—we borrow at 6 per cent. per annum (5½ per cent. for maturities up to five years, 6½ per cent. for later maturities—on 7-year credit this works out at 6 per cent. overall), but in addition we pay to E.C.G.D. and our bankers up to a further 6.6 per cent. of the contract price, which in terms of a rate per annum is equivalent to 2¼ per cent.—a total in all of 8¼ per cent. per annum.It is the all-in-all figure which matters, because the customer totals this up to see how much he has to pay to potential exporter A and to potential exporter B. That is the British position.
Now we turn to the American position where this is at least 2 per cent. less, 351 which in terms of a number of large aircraft which sell at £2 million a time is a very relevant figure indeed. What S.B.A.C. are saying, after a most careful reconsideration, is exactly what I suggested in a speech I made as early as May of this year, that the fundamental cause of this is not necessarily E.C.G.D. at all. It is because of the supply of the money in the first place at higher interest rates which is borne here as compared with the cost at which the American Treasury makes the money available in the first place.
The net result is that we compare something like 8¼ per cent. with about 5¾ per cent.—in some cases a spot more—with the Americans in this instance. That is a minimum of 2 per cent. difference and, in some cases, of 2½ per cent.
The figures are detailed and I will not bore the House with them. However, the comparison I have made is as fully documented in terms of aeroplanes as can be the case. It has been supplied after the most thorough consideration by the Society of British Aircraft Constructors. I have a considerable constituency interest in this matter, but all hon. Members are interested in the sale of aeroplanes. Things have been going very much the wrong way recently and most hon. Members who have spoken today have referred to this subject.
I do not expect the Minister of State to give a full answer to these points tonight. I will be grateful to him if he will prefer the other course and look at the matter with the care that is appropriate to the circumstances which possibly have lost us export orders in aircraft and which, if not altered, may continue to do so.
§ 9.46 p.m.
§ Mr. du Cann
I will, by leave of the House, do my best to reply to the points that have been made in this fascinating and constructive debate. I am sure that those who have listened to it right through will be grateful for the contributions that have been made by hon. Members on both sides. After all, we share a common interest—the promotion of exports and the improvement of facilities for British exporters. We wish to do this, but, as the hon. 352 Member for Gloucester (Mr. Diamond) pointed out, not too far because nobody wants to be spoilt. All that any Englishman should ever require is a reasonable opportunity and fair competition.
The snag to my replying tonight is that so many and varied have been the points raised that I doubt whether it is possible for me to answer them all. None the less, I will do my best within the compass of a short time to do so, and I would like to assure all hon. Members that the points they have raised I personally have greatly valued and the Secretary of State and I will do our best to pay strict attention to them in the future.
Since those concerned are not in this forum able to speak for themselves, I can inform the House of how grateful the Council and the Department will be for the kind things that have been said about them. As the hon. Member for Ashton-under-Lyne (Mr. Rhodes) rightly said, this is not a moment for self-congratulation and they would not accept the praise which has been properly accorded to them in that spirit. However, I believe that they will go forward in their tasks fortified in the knowledge that tonight, as always, they have the goodwill of the House.
The right hon. Member for Battersea, North (Mr. Jay) did a leg-pulling exercise, if I may call it such, about this splendid State corporation. He will not wish me to reply to that point in detail, other than to say that it has always seemed to me that the E.C.G.D. is not a wholly State corporation. It is more a joint partnership between the State and private business. Whatever may be said on this score, so long as it is effective I do not mind who founded it.
There are certain risks that the State should take, particularly when the scale of business is becoming so vast and complex. There are private enterprise organisations in this sphere which are also doing a useful job, but the point is not who does the work but rather that it should be done effectively. While the constitution of the E.C.G.D. is not a matter for argument tonight, I do not regard its present constitution as fixed necessarily for all time. If we find that we can change its constitution and organisation in such a way as to make it more effective in the future, we should 353 not hesitate to do that. I do not suggest that we have these great changes in mind at the present time—far from it—but certainly let us be flexible in our thinking, as I can assure the House, we are at the present moment.
Another point that the right hon. Gentleman quite rightly raised was that of improvements in E.C.G.D. activities. He suggested, and I make no quarrel with him on the suggestion, that it was, perhaps, the custom for Ministers of State, of whom there seem to have been an unholy succession, if I may say so, to say that nothing further is really desirable and then to come along a few months later and propose alterations. Whether or not that is so in detail, I am not quite clear—I should have to do a great deal of research, extending, no doubt, to 1945—but that is not the point.
The point is that I am not sitting here secretly yearning to make improvements and being inhibited by my old friends at the Treasury with whom, I am glad to say, I remain on the most cordial and happy terms. That is far from being the case. It is the aim and ambition of the Board of Trade, severally and jointly, to find ways, if they exist, of improving the facilities of E.C.G.D, without argument and without dissension. As long as I remain Minister of State, so long shall that be done.
A further word was said by the right hon. Gentleman on the subject of exports and imports. He was quite right to draw the attention of the House to the figures, which are very interesting and will well repay study. It is splendid that exports are 7 per cent. up on last year, but I say at once that it is not enough. We must have a further expansion in 1964, and as far as the Government can influence matters or, at any rate, encourage a spirit in which existing exporters will be more active and new exporters come into the field, that we shall do.
I am not so bothered about imports at the present moment. I think that it is too early to make a specific judgment there. A degree of the import bill is due to restocking, and if certain manufactured goods are purchased by United Kingdom manufacturers of one sort or another because the equivalent manu- 354 facture cannot be obtained in United Kingdom markets, I hope that the shock of competition will do other United Kingdom producers a lot of good.
It may be necessary to look seriously at imports as the year goes on, but it is precisely in order to accommodate this restocking period that my right hon. Friend the Chancellor of the Exchequer has arranged what one might call an overdraft—the new working capital facilities with which the House is familiar. I would not, therefore, say that at the present time I am necessarily bothered about the import figure, although I agree that it requires to be watched, but I hope that in 1964 we shall see exports continue to rise, and rise at a substantial rate.
I liked what the hon. Member for Ashton-unda-Lyne said about exporters; it struck me that his whole mood and spirit was one of, "Let's go. Let's not have silly exhortations"—
§ Mr. du Cann
The hon. Lady presumes far too much. It is, I know, a woman's prerogative always to presume. The hon. Lady does so with much charm, but is most terribly wrong in the narrow field she was considering. In the field of exports, certainly, "Let's go."
As the House knows, I have recently been abroad for a very short time. I had four days in Venezuela and four days in Trinidad. In Trinidad, I met a man who had in the course of the previous ten days been in Montreal, in Washington, in Houston in Texas, and then in Trinidad. In each place he had done business with great profit to his company. In each place, as I understand, he had been to see the local Board of Trade representative before making his calls, which had previously been well prepared by his company. As a result, they were more effective. I thought that this was more typical of the new attitude of the British businessman than is sometimes suggested by some people who should know better.
Exporting is extremely hard work. It is a difficult and arduous business. There is only one way to sell, and that is to get off one's backside behind a 355 desk and go out in the field. This is why the Board of Trade provides overseas services, and we are always delighted to know that these services are used or to hear how we can improve them. The attitude of British business, small or large, is infinitely better than it was, and I think that our people deserve great congratulation on all they have done. The House certainly wishes them success in future and is always ready to do what it can to help them.
The hon. Member for Lichfield and Tamworth (Mr. Snow) raised the question of markets. There is no market of any size in the whole world for which the E.C.G.D. provides no cover at all. The degree of cover is bound to vary according to risk-worthiness, but that is a matter of fact. The hon. Member spent a good deal of time talking, quite rightly, about the small exporter. There is a lot that one could say on this subject. There are great problems possibly in encouraging the small exporter too greatly, because he is not in a position necessarily to provide after-sales service of the kind so often necessary in certain markets. Nevertheless, he has a great contribution to make. I hope that the figure of policies taken out by small exporters, which is 1,581 since the scheme started2½ years ago, is some indication of the progress made in this field. I want to talk in a moment about publicity and what is done in particular to try and bring the services of the E.C.G.D. to the attention of small exporters. I will not deny that there is a great deal to be done in education and that this is important and urgent.
I hope that we shall be able to increase trade with the Eastern bloc, a subject which was also raised by the hon. Member for Lichfield and Tamworth and the hon. Member for Gloucester (Mr. Diamond). The prospects at present look good and there is no earthly reason why we should not do this. The Secretary of State has been clear about the intentions of Her Majesty's Government. I hope that as time goes by in the next several months it might be possible for us in various ways to indicate to the House the positive things which we may have achieved.
The hon. Member for Gloucester particularly mentioned aircraft. It may be 356 that I misunderstood his figures. I had thought that the highest rate of premium in this case was only 5 per cent., but the hon. Member was good enough to invite me not to reply in detail at the moment and, therefore, I shall not. On the other hand, I promise him that I shall look at the matter with care. Like the hon. Member for Lichfield and Tamworth, who also mentioned the problem of aircraft, nothing has annoyed me more in reading the newspapers in recent months than to read about the way in which we have not been able to secure orders which the excellence of design and workmanship of British aircraft have deserved our obtaining in world markets. This is a serious matter.
§ Mr. du Cann
Newspaper comment immediately recently has suggested this, but I do not feel that I am sufficiently well informed on the subject to give a firm opinion one way or another. I shall put myself in a position as best I can to make up my mind and to take positive action if such be open to us to deal with the matter.
The hon. Member for Ashton-under-Lyne asked a question about grouping orders. Some day I should like to write to him and answer fully. This was a question asked of us by the F.B.I. who pressed us very hard to make relaxations. We have asked them in turn for clear evidence of a shortage of finance in this field. The subject, therefore, is under discussion.
I come to a further point raised by the right hon. Member for Battersea, North on the breakdown of the total of actual liabilities and potential commitments under Section 2. This matter is difficult to follow, but I have a note to which I should like to refer. At the end of December, 1963, of actual liabilities under Section 2 of £391.1 million—
§ It being Ten o'clock, the debate stood adjourned.
§ Question again proposed, That the Bill be now read a Second time.357
§ Mr. du Cann
Of the figure of actual liabilities of £391.1 million, £81.6 million was in respect of financial guarantees; £116 million in respect of other guarantees issued and accepted offers of cover; and £193.5 million disbursements under economic assistance loans. Out of the total potential commitment of £453.9 million, £287.3 million related to financial guarantees approved in principle but not yet issued; £14.3 million offers on other guarantees; and £152.3 million to undisbursed portions of economic assistance loans and prospective loans which have yet to be signed. I think that if the right hon. Gentleman will be good enough to look at those figures, he will find that they give him the information he wanted.
My hon. Friend the Member for Willesden, East (Mr. Skeet), whose contribution we all so much welcomed, spoke, among other things, about investment guarantees. This is primarily a matter for my right hon. Friend the Chancellor of the Exchequer, but as I have had my leg pulled about having been at the Treasury for a brief but I hope not undistinguished period,—
§ Mr. Diamond
The hon. Gentleman's period of office in that appointment will prove to be nothing like as brief as his stay in his present office.
§ Mr. du Cann
I am very fond of the hon. Member for Gloucester, but the one characteristic of his which I regret is his pessimism.
On the subject to which I was referring, I shall draw the attention of my right hon. Friend to what my hon. Friend said, but I am bound to point out from my previous experience that in the past the Government have always felt unable to give investment guarantees, partly because they are apt to lead to a diversion of investment from what one might possibly consider more desirable locations, and because investment overseas in any case forms a considerable strain on our balance of payments, amounting to no less than £300 million at current figures, so I would not hold out any hope for my hon. Friend that there is likely to be progress here.
I was interested to hear what my hon. Friend said about documentation. I was horrified by some of the examples he gave of South American practice. On the question of home documentation. I think that 358 the E.C.G.D. goes to substantial lengths to make this as tolerably simple as possible. If my hon. Friend accepts, as I believe the House does, that much of this work of selling overseas is very much more complex than it used to be and that this complexity is likely to increase, and if he accepts, too, that many of these projects are for larger sums than have ever before been considered, inevitably the degree of information which the E.C.G.D. must have as a minimum must be substantial. That really is the basic point. If my hon. Friend, or any other hon. Member, has specific examples of excessive E.C.G.D. paperwork. I hope that I shall be informed, because we shall be ready to look into the matter.
On the subject of the amount of documentation required by certain countries with regard to exports, I know that this presents problems for the exporter. The Government have played an active part in international discussions directed to reducing export documentation as far as possible, and I assure my hon. Friend that we shall continue to do that.
I turn now to the question of the F.B.I. Memorandum I have here, which I read with great interest, together with the allied newspaper comment. It was one of the things which, soon after my appointment I had the opoprtunity to discuss, in particular with the Secretary of the E.C.G.D. There are many points about that report, and the right hon. Gentleman mentioned three main ones. Perhaps I may make some general observations about it from my experience of having looked at it and discussed it.
The F.B.I is a most important body, and anything that it suggests must be taken very seriously. We did take the report very seriously. On the other hand, there were certain errors of fact in it, and we thought it appropriate to have certain discussions, in general and not formally, with the F.B.I., as a result of which I believe that there is a better understanding on both sides about the problems and difficulties involved. I am delighted that the E.C.G.D. should have had the opportunity to put its side of the question to the F.B.I., on a number of these cases, for that knowledge, in the hands of the F.B.I., can be nothing but beneficial, in general, for obvious reasons.
It is not a question of not caring for criticism: that is not the point. 359 Criticism is welcomed. But a number of suggestions made by the F.B.I.—which the right hon. Gentleman was himself careful to avoid—were not accurate as matters of fact. To some extent that blunted the value of the document and of the surrounding comment.
On the question of cover for exchange rate fluctuations, this is obtainable through the well developed existing market, where a large measure of protective cover can be obtained. It is always possible to deal forward in the foreign exchange market. We feel that in general this goes far enough, but I would welcome any evidence from the right hon. Gentleman or anyone else to the contrary.
§ Mr. du Cann
Yes. One can deal forward in the dollar market without doubt. The rates are quoted every day in the financial Press. But if there is substantial evidence which shows that in some cases this is a genuine handicap to exporters, I should like to hear more about it so that the matter can be properly investigated.
I now turn to the question of matching, which was mentioned by the hon. Member for Ashton-under-Lyne and which was also a point in which the F.B.I. were interested. This involves obtaining evidence of competition, as distinct from vague allegations seeking to play off one supplier against another. We recognise that the difficulties in securing evidence may be formidable, but our own inquiries do not bear out any contention that evidence is impossible to obtain. In fact, we have found the position to be rather the reverse. We are ready, through our embassies overseas and our Berne Union contacts, to investigate promptly and extensively any allegation which comes our way. The fact that we have done this in 370 cases since the introduction of matching cover, in October, 1960, is an earnest that we are 360 able to deal practically with the situation through these avenues. I could say a great deal more on that point, but I will pass from it.
I now turn especially to matters raised by the hon. Member for Ashton-under-Lyne and the right hon. Gentleman, and the suggestion that the E.C.G.D. should be more favourable to "selected markets", "selected customers", "split risk" and "reduced percentage of loss" cover. These are important subjects. The F.B.I. suggested that selected market terms are heavily weighted in favour of whole turnover. On examination, we find that in general the whole turnover requirement is a reasonable one. "Selected markets" policies, on the other hand, are freely available, provided the markets offered to us give a reasonable spread of risk. This is essential in order to keep the E.C.G.D. on a sound commercial basis. Rates are never more than 30 per cent. above standard whole turnover rates. This is not excessive. As for cover for split risks, it is difficult to determine whether a particular loss is due to del credereor to a political risk. The right hon. Gentleman will understand the force of this point, as will the hon. Member for Ashton-under-Lyne, with his substantial experience of overseas markets, some of them very difficult ones. That to cover split risks would both increase costs and reduce the value of the policy as security for banking advances is a point which should not be ignored.
After those short comments, let me go on to the other point which was made. It was suggested that there was a good case for lowering the minimum limit of £100,000. This has been discussed with the F.B.I. on several occasions, and I hope it has been made clear to the F.B.I. that we should not be justified in making this alteration without evidence of shortage of finance in the field for which bank guarantees are not available. If such evidence is produced we should be ready immediately to consider it. I can be quite clear and certain that that would be done.
I had a memorandum prepared which summarised the points made by the F.B.I., and I have been looking at that with some care in the last few days. I am satisfied that, in general, a number 361 of the points made by the F.B.I., though valuable, are probably not points on which we could justifiably take action at present. But our minds remain open about every one of them, in so far as they do not result—as did one or two—from an honest misunderstanding of the position.
A great deal was said about aid, a fascinating subject which we debate in this House much too rarely. We had the splendid White Paper which contained many striking points. But we have not had—for good reasons—an opportunity to thrash out the matter in detail. One suggestion was that we should take greater risks in our aid policy. It is our feeling that we already take great risks in certain territories. Obviously, I do not wish to name them. But I think that the House will be with me to some extent over this and I urge hon. Members not to underestimate the position.
There is a limit to what we can do physically. Our aid is running at a record total. The precise figure for this year is not yet known but it is around £200 million. It may be a little below that figure because there is always the problem of the pipeline. But there is a physical limit to what we can do with the best will in the world. Nor do I think we should resent in any way the fact that other nations sometimes step in to assist countries which need aid. I do not resent the fact that, for example, the Americans, the Japanese, the French and the Italians have come into territories which were formerly British Colonies. If that be good for those territories, I say that it is fine.
I am concerned—the point was made by the right hon. Gentleman—to see that we get our fair place in the sun and are not squeezed out unfairly or unnecessarily. Aid to independent Commonwealth countries increased two-and-a-half times between 1958–59 and 1962–63, from £25.8 million to £62.3 million. In the Queen's Speech it was made clear that it was the policy of the Government to have an expanding programme of capital aid and technical assistance.
§ Mr. du Cann
I do agree. It is not for me to decide these matters, but I hope that we may have the opportunity to debate the whole subject of Commonwealth trade. I am sorry that tonight we are talking about E.C.G.D. and not that particular thing. But the reasons are well understood. However, I look forward to such an opportunity. It is essential that this House should get down to a detailed examination of the reasons why we are not doing as well in Commonwealth trade as we should all wish to do. Those reasons do not necessarily result from our own faults of commission. But there are facts which ought to be looked at seriously and remedies provided.
Section 3, in relation to loan distribution, gives what, I think, is a misleading picture of distribution of aid. It is only a quarter of the total. So much of our aid, to the Commonwealth especially, is given through C.D. and W. Acts. The great bulk of our aid to Africa is given in that form.
On the other hand, my hon. Friend, the right hon. Member for Battersea, North and the hon. Member for Lichfield and Tamworth talked about Section 3 aid, and I should like to go through that very quickly. It would take much too long to give details of all the loans made under Section 3 in the past 15 years. There have, in fact, been 54. I will ensure that the hon. Gentlemen concerned receive detailed in formation but I should just like to summarise the position now.
The 54 loans, agreed for 21 countries, total almost £350 million. India received 16 loans totalling £193 million. Pakistan has received seven loans totalling £47 million. Pakistan has, in fact, done second best. Other loans have been agreed with Yugoslavia, Nigeria, Ghana, Sudan, Iran, Chile and Turkey, each receiving two or more loans.
Part of the aid dealt with the surplus capacity provisions which the House welcomed. All those loans have been made to Governments. On the other hand, some have been made to public bodies but guaranteed by Governments. Most of the loans were made after the Montreal Commonwealth Trade and Economic Conference in 1958, when there was a move forward in Imperial loans, if I may use such a term, and all of them were tied to the purchase of 363 British goods and services. Disbursements have risen from £5.7 million in 1957–58 to £40.5 million in 1962–63.
A good deal has been said about terms. There is an increasingly difficult task for some developing countries in servicing their external debt. This has led to extending the length. The longest term yet granted is 25 years, including an initial grace period of seven years before repayment of principal begins. The rate of interest charged is the rate at which the Government can borrow for comparable periods, plus a fixed management charge, usually ¼ per cent. As a further means of assistance to developing countries, we are always ready to consider waiver of interest payments where the economic circumstances of the recipient justify this. We have done this with recent loans to India, Pakistan and Turkey. A waiver of interest of 7 years offered to India and Pakistan in 1963 is equivalent to halving the interest charge, and that underlines the importance of the grace period.
On the subject of Latin America, my hon. Friend the Member for Willesden. East may know that I have just returned from Venezuela. It was a short visit and not a world tour such as someone suggested that Board of Trade Ministers were in the habit of making. I feel that there would be great and continuous advantages if more hon. Members were able individually to travel and put the British point of view abroad, because it is far too little understood. I am certain that the opportunities in Latin America are good. We have had a disappointing experience there in the past but I do not think this should prevent us from taking advantage of taking good opportunities where they exist.
§ Mr. Skeet
At least two or three Ministers have gone to South America recently, and the Section 3 loans are very minute for that part of the world. If we take our total investment there on Government account, it is next to nothing compared with our investments in Africa and Asia. If we want to encourage our trade with South America, ought we not to do more about it?
§ Mr. du Cann
My hon. Friend interrupted me before I had finished what I was saying on this subject. There is one point of principle that I want to make, 364 that the claims on our resources are very great. I have said that our resources are not inexhaustible. I am old fashioned enough to think that when we have capacity which we can spare we should first consider the claims of our old friends in the Commonwealth, and I would hope that after that it might be possible in future to do a little more for the Latin American territories; and if that is possible, my hon. Friend will certainly be hearing about it.
The hon. Member for Lichfield and Tamworth asked about information. He has now left the Chamber, which perhaps saves me from saying as much as I had intended to do. On advertising we spent £60,000 a year in E.C.G.D.—with good results, I think. Many hon. Members will have seen the advertising. I thought it first class.
As to calls on exporters, in the 12 months ending in October officials from our 16 branch offices made nearly 28,600 calls on exporting firms, nearly 13,000 being uninsured firms, to introduce and explain their facilities. A good deal of work has been done with trade associations. There are 350 accredited brokers on the panel.
With regard to banks, in July, 1960, a new booklet was produced called "E.C.G.D. and the Bank Manager" and 10,700 copies were supplied to the main banks head offices within a few weeks, and copies are now issued on request. In the year ending December, 1962, 3,500 copies were issued. In addition to that booklet we have produced a number of publications, which are, incidentally, available in the Vote Office, to explain the advantages of these facilities. In 1962, 40,800 were distributed, including 10,000 copies of the main booklet "Payment Secured". We shall produce a new comprehensive booklet dealing with E.C.G.D.'s development, and it will be called "E.C.G.D. services; the British Government's credit insurance facilities for exporters". This will be available, I hope, in the fairly near future. As to editorial comment, I am advised that during the year ended 31st October, 1963, we noticed 618 mentions of the credit insurance facilities provided by the department in the British Press.
One could go on for a long time discussing the various ways in which we endeavour to bring the services of 365 E.C.G.D. to the notice of present and potential exporters. I thought the other day that the summit of publicity was reached when my photograph appeared in the newspapers signing the loan agreement with Chile for the purchase of ships, which came under the Chancellor's surplus capacity scheme. The only unfortunate thing I have to report to the House is that I am not aware that any increase of business has resulted since. However, I quote the example to show that in every way we do what we can.
I have very much enjoyed this debate on the subject of exports and E.C.G.D. I am grateful for the welcome which the Bill has received. Those questions which I have not been able to answer in the long time I have spoken in winding up the debate I will do my best to answer in other ways. I wish again to assure the House that if there are constructive ways open to us in the future of improving the services, either of the Department which I have the honour to serve or of E.C.G.D., we shall be only too ready to take them. The whole House has been united in approving the Bill in a generous way. If any hon. Member knows of ways in which he thinks we could improve these services, I hope that he will not hesitate to let us know.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. I. Fraser.]
§ Committee Tomorrow.