HC Deb 13 February 1967 vol 741 cc16-42

10.45 a.m.

Mr. John Nott (St. Ives)

I beg to move in page 1, line 12, at the end to insert: Provided that, for the purpose of encouraging trade with places outside the United Kingdom, nothing in this section shall prevent part thereof being applied to the provision of guarantees up to two years before the shipment of goods overseas. In moving the Amendment I am conscious of the fact that pre-shipment cover for goods in the process of manufacture is available in a wide majority of cases—it may well be in all cases. In going through the different types of policy involved, I should like the Minister to clarify my own mind, and that of the Committee on a particular grey area which I believe exists.

In the case of a comprehensive guarantee based upon the turnover of an exporting company, E.C.G.D. certainly makes available a policy either from the date of contract or from the time of shipment of the goods. Likewise in the case of two types of specific guarantee, namely, the ordinary policy and the financial guarantee, E.C.G.D., either directly or indirectly, makes cover available. In the first case, that of the ordinary policy, the policy may be made available, on signature of contract and then can be assigned or hypothecated to the bank so that the bank can provide financial cover for work in progress. Similarly, in the case of the financial guarantee granted to the overseas buyer and not to the exporter in this country—the overseas buyer may decide to make payments for work in progress, and again the E.C.G.D. financial guarantee will be indirectly available as cover.

In clarifying this position, I am indebted to the members of E.C.G.D. and to the Minister, who gave me permission to speak to them. It was a matter of some amusement to me that as a member of a business firm I am able to ring up the E.C.G.D. and seek information on any matter that I desire in my own business, and I do so often. But I found to my horror that as a Member of Parliament—and I can understand this—I have to go through the Minister in order to speak to E.C.G.D. I can understand the reasons for this, but it is rather surprising that a Member of Parliament finds it more difficult to elicit facts than the ordinary businessman. The purpose of my Amendment—

Mr. Kenneth Lewis (Rutland and Stamford)

On a point of order. I apologise to my hon. Friend for interrupting him, but may I point out that there are no Labour back-benchers in the House to hear this important speech by my hon. Friend?

The Chairman

This is not a point of order.

Mr. Lewis

I am sorry Sir, but if I were able to call a Count, this would have some effect. This is Government business, and there is no one here.

The Chairman

The hon. Member is not raising a valid point of order.

Mr. Lewis

What do we do? This is Government business.

The Chairman

Order. The hon. Member cannot interrupt the speech being made by an hon. Member in order to raise a bogus point of order.

Mr. Lewis

May I raise later this point of order about there being no Labour Members present?

The Chairman

It is not a point of order.

Mr. Nott

Although it may be out of order, I will try to satisfy my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) by working it in during the course of my speech, also deploring the fact that there are no hon. Members on the Government back benches to listen to this most important matter.

The purpose of my Amendment is to draw out the Minister in the case of the banker's policy, which is the third type of specific cover with which we are involved. Here the E.C.G.D. policy is made available directly to the banks putting up the money. It involves no hypo- thecation of the policy as in the case of the ordinary policy, nor is it granted to the overseas buyer, as in the case of the financial guarantee. The banker's policy becomes available only at the point of acceptance of the goods and it cannot be made available at the time of signature of the contract.

May I give an example of what I have in mind? Take a small or medium-sized company, manufacturing a new type of equipment. It is a leader in export markets, as many such small companies are. Its very success has led to a rapid development of sales in export markets. Indeed, to a conservative banker—with a small "c"—or to the Treasury, this company may be guilty of the deadly sin of over-trading. Nevertheless, there are many small or medium-sized companies which invent new processes, go out abroad to sell them and require all the backing that they can be given. Many of the new processes which have been invented have been introduced by small or medium-sized companies without a great deal of financial strength behind them.

Let us say that this small company obtains a £3 million export order in Brazil and that it requires credit for a term of five years. In such a case, the banker's policy would be the type of specific policy which would normally be issued and I have no doubt that this policy would be made available at the time of shipment of the goods. There is no doubt about that. Although the policy comes into effect at the point of shipment, however, it does not come into effect at the time of acceptance of the goods. In this respect it is different from the comprehensive guarantees.

Therefore, if this small or medium-sized company applies to its hank to increase its overdraft limits to finance work in progress, the bank may say, "We are not prepared to increase your overdraft. You do not have the financial strength to bear it". For this reason, this small or medium-sized company, which has a new process and which has already obtained a contract in export markets, cannot get its finance. The bank may well say to the company, "We would be prepared to grant you increased overdraft facilities on the security of your overseas contract, but we wish to be covered against exchange and political risks during the time that the equipment is undergoing the process of manufacture".

We therefore have the situation that in the case of the banker's policy, cover comes into effect only on acceptance of the goods. Acceptance of the goods may be obtained half-way through the process of manufacture. From experience, I know that a small company may start manufacturing a piece of equipment and find that the goods are not accepted by the overseas buyer until a few weeks or months, or even a year, has passed after the process of manufacturing has begun.

The argument against granting a banker's policy in this case is principally that it is not the job of the Export Credits Guarantee Department to cover work in progress, that a company may be over-trading and that if it is not over-trading it can get the finance from its bank. Many small companies may be technically over-trading. Where they actually have an export contract, however, it is necessary for the Government to do all in their power to help the company to finance a contract which it has already obtained.

I will summarise, for the Minister's benefit, the narrow point which I am making, so that there is no mistake. I am referring to the case of a banker's policy only. A banker's policy comes into effect, I understand, only when the goods are actually accepted and not when the contract is signed, as in the case of comprehensive guarantees, as in the case of a financial guarantee, as in the case of an ordinary specific policy. It may be that under Clause 1 the E.C.G.D. now has power to give a banker's policy at the time when the contract is signed. In practice, however, the Department gives a banker's policy not at the time of signature of the contract, but only on acceptance of the goods. It may be that the E.C.G.D. gives an ordinary policy until the banker's policy comes into effect. It may be that an ordinary policy is available during the early processes of manufacture and that the banker's policy comes in later.

However, if this is the case, surely that is a rather confused way of carrying out the business. Would it not be better if the banker's policy came into effect at the time of signature of the contract in the same way that other policies do? I will be interested to hear what the Minister has to say.

Mr. Kenneth Lewis

On a point of order. May I ask your guidance, Sir Eric? Can you tell me whether, under the Sessional Order under which these morning sittings are held, it is possible to adjourn the House for a while to allow the Government Whip to go round to get in sufficient hon. Members to make their support of these Government Measures, against which it would normally be possible to call a Count, look respectable?

The Chairman

I do not think that the hon. Member is really raising any point of order.

Mr. John Biffen (Oswestry)

Further to that point of order. I suggest with respect, Sir Eric, that my hon. Friend has raised a perfectly valid point in asking whether the Sessional Order governing morning sittings provides for a limited suspension of business. Cart you kindly give us guidance about this?

The Chairman

On that point, it is open to any hon. Member to move that any particular debate be adjourned.

Mr. Kenneth Lewis

I would so move, Sir Eric. There is inadequate support on the Government side and I move that the Chairman do report Progress, so that we may get some, even limited, enthusiastic support from the back benches opposite to support the Government, since this is Government business. I so move.

The Chairman

I am not prepared to accept such a Motion.

Mr. Lewis

May I ask your reasons, Sir Eric, why you would not accept this Motion and on what grounds you would accept such a Motion?

The Chairman

It is entirely within the discretion of the Chair to decide whether any dilatory Motion should be accepted at any time.

The Minister of State, Board of Trade (Mr. George Darling)

This is a very technical discussion in which very few hon. Members have expressed an interest. These Amendments were put down on Friday afternoon and I gave undertakings that I would deal with them in the way they had been put down.

The Amendment is unnecessary for the reason, given by the hon. Member for St. Ives (Mr. Nott), that the principal Act gives authority to the Export Credits Guarantee Department to provide for credit cover from the time of the signing of the contract, in cases where this is appropriate, as well as cover from the shipment of the goods. In most cases an exporter can choose whichever form of cover he wants, whether from the time of signing of the contract, which in many cases, as the hon. Member has said, would he long before shipment of the goods, or from the time of shipment of the goods.

There are exceptions to the choice. Obviously, cover would not he given for perishable goods to be shipped some time in the future or for mass-produced goods the model of which will not change and where, obviously, it would be to the disadvantage of the exporter to have that kind of expensive cover extending over a period of time. Generally speaking, however, with minor exceptions of that kind, the exporter can choose which cover he wants. The Amendment suggests that the period should be a guarantee of up to two years before shipment of goods. In the principal Act, there is no time limit. It depends upon the nature of the contract.

The hon. Member for St. Ives, having carefully explained to me and to the House how the present system works and having commended it, then asked me a very technical question—I am not in the business, as the hon. Member is—concerning the special position of a banker's policy and whether this, too, could cover the contract period instead of being, as the hon. Member thinks, confined at present to the shipment of the goods.

11.0 a.m.

The note which I have says that, in practice, the Department's policies help exporters to raise some pre-shipment finance in the two ways that he has mentioned: by hypothecation, as collateral security for overdrafts, or under financial guarantees of credit, to the extent that the exporter can persuade the buyer to draw on the credit for the progress payments.

The extent to which cover should he provided for progress payments is a rather difficult issue, particularly for small firms which may be in danger of over-trading. Such a firm may have signed a nice contract, and it looks as if it will be a prosperous thing for a relatively small firm. If it is trying to get a banker's order operating, there may be a danger of over-trading. Naturally, the Department has to look carefully at that kind of arrangement.

The only thing which I can do, on the special question which the hon. Gentleman has raised, is to go into it with the Department. If there is any evidence of weakness in the Department's operations on this point, with the help of evidence which may be provided to us, we will see what we can do to get rid of it.

As the hon. Gentleman knows, it is the policy of the Department to provide, on good commercial grounds, the best cover which can be made available, particularly matching the credit arrangements which may be made by competitive countries. We will do everything possible, still within the terms of good but flexible commercial policy, to make sure that no weaknesses remain in our operations. I will see whether that one point which the hon. Genleman has raised can be covered in that way.

I repeat that the Amendment is unnecessary, because these powers for the Department are already in the main Act.

Mr. Terence L. Higgins (Worthing)

I wish to make one brief point which may be regarded as a point of order, and then reinforce what my hon. Friend has said.

The Minister of State said that the Amendment which we are discussing was not put down until Friday. As my hon. Friend the Member for Rutland and Stamford (Mr. Kenneth Lewis) pointed out, we are still considerably in the dark as to how morning sittings work. Am I wrong in supposing that if the Amendment was put down on Friday it would be "starred"?

Mr. Darling

I am sorry; it was starred on Friday.

The Chairman

As I recall, these Amendments were put down on Thursday and appeared on Friday's Order Paper. Therefore, they were not starred.

Mr. Higgins

In that event, they were put down a considerable time ago, and we are prepared to accept that the Minister of State made a slip of the tongue. They were starred on Friday but put down before, and therefore they are not starred now. In that case, it is not unreasonable to discuss them on this occasion.

The point which I wish to make, in reinforcing what my hon. Friend the Member for St. Ives (Mr. Nott) said is that, while this is a technical matter, none the less he makes a point of principle which is that it may be that a firm which has obtained an export order is having difficulty in financing it. It may be that it is a new firm and that it is a very important order to it. It may find that it undertakes to fulfil the order, puts work in progress, and then the country from which the order has come imposes restrictions on balance of payments grounds on remittances from that country to this. It may be that a firm, showing enormous initiative, going for export markets and doing everything it can to help the export drive, will find itself in a position where its financial structure is jeopardised and it might even go bankrupt because of government action taken by another country to which it is selling goods.

Therefore, while we accept that the Minister may not want to go into the technicalities, may I ask him if that, in principle, is something which ought to be covered?

Mr. Darling

If I may reply to that question, as the hon. Gentleman knows, it is not part of E.C.G.D.'s responsibility to provide finance for the production of goods in the general run of commercial and industrial activities. There are other sources of finance and help for that purpose.

There can be the case which the hon. Gentleman has mentioned, where a firm may have got the ordinary financial support which it needs for the production of goods in this country to meet an export order, and then, through no commercial fault of anyone, because there is a lack of foreign exchange or whatever it may be, the order collapses, and the effect goes right back down the line. The firm has to pay for the finance that was raised for the purpose of the production goods. It cannot sell goods, and the order has collapsed. In that very exceptional circumstance, I can see the hon. Gentleman's point very clearly, and I give him the assurance that he asks for.

Mr. Nott

Having heard that reply and the Minister's assurance that he will look into this technical point, I would be happy to withdraw the Amendment. However, when he mentions the point about over-trading, I emphasise to him that no one suggests that E.C.G.D. should actually finance work in progress. Where work in progress is going on, purely insurance cover should be provided in case political or exchange reasons in the overseas country make the contract null and void. That is the specific point with which we are dealing.

As for the point about over-trading, the Minister must be aware that a vast number of commercial activities are carried on here on the basis of the covenant which a firm contract provides. Very little property development would ever take place if the property companies themselves had to finance on their own credit the erection of a property. Most financing of business takes place on the security of a contract. That is the point with which we are dealing here. If a contract cannot always be lodged as security for an overdraft to finance work in progress because of political or exchange risks from other countries, the E.C.G.D.—and I can understand that this is of total disinterest to any hon. Members opposite—

Mr. David Webster (Weston-super-Mare)

How can my hon. Friend know that if none of them is here?

Mr. Nott

As my hon. Friend says, it is impossible to tell. Although exports are always talked about by hon. Members opposite, when it comes to considering the technicalities of exporting, they prefer not to come into the Chamber. However, on the Minister's assurance that he will look at this point, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Mr. Nott

I beg to move, in page 1, line 12, at the end to insert: Provided that, for the purpose of encouraging trade with places outside the United Kingdom, part thereof may be applied in guaranteeing moneys invested in industrial and commercial undertakings overseas. This Amendment is very much less technical than the previous one, and I should have thought that there would have been a great number of hon. Gentlement opposite wishing to take part in this important debate. It concerns the whole question of overseas aid and whether some means can be found of providing cover for the investment of monies from the private sector into commercial and industrial companies overseas. This is a matter upon which there have been many debates in the past, and I have put down this Amendment purely as a probing Amendment so that we may have an opportunity of discussing it in Committee.

I am aware that it conflicts directly with current Government policy, which is designed to restrict the investment of private capital overseas. However, the so-called voluntary programme on overseas investment in the sterling area has been described by the Government as a temporary one. I am not seeking here to increase the total volume of overseas investment in aid. Rather, I am trying to make it slightly more flexible.

May I say at the outset that I do not want to encourage a large expansion of tied aid, because the United Kingdom's long-term interests call for the encouragement of multilateral trade. Nevertheless, when one looks at our export performance over the last decade and compares its growth with that of America, it is, I think, instructive to examine where our system of export credit differs from that of the Americans, because American exports amount to about 4 per cent. of their output, whereas in our case the figure is over 20 per cent. In one case the percentage is purely marginal. Although the Americans are running a large deficit on their balance of payments, it is purely on capital account, whereas in our case 20 per cent. or more of our output goes in exports, and this is crucial to the future of this country.

I believe that our system of export insurance is as good as any in the world. It has its critics, and its detractors, and no doubt when we discuss the Question, "That the Clause stand part of the Bill", and also my hon. Friend's Amendment, we shall hear certain criticisms of the way in which the Act is being administered, but, taken all in all, I believe that our system is one of the best in the world, and I would not seek to criticise the basic principles on which it operates.

The members of the Export Credits Guarantee Department are always helpful and flexible. I wish that I could say the same for the Board of Trade, because if all the Departments of the Board of Trade operated on as reasonable a basis as the E.C.G.D., a whole host of matters which they administer could be much improved.

There are two basic differences between the American system and ours. In the first place, the American Export Import Bank actually finances exports as well as insures them. More than 10 per cent. of U.S. exports are financed by Government money, whereas in our case only about 2 per cent. are financed by Government money. But I do not think that this is an important point, because I do not know of any exports where, following the issue of an export credit guarantee, money has not been found to finance that export. That is one difference—the export import bank actually puts up the money.

I am glad to see my hon. Friend the Member for Weston-super-Mare (Mr. Webster) sitting on the bench opposite. It shows that at least our side of the House is interested in this very important issue.

Mr. Webster

I am not sure whether my hon. Friend is now the hon. Gentleman, but I now have a splendid view of him, and I wish that hon. Members from this side of the House were here to hear his wonderful speech.

Mr. Nott

I make no pretentions about my speech being a wonderful one, nor would I necessarily encourage my hon. Friend to sit on the benches opposite with the object of looking at me. Nevertheless, I am grateful to him for the encouragement he is giving me in putting this important point to the Committee.

Secondly, and this is where I come to the real reason behind the Amendment—I want to draw the Minister's attention to the Agency for International Development,—A.I.D. as it is known—because it provides a comprehensive system of investment guarantees in the United States. First, it provides a specific political risk guarantee which may be granted to United States companies operating overseas. It enables the investor in the United States to invest money in these United States companies, and at the same time to be covered against inconvertibility or expropriation of his investments. This means that the United States citizen can receive an insurance guarantee to cover the investment of cash, materials, equipment, patents, and all services, in companies overseas. Secondly, there is an extended risk general guarantee, whereby it is possible for a guarantee to be given by A.I.D. to help the development of small independent business enterprises overseas.

At the moment there are many question marks overhanging our aid programme. First, there is the whole question of whether the increase in Government expenditure has grown far too rapidly, in which case I suggest there are some arguments for enabling the private sector to invest money overseas by encouraging them to do so through the receipt of a guarantee against exchange or political risks. If this were done, it would be possible to reduce somewhat Government overseas aid and replace it by aid flowing out of the private sector of the economy under the guarantee of the E.C.G.D., or the Ministry of Overseas Development. This has some bearing on the whole question of Government expenditure and the need for this country to draw savings out of the private sector to replace expenditure which is now coming from the public sector.

11. 15 a.m.

The other point which I should like to make about our overseas aid is that, because this is Government to Government aid, a great deal of it never finds it way through into the pockets of the people of the country concerned. It is salted away in Swiss bank accounts in the case of certain countries overseas, and in many cases it does not benefit the private sector of the countries which we are trying to help.

In conclusion, I suggest first that if the E.C.G.D. or the Ministry of Overseas Development could, in practice, give some kind of investment guarantee, in the way that A.I.D. does in the United States, it would help in reducing the burden of Government aid. I am not referring to the immediate present. I know that our balance of payments problem precludes this at the moment, but it is something to look at in the future.

Secondly, it would draw money out of the private sector into overseas aid, which will now not flow out because of the political and exchange risks concerned. Thirdly, it could bring back to this country a high return in dividends and interest. Many companies overseas are providing a high return and this could bring back much in terms of interest and dividends.

Fourthly, and perhaps most important of all, these companies would, to a large extent, provide a captive market for the export of British goods. This is where the A.I.D. has played such an important part in the United States. It has guaranteed about £500 million worth of overseas investment, and these companies, supported by A.I.D., provide a captive market for American exports. This is something at which we should aim.

If some form of investment guarantee could be incorporated in either Section 1 or Section 2 of the Act, or, alternatively, if the Ministry of Overseas Development could consider some development in this way, I think that it would be constructive. I would, however, prefer such a system to be administered by the E.C.G.D., rather than by the Ministry of Overseas Development, because it has a mass of commercial detail already at its disposal, and it is able to assess commercial risks in oversea countries. It is for this reason that I have tabled the Amendment.

I congratulate the hon. Member for Erith and Crayford (Mr. Wellbeloved) on joining us in this discussion. We have been debating these Amendments for some time, and it is most encouraging to see that a Government back bencher has taken the trouble to join us.

Mr. Biffen

I am moved to make a brief intervention by the eloquence and force of the argument advanced by my hon. Friend the Member for St. Ives (Mr. Nott). I suppose we are all labouring under the disability of imagining that most of the legislation which would be discussed during morning sittings would be non-controversial and largely technical, yet the Amendment is designed to draw out one of the major divisions in this House between the parties concerning the relationship between this country and developing countries. Whereas hon. Members opposite lay great stress upon Government-to-Government overseas aid—the transfer of resources from one set of politicians to another—my hon. Friends and I have always argued the virtues of a free flow of capital resources between this country and developing countries, based primarily upon economic criteria. The purpose of the Amendment is to provide for Government encouragement for the flow of private capital. The Amendment is therefore of major significance, and I hope that the Minister of State, notwithstanding his Socialist principles, will be able to accept it.

Apparently it is still Government policy to discourage the outflow of investment, to the extent that the Prime Minister, in his speech in Swansea a few days ago, again said, almost as a matter of pride, that the Government had succeeded in restraining the outflow of private capital from this country. Yet all commercial history speaks to us of our success as an exporting nation based primarily upon the establishment of United Kingdom overseas companies. I have to make this argument in anticipation of the findings of the inquiry set up by the C.B.I., now being conducted by Professor Reddaway, but I have been in correspondence with Professor Charles Wilson, Regius Professor of History at Cambridge University and a distinguished economic historian, and he has argued that we would never have had success, especially with companies like Unilever's, as major international trading companies which lend great character to the export performance of this country, had they not been able to set up overseas industrial bases.

We have only to look at the dangers that exist in respect of British capital overseas today—during the last few days Tanzania has expropriated private capital—to realise that there are enough hazards for British capital overseas without the prejudice of the British Government. It is the prejudice of the British Government, so clearly underlined in the provisions of the 1965 Finance Act, which my hon. Friend the Member for St. Ives seeks to neutralise to some degree in the Amendment. It would be at least a sort of Monday morning present, to compensate for the almost total indifference and absence of Labour back benchers, if the Minister of State were to accept the Amendment.

Mr. Darling

It has been a quite interesting though short debate. I will not say that I am out of sympathy with many of the arguments put forward, but the hon. Member for St. Ives (Mr. Nott) is asking for a fundamental change in Government policy which has continued over the years. No post-war Government has adopted a policy of providing guarantees for overseas investments.

Whether the policy should be changed is a matter for debate. I would not question the need for such a debate. This is a very important issue, and I agree with the hon. Member for Oswestry (Mr. Biffen) that it is especially important when political disturbances throughout the world may affect overseas investments—whether from private or Government sources—which have been made not only to help developing countries but to assist our economy. There is always a great deal of self-interest in this kind of activity. I do not question the need for a debate, but it is hardly appropriate to attempt to make this major change in Government policy by way of an Amendment to an amending Bill.

Mr. Nott

Is it not true that Section 3 of the 1949 Act, which is now administered by the Ministry of Overseas Development, is very much concerned with overseas aid, and that if the Minister is implying that this point is outside the scope of the 1949 Act he is being a little harsh?

Mr. Darling

The hon. Member has not understood what I have been saying. I said that we cannot make this change in policy by amending an amending Bill. I was going to come on to the amending Bill, which says nothing about Section 3 of the 1949 Act. That Section deals with Government aid and investment overseas—usually Government-to-Government by way of loans, and so on—but because its activities have now been transferred to the Ministry of Overseas Development there is no reference to Section 3 in the Bill.

We have had some discussion about the United States practice. We know that the United States provides investment guarantees for United States investment overseas. This has long been established United States policy. Whether there is anything on those lines which could be useful to us is a matter that we can examine. But even if it were decided that Government guarantees for overseas investment should be introduced it would still be entirely separate from E.C.G.D.'s commercial responsibilities.

Something more is involved than providing commercial insurance for export finance. The Government must be very much involved even if they are covering what the hon. Member for Oswestry wants—a great deal more private investment overseas—because much of this is not commercial cover; it has to be special cover. Sometimes we do not know whether investment from this country will ever be paid back, let alone whether a period of repayment can reasonably be laid down. There are all kinds of qualifications, and risk-taking activities would have to come in. If we had discussions about the need to insure British investment overseas, in my view we would have to arrange it quite distinct from E.C.G.D.'s ordinary commercial activities.

Mr. Nott

The Minister talks about the difficulty of knowing whether or not investment will ever be paid for. Does he nevertheless agree that the Treasury has recently tried to lay down rules by by saying that any future investment is supposed to pay for itself in the most extraordinary time scale of three years?

Mr. Darling

I shall not argue about the Treasury's time scale. The hon. Member's intervention gives me my point—that this matter must be arranged outside the ordinary commercial activities of E.C.G.D.

During the course of his most interesting observations the hon. Member for St. Ives went further than the question of ordinary investment overseas; he talked about services provided overseas, such as consultancy services. These can be covered by E.C.G.D. as it is.

Mr. Nott

The Minister has misunderstood what I was saying. I was only saying that A.I.D. in the United States, when providing investment guarantees, does not insist that it should cover only the investment of cash. It says that it can also cover the investment of services in respect of a United States company operating overseas.

Mr. Darling

There seems to be some confusion about this. I did not misunderstand what the hon. Gentleman said. I was pointing out that if one is to have the two separated, services from investment, those services can in many cases be covered by the ordinary E.C.G.D. arrangements.

As I pointed out, since this is not the Measure in which to make a change of this kind—an Amendment of Section 2 or 3 of the parent Act would probably be more appropriate for a change of this kind—and since acceptance of the Amendment would mean a complete and fundamental change in Government policy, I ask the hon. Gentleman to withdraw the Amendment, but not to give up probing and questioning Government policy on this issue.

11.30 a.m.

Mr. Higgins

Before commenting on the Amendment, I must draw the attention of the Government to the fact that we are considering an important Bill in a Committee of the whole House. It would seem that if this occurs during morning sittings it will not be possible for the Opposition to obtain a Count or Government quorum. In Standing Committee it would have been possible for my hon. Friends to have ensured that an adequate number of Labour hon. Members were present to hear this important discussion. We therefore appear to be varying our normal procedure, and I hope that that is being noted.

The Minister said that if the Government accepted the Amendment it would involve a complete reversal of Government policy. But that would be the case only if the Government were totally against any form of private investment. My hon. Friend the Member for St. Ives (Mr. Nott) is suggesting a change of emphasis and is anxious to encourage private investment. For the cogent reasons put forward by my hon. Friends in favour of the Amendment, it will be obvious to the Minister that we believe that private investment based on commercial principles may be one of, if not the, most important ways in which aid can be given to developing countries.

In view of the emphasis the Government have placed on the question of aid generally, it is surprising that more hon. Gentlemen opposite have not taken part in this debate. The Bill makes certain changes in aid policy. On Second Reading the Minister stressed that in future responsibility for making Government loans would be transferred from E.C.G.D., the mechanism previously employed, to the Ministry of Overseas Development, although I understand from subsequent correspondence that Section 3 of the parent Act is to be retained. For reasons which I gave on Second Reading, the Government are adopting u debatable policy in this matter, and I will return to this subject on Third Reading.

The principal Act is concerned with aid and provides possible machinery for assisting aid. It is, therefore, reasonable that my hon. Friends should suggest that E.C.G.D. should again be employed to assist our aid programme in the way suggested in the Amendment. For this reason the Government can have no quarrel with the views of my hon. Friend the Member for St. Ives, and I trust that the Minister will take a more enlightened view about this whole matter.

The whole operation of the parent Act and the Measure which is now raising the limits draws a fine line between the question of exports and the question of investment. Once one gives export credit, the impact of that on the balance of payments for exports and investment is very much the same. In both cases one ships goods from this country. That has an adverse effect on our balance of payments until payment for those goods is received. There is really no difference in principle between the export of goods which are purchased by a foreign person on credit and investment in goods shipped to a foreign country. In both cases the initial effect on our balance of payments is adverse. When the remittance is received, either for the export of the goods or the return on the investment, our balance of payments benefits.

On what criteria do, the Government draw the line between exports and investment in overseas countries? We are entitled to a further explanation and I advise my hon. Friend the Member for St. Ives to await that explanation before considering whether or not to withdraw the Amendment.

Mr. Webster

I understood that morning sittings were designed to enable the whole House to debate, in Committee or otherwise, non-controversial business. My hon. Friend the Member for St. Ives (Mr. Nott) has moved a most important Amendment which the Government have resisted. That action was taken by a Minister who completely lacked support from his back-benchers for at least one-and-a-half hours—that is, until at least, perhaps as a result of my taking the unusual step of sitting on the Government side of the Committee, another Labour hon. Member appeared on the scene. This follows the incident last Friday, when another valuable section of industry and the economy, the small businessman, was being debated and when, apart from one P.P.S. and the Minister, the Opposition had to discuss the issue before otherwise empty Labour benches. Since we were supposed to discuss non-controversial matters during morning sittings, perhaps the House of Commons should now take the view—

The Chairman

Order. It is appropriate for the hon. Member to make incidental references to the value or otherwise of mornings sittings, but he cannot debate the whole question of morning sittings on this Amendment.

Mr. Webster

I shall try to keep in order, Sir Eric, although, sitting on this side of the Committee, I may find that somewhat difficult to do. It is a matter of grievous wrong that the Minister should have resisted the admirable Amendment moved by my hon. Friend.

Mr. James Wellbeloved (Erith and Crayford)

I came into the Chamber to receive the acclamation of the hon. Gentleman and his hon. Friends. I have heard nothing from him or his hon. Friends which will long delay my departure.

Mr. Webster

Not having been present for one and a half hours, the hon. Gentleman obviously has no interest in morning sittings and simply wants everything to be pushed through as though Parliament were a rubber stamp. There was a complete apathy of Government supporters last Friday—

The Chairman

Order. I suggest that the hon. Member addresses himself to the Amendment.

Mr. Webster

My hon. Friend the Member for St. Ives is proposing something which is valuable to our export effort, yet it has been resisted by the Government. This would appear to be making morning sittings a controversial matter and I would like to know what we can do about it.

Mr. Biffen

Would not the hon. Gentleman agree that that is even more the case since the T.U.C. has this morning indicated in its pre-Budget advice to the Government its wish to see measures taken to make exporting more profitable?

Mr. Webster

I agree with my hon. Friend. Although I am sitting on this side of the Committee, I hope that he will continue to call me his hon. Friend.

Since the Government are resisting an Amendment which is designed to aid our export effort, I should like to know what procedure my hon. Friend the Member for St. Ives, or any hon. Member who finds himself in this position, can adopt when faced with Government resistance of this kind. I hope that you, Sir Eric, or the Minister will explain how one may obtain redress in these circumstances or press a matter to a Division during morning sittings.

Mr. Kenneth Lewis

May I have an assurance from my hon. Friend the Member for Weston-super-Mare (Mr. Webster) that when a Division takes place he will come over to this side and vote with us?

Mr. Webster

As usual, I shall of course judge the matter on its merits. If we can get a more satisfactory answer from the Government we can allow the matter to proceed, but I protest at the lack of support of hon. Members on the Government side in morning sittings.

Mr. Nott

On a point of order, Sir Eric. Could you give some guidance on this? If the Amendment had been considered in Committee upstairs I would have had no doubt about our definitely dividing on it. As we are in Committee of the whole House, and in a new morning sitting, should not precisely the same guideline apply? Perhaps you can assure me that that is the case?

The Chairman

We are not in Committee upstairs but in Committee of the whole House. Therefore, a morning sitting is governed by the Sessional Order of 14th December, by which if a Motion is challenged it is necessary to defer the Division until the afternoon sitting.

Mr. Darling

I think I had better intervene here. I discussed the proceedings for this morning's sitting with the hon. Member for Worthing (Mr. Higgins) when I did not know what Amendments would be on the Notice Paper. He assured me that there would be some Amendments and he gave me an idea of their nature. He told me that in the main—I think entirely—they would be probing Amendments. On that assurance, having been given the idea that they were to be probing Amendments, when my hon. Friends asked if there was any controversial business on the Export Guarantees Bill this morning, I said "No". I did not anticipate that on the Amendments to be put down there would be any controversial business whatever. I was given an assurance that there would be no filibustering whatever, in so far as the Opposition Front Bench could give that assurance.

Mr. Higgins

It is perfectly true that I pointed out that an hon. Friend and I were putting down an Amendment which certainly is a probing Amendment. I think it has been selected, or perhaps we could discuss it on the Motion, "That the Clause stand part of the Bill". But I am not in a position, of course, to give a clear undertaking about Amendments put down by my hon. Friends. Still less could I indicate their feeling about morning sittings.

Mr. Darling

It would be very difficult indeed to find anything politically controversial in this Bill. What I found surprising was the constant change of heart by the Opposition. This was quite unanticipated because never in the past when they were in Government have they been in favour of investment guarantees. This is a new point.

I anticipated a probing Amendment, but if it is suggested that the E.C.G.D. should be used to provide guarantees for investment overseas, that is something we shall have to look at very carefully indeed. I certainly cannot answer the question offhand at such short notice and discuss the whole range of the Government's investment policy, which is a matter for the Chancellor of the Exchequer. I should be glad to take the hon. Member on if I thought that there was to be an Amendment of such a wide-ranging character, but in the circumstances of today I certainly cannot respond to his invitation.

Mr. Higgins

I am sure that the right hon. Gentleman will appreciate that I was raising the points I raised in the sense of probing for answers to see if we could find the criteria which the Government employ in drawing the line between credits given for exports and credits given for investments. I am sure that he will appreciate that the line is rather fine, and it may be that successive Governments have adopted precisely the same criteria. It would be helpful if what these are could be stated. We would then be in a better position to understand the problem.

11.45 a.m.

Mr. Graham Page (Crosby)

On a point of order, Sir Eric. If a Division is challenged on a subject in Committee on the Floor of the House, a decision has to be postponed until the end of the sitting. I presume that the House can then not proceed to Report stage because then we would not know what is in and what is out of the Bill. It seems a most confusing position if a Division is challenged now on this Amendment and we are left in doubt as to whether the Amendment has been made or has not been made. It would therefore be impossible to go on to the remaining stages.

The Chairman

I think that the hon. Member has misunderstood the position. If a Division is challenged on this Amendment I shall vacate the Chair and in the House I shall have to be informed of a Motion to report Progress and to ask leave to sit again. The result would be that the Division would be deferred to this afternoon's sitting and the proceedings on the Bill would be adjourned to another day, and at this morning's sitting we would proceed to the Adjourned debate on the Salop (No. 2) Order.

Mr. Kenneth Lewis

On a point of order, Sir Eric. We are in difficulty. If we were in Committee upstairs some of us would feel it right to vote for the Amendment, but we do not want to create a wrecking procedure. [Hon. MEMBERS: "Oh."] If you called for a vote, as you would, the Question would not go to a Division, you would collect the voices. It seems reasonable that when Amendments which are important are put down, Ministers should not assume that they are important only to the Front Bench on the Opposition side. They can be equally important to the back benches. The Government should have a sufficient number of hon. Members present on their side so that when you collect the voices those on the Government side would be greater than those on this side and there would not have to be a Division. The Government should look after their own business in this connection.

The Chairman

In so far as the hon. Member has raised a valid point of order, the position is that it is my duty to give effect to the Sessional Order passed by the House on 14th December which provides the procedure to be followed in the event of the House or a Committee of the whole House wishing to divide on an Amendment.

Mr. Nott

It certainly is not my wish to be obstructive in any way. The Amendment was put down when I first thought of it last Thursday as a probing Amendment. Arising from this debate I deprecate, first, the suggestion by the Minister that because my Front Bench did or did not agree with an Amendment I was under some obligation to let it go forward or to withdraw it. I reject that entirely. Because certain of my hon. Friends had a policy in 1952, that does not necessarily mean that we should follow it in 1967. Therefore, I wholly deprecate the suggestion that a backbench Member cannot press an Amendment.

I also deprecate the fact that for three-quarters of an hour or more when we were debating this Amendment there were no back-bench hon. Members of the Government party present. That I find very strange in view of the fact that understood there was an arrangement whereby the Whips put certain pressure on hon. Members to go through the Division Lobbies to vote for morning sittings.

The Bill sets out an increase on the level of guarantees which the E.C.G.D. makes available, and that is something with which we on this side of the Committee are in full accord. For this reason I beg to ask leave to withdraw the Amendment, on the basis that the Minister will bear the Amendment in mind because it could have a most interesting and perhaps beneficial effect on exports.

Mr. Biffen

May I raise a point of order before my hon. Friend gets the leave of the House to withdraw the Amendment? My difficulty is, I think, shared by the Parliamentary Secretary to the Ministry of Housing. If a Division is called on this Amendment, then, as I understand your Ruling, Sir Eric, we proceed to discuss the Salop (No. 2) Order. If, on the other hand, leave is given and my hon. Friend charitably withdraws the Amendment, I take it that we shall continue with a further Amendment and consideration of the Export Guarantees Bill. This could conceivably take a considerable time, and there will be no more time to discuss the Salop (No. 2) Order. The Order will be out of time.

Therefore, my dilemma is that, unless I can get from the Patronage Secretary or one of his aides some guidance and assurance that the Order will be debated either later this morning or on Wednesday, I will be in the embarrassing position of having to challenge the Question that leave of the Committee be given to the withdrawal of the Amendment, as the only way in which I can get the Order debated this morning.

The Chairman

The hon. Member is quite right that, as I have said already, if a Division is challenged on this Amendment, we then proceed immediately to the adjourned debate on the Salop (No. 2) Order. If the Amendment is, with the leave of the Committee, withdrawn, we will then proceed with the rest of the debate on this Bill. It is purely hypothetical whether we shall then reach the adjourned debate on the Salop Order and I cannot help the hon. Member to resolve his dilemma about what to do. In the general interests of the House, perhaps we ought to proceed.

Sir John Langford-Holt (Shrewsbury)

Further to that point of order. I should like this cleared up. I understand that, if a Division is called on this debate, as we are in Committee, the House can resume its sitting. Had we, on the other hand, been sitting as the House of Commons, the adjournment of the whole House would then take place. Am I right in so thinking?

The Chairman

That is a hypothetical question about what we should have done if certain things had arisen. I can only take the situation as it is, on today's Order Paper. Bearing this in mind, I think that we ought to proceed.

Mr. Anthony Kershaw (Stroud)

Further to that point of order. I cannot follow why it is necessary to adjourn the Committee if a Division is called. Why should we not agree that a Division has been called and then proceed with the next part of the debate in Committee?

The Chairman

Because I am governed by the provisions of the Sessional Order passed on 14th December. If a Division is called in Committee, I then have to adjourn the proceeding in the Committee and the House then proceeds to the next item of business.

Mr. Biffen

Further to that point of Order. I hope, Sir Eric, that you appreciate that I am in a genuine difficulty. I am tempted to challenge the Question that leave should be given for the withdrawal of the Amendment, unless I may have some indication from the Front Bench, through a point of order, that debate on the Salop (No. 2) Order will be preserved, either for later today or on Wednesday. Might I appeal, through you, Sir Eric, for some indication from the Government Front Bench?

Mr. Jasper More (Ludlow)

Is this not a matter which the Leader of the House should be brought here to deal with? This matter affects all the Shropshire Members, myself included. We understand that the praying time cannot be continued beyond next Wednesday. If we cannot have some guarantee about time, my hon. Friend would have to take a course of action which he would not otherwise wish to take, to protect his own interests.

The Chairman

The hon. Member will appreciate that it is not a matter for me to give any such assurance. All hon. Members must be free to exercise their own judgment of what they should do.

Mr. Kershaw

Further to that point of order. Everything said by my hon. Friend the Member for Oswestry (Mr. Biffen) applies with even greater force to me. I hope to catch the eye of the Chair on the Order which follows the Salop Order—the Gloucester Order, on which also time is running out. As it seems unlikely that the Gloucester Order will be reached, even if the Salop Order starts in the next two or three minutes, how am I placed?

Is it not possible—I know that this is not a point of order—for somebody from the Front Bench to give some indication and for someone to find out where the Leader of the House is? Does the Leader of the House know about these morning sittings? Would he be able to come along occasionally?

Mr. Darling

Further to that point of order. I would point out that no hon. Member on this side has held up the proceedings to prevent these two important Orders being discussed.

Mr. A. P. Costain (Folkestone and Hythe)

Further to that point of order. You will recall, Sir Eric, that, at business time last Thursday, I was particularly concerned about this Order and raised the matter with the Leader of the House. He then gave the assurance that he wished the Order to be debated. Would not the representative on the Front Bench now confirm that what the right hon. Gentleman said is true, because it has a great bearing on this?

Mr. Webster

Is it not a fact that this Salop Order is a matter of great principle which could affect many other local authorities in due course and that the great increase in delegated legislation makes this very important? Cannot the Leader of the House be sent for to assist the House? Is he even in London? Can his P.P.S. come here to assist us? We must have some protection for the rights of our constituents.

The Chairman

These are matters of great importance and I should have thought that we would have made more progress if we got on with one or other of the items of business.

Is it your pleasure that the Amendment be withdrawn?

Hon. Members


Question put, That those words be there inserted.

The CHAIRMAN'S opinion as to the decision of the Question being challenged, he left the Chair to report Progress and ask leave to sit again pursuant to Order (Sittings of the House (Morning Sittings)).

Mr. DEPUTY SPEAKERresumed the Chair and The CHAIRMAN OF WAYS AND MEANS reported, That the Committee had made Progress and asked leave to sit again.

Mr. Deputy Speaker (Sir Eric Fletcher)

Pursuant to the Sessional Order of 14th December, the Division on the Amendment proposed by the hon. Member for St. Ives (Mr. Nott) is deferred until this afternoon's sitting and will take place, pursuant to the Sessional Order, at the time when a member of the Government shall have signified to the Chair his intention to move, "That this House do now adjourn".

The Proceedings stood deferred.