§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harold Walker.]
§ 12.30 p.m.
§ Sir Gerald Nabarro (Worcestershire, South)
On the Motion for the Adjournment, I wish to raise a matter of which I gave notice on 18th April last having regard to the highly satisfactory reply which I then received from the Chancellor of the Exchequer on the matter of travel allowances for British citizens travelling oversea outside the sterling area.
It is, perhaps, quixotic—it depends on one's sense of humour—that the United Nations has promoted in 1967 International Tourist Year. The Treasury has decided throughout 1967 to apply the strictest and most stringent limitation of funds available to British nationals travelling abroad which have ever been known in recent history.
Of course, it fell to the Tories in the early 1950s virtually to abolish the nonsense inaugurated by the late Lord Dalton and Sir Stafford Cripps after the war in trying to restrict what British citizens should spend abroad. We abolished it. We kept a notional limit of 1080 £250 per person per annum on the travel allowance, but anybody could have more if he wanted it.
On 20th July, 1966, the Prime Minister decided, for no economic reason as far as I can tell, to impose a £50 limit on the travel allowance for British citizens abroad. That £50 was computed thus. The total number of British citizens travelling outside the sterling area was divided into the aggregation of expenditure and it was decided that the average expenditure per person was a trifle less than £50. The Chancellor therefore decided on a £50 limit.
I now proceed with some Parliamentary quotations. In his Budget statement on 11th April last, the Chancellor of the Exchequer used these words:The present restrictions on travel expenditure provide a useful gain."—[OFFICIAL REPORT, 11th April, 1967; Vol. 744, c. 994.]In due course I asked the Chancellor of the Exchequer, on 18th April, what was the gain. I asked:what saving in foreign exchange during the year ended 5th April, 1967, resulted from the £50 foreign currency limit applied to British people travelling abroad outside the sterling area".The Chancellor replied:Travel statistics for the year mentioned are not yet available."—[OFFICIAL REPORT. 18th April, 1967; Vol. 745, c. 292.]On the one hand, therefore, the Chancellor misled the House in his Budget statement by saying that there was a useful gain; and a week later he came back and said that he could not quantify the useful gain. That is a further example of Treasury deceit—I repeat, Treasury deceit—which I dislike very much indeed, because I like Chancellors of the Exchequer to be utterly candid and truthful with the House of Commons. I gave notice that I would raise the matter.
My hon. Friend the Member for Belfast, North (Mr. Stratton Mills), who has been campaigning with me in this important matter, asked the Chancellor on 13th JuneIf he will make a statement reviewing the results of the £50 travel allowance; and what proposals he has for increasing it.The Chancellor replied:No, Sir. Meaningful figures will not be available for some time after the main holiday season is over."—[OFFICIAL REPORT, 13th June, 1967; Vol. 748, c. 295.]1081 That awful word—"meaningful". The Prime Minister used it twice in his D Notice statement last week—"meaningful", Parliamentary jargon to replace "purposive" from the last General Election or the "white heat" of the technological revolution which we have yet to see. I hope that the Financial Secretary will not use the word "meaningful" today.
My first complaint, therefore, is that the Chancellor said that there were useful savings, but he will not tell the House of Commons what they are. Indeed, he now informs my hon. Friend the Member for Belfast, North and myself that he is not in a position to quantify what those savings will be.
I am not alone in these matters. Almost the entire national Press is now with me, as witness an important contribution from Professor A. J. P. Taylor, who is no friend of the Tory Party or of mine, who wrote on 26th March:The £50 limit is not of the slightest use to our economic circumstances and never has been. It was merely the worst panic-measure in a series of panic-measures. The imposition of the limit did not bring any benefit during the weakness of the £. Foreigners were not impressed. They simply thought that the British Government must have lost its senses to rely on such a foolish measure.Of course, the learned professor was exactly right when he wrote those words in the Sunday Express of 26th March.
Professor Taylor was followed by the Daily Mail on 6th April in its leading editorial, which printed these words:And now, surely, Mr. Callaghan can afford to lift that annoying £50 limit on holiday travel allowances. It never was a serious economic measure, but was imposed to show the world we meant business in dealing with our economic problems. Now, it would make equally good sense to abolish it or at least raise it to its pre-squeeze figure of £250 to show that not only did we mean business but that we are succeeding.The Daily Mail followed with words of great wisdom:People will always respond to leadership whereas they will do their damnedest to evade petty restrictions",as these restrictions are largely being evaded.
Various professional bodies are concerned with tourism, notably during the United Nations International Tourist Year, when the British Government have gone so sour on the United Nations by 1082 their restrictions on travel allowances for British nationals. The British Travel Association says in its report to me on the matter that it seems quite certain that the internal credit squeeze is having a far greater effect on United Kingdom citizens travelling and spending abroad than the £50 allowance. Bookings for holidays in 1967 are at the same level as they were in 1966. All of which underlines my view that there is no overall saving whatever by foreign travel allowances. The statistics furnished to me by the British Travel Association support that view.
I want, however, to quote what I believe to be an important statement by Lord Geddes, Chairman of the British Travel Association, who said at the annual general meeting, last October.
We were disappointed when the Government introduced a currency restriction on our own people travelling abroad, partly because we do not think that currency restrictions are effective, but principally because, appreciating this country's present economic situation, we believe that positive action to expand trade and to compete with our rivals were the right answers. We hear increasing references to the importance of tourism in the balance of payments.It is right that attention should be given to this matter, but there is still a great misunderstanding about the situation. Travel spending by British people going abroad is often compared with earnings from visitors to this country—as though the two should balance. But there is no direct connection between the two. Do we measure our imports of oil against our exports of coal, and cut down on the former in order to obtain what I suppose would be called a balance of fuel? That would be economic nonsense—and so would be any attempt to achieve a balance of payments in tourism.All one can say is that travel restrictions in one country tend to encourage restrictions in others; and we can only hope that Her Majesty's Government will find it possible to lift the £50 limit before our own tourist trade is affected by it.Here are the supporting statistics. In 1965, there were 4.9 million United Kingdom visitors travelling overseas. They spent £290 million outside the sterling area. In 1966, there were 5 million people travelling abroad. They spent £301 million. The estimate for 1967, again from the British Travel Association, is 5 million visitors travelling abroad, and the total expenditure will be roughly the same at £300 million. Therefore, there is no change as a result of all this wretched paraphernalia of minute 1083 restrictions on British people going abroad, and there is no estimated saving in foreign exchange.
Since 1965, we have seen an increase from 2.776 million people coming into Britain to an estimated 3.5 million people this year. The incoming money has increased from £321 million in 1965, including air fares, to £380 million in 1967. The two are not quite in balance, but they are not very far removed the one from the other, if it is the Treasury's policy to try to bring them into balance, the incoming and the outgoing.
I continue by quoting one further contribution in the national Press, again not from a friend of the Tory Party or even a friend of mine. In fact, I am named in the contribution. It appeared on 30th March, 1967, in The Guardian, written by the Financial Editor, Mr. William Davis. For some curious reason he says:Sir Gerald Nabarro is not the best possible champion for this particular cause.He is referring there to the foreign travel allowance. I do not know why he says that. It is a rather misguided statement. However, he continues in a very sensible vein when he writes:The classic Whitehall solution is to prevaricate. This is easy enough: one simply says that serious consideration should be given to raising the travel allowance when the 1967 tourist season is over. By then, the Treasury should have figures to show whether the whole exercise was worth while, and the Bank of England should be a bit less fretful about sterling. Few holiday-makers would take advantage of the higher limit until 1968, but an announcement that it would go up to, say, £100 exactly one year after the emergency figure became effective might boost the morale of middle-class types who are brassed off with the Labour Government's apparent disdain for any sort of incentives.The whole of the middle class is "brassed off" with the Chancellor of the Exchequer and his Treasury colleagues, who discriminate against the great middle class of Britain, 5 million of whom believe in taking their holidays outside the sterling area and who are gravely concerned about the humiliation heaped on British heads when they are treated overseas, as the poor relations of the Common Market and the Iron Curtain countries.
I do not like being regarded overseas as lower than the Albanian tourist for the sum of money which my Government will allow me for my holiday peregrinations 1084 round Europe. Neither do 5 million other British people, especially when it serves no economic purpose. Accordingly, I want to see the abolition of the £50 limit at the end of this travel year, namely, on 31st October next. I believe that the present limit is futile economically and has resulted in no overall saving in foreign exchange. If the Financial Secretary wishes to disagree with me, perhaps he will quantify the statement made by the Chancellor on 11th April last that there is a useful saving in foreign exchange. If he cannot, I shall endorse the words of Mr. William Davis that the Chancellor is prevaricating.
In my judgment, it is utterly humiliating that Britons overseas outside the sterling area should be regarded as second-class people. I endorse the views of the Chairman of the Conservative Party, my right hon. Friend the Member for Taunton (Mr. du Cann), who said in a speech in the West of England last Saturday, reported in the Sunday Express of 18th June:A British passport not so long ago was virtually a guarantee of safe conduct. Today it is almost a provocation to insults in too many countries.The travel allowance aids and abets those insults.
§ 12.45 p.m.
§ Mr. Stratton Mills (Belfast, North)
I am grateful to my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) for allowing me a few minutes in which to add to his forceful remarks.
I want to remind hon. Members of the words of the Chancellor of the Exchequer on 13th June, in reply to a Question of mine, in which he said:…the travel allowance is certainly adequate for the holiday needs of most families in this country when they go abroad."—[OFFICIAL REPORT, 13th June, 1967; Vol. 748, c. 295.]My complaint is that the Chancellor has twisted that argument into a typical Socialist point that only the rich suffer from his measures. I complain on three grounds.
First, these measures make it impossible for people to have two holidays abroad a year. I would remind the Financial Secretary that very many people, particularly the young, have got into the pattern of having a short ski-ing holiday in the winter and another 1085 cheapish holiday during the summer, and that they make considerable sacrifices to those ends.
Second, it is virtually impossible for people to have more than a fortnight's holiday. I remind the hon. and learned Gentleman that many people, particularly the elderly, enjoy having slightly longer than 14 days in the sun.
Third, it is clear that the £50 allowance greatly restricts the choice of places where British tourists can stay. The hon. and learned Gentleman may not be aware of it, but I have been looking at a booklet published by Sir Thomas Cook & Son which shows that British tourists are restricted to relatively modest hotels costing less than £3 a day. If they want to go to a better hotel, they can afford to stay for only one week. For example, France, Italy and Switzerland are very expensive countries, and many British tourists find themselves in difficulty. In Lucerne, out of 16 hotels listed, in seven of them a British tourist can only afford to stay for one week. Similarly, in Greece there are 22 hotels shown in Thomas Cook's booklet, in 12 of which British tourists can only stay for one week, the reason being that many of the hotels cost a little more than £3 a day.
I think that this is a typical piece of Socialism. Our Socialist masters are trying in yet one more measure to regulate our lives and are laying down a Treasury diktat that British tourists shall not have more than one holiday a year, that they shall not have more than 14 days' holiday and must stay in a modest hotel costing not more than £3 a day. That is Socialism, and I join with my hon. Friend in condemning it.
§ 12.48 p.m.
§ The Financial Secretary to the Treasury (Mr. Niall MacDermot)
The hon. Member for Worcestershire, South (Sir G. Nabarro), as usual, began his speech with inaccuracy and ended with prejudice. He said that this was the strictest ever travel limit imposed. It is not. The strictest ever travel limit was imposed by his own Government in 1952, and the limit was £25. He says that it was done for no economic reason that he could see. He knows perfectly well why it was done.
He argues that it is not achieving its object, which is to make a saving to assist our balance of payments. Let me begin by reminding hon. Members that 1086 expenditure on foreign travel by United Kingdom residents in non-sterling countries is substantial and has been rising rapidly. In 1958, it was £112 million. In 1966, it was almost double, at £221 million. If it be right, as the hon. Gentleman says, that there has been no change in the year following the imposition of the restrictions, that does not mean that there has not been a substantial saving.
Then he attacked the way in which the £50 limit was arrived at. It is correct that the average expenditure in Western Europe by United Kingdom residents for visits of all kinds was some £43. With the £50 travel restriction plus the £15 which people are allowed to take in sterling notes, each individual's expenditure is likely to be of the order of £60.
In 1965, only 27 per cent. of travellers to Western Europe spent more than £60 a visit but they accounted for 52 per cent. of the spending and between them they spent about £75 million; 6 per cent. spent more than £100 a visit, accounting for £24 million, and that was 17 per cent. of holiday spending by travellers to Western Europe. These figures show that the £50 allowance is adequate for the needs of most families going abroad, but that the restriction bites on a significant number who are in a position to spend much more than the average and, but for the restriction, would spend more.
I thought that the attempt by the hon. Member for Belfast, North (Mr. Stratton Mills) to show that the restriction was affecting the poorer people was rather fanciful. I wonder how many people with an average rate of earnings in this country are in a position to have two holidays a year, and to stay for more than a fortnight in hotels which cost more than £3 a day? I think that the fact that he uses such an argument indicates how out of touch he is. But I was grateful for his tribute to the work of the nationalised Thomas Cook & Sons.
I come now to the extent of the saving. It is said that because the figure cannot be quantified it means that there is deceit by the Chancellor—"Treasury deceit" was the hon. Gentleman's phrase. I imagine that as a businessman he usually knows whether his business is making a profit or a loss, even if he is not in a position to quantify the profit or loss until the end of the year.
1087 Tourist expenditure does not represent a steady outflow which one can compare for one quarter by looking at the preceding one. The time of heavy spending is only just starting, and will run on until the autumn. It is obviously at this time that the restrictions for the current year will have the most effect. The information about expenditure takes some time to process. We cannot hope, before December, to have meaningful figures of the actual expenditure for this holiday season, and even then there will be problems of comparison with the necessarily hypothetical estimate of what they would have been without the restrictions, owing to the rising curve of travel expenditure.
There is no doubt that a useful saving is being achieved, and although there is no statistical evidence there is plenty of other evidence to show it. First, there are the numerous applications for an additional allowance which are being refused, and the many letters of complaint on refusal. In this connection, I may say that it is perhaps not surprising that everyone thinks his case for a special allowance is unique.
Second, there are the efforts—and I pay tribute to them—of the travel trade to arrange cheaper holidays, sometimes by securing more advantageous terms from foreign hoteliers, so that they are able to offer a wide range of package holidays which can comfortably be fitted into the basic allowance and still leave the holidaymaker with an adequate spending allowance.
Third, I think, there is the evidence to which the hon. Gentleman referred, namely, the statement in the ordinary and trade Press of a disappointing season for travel agents. The hon. Gentleman suggested that this was all attributable to the credit squeeze. This is, of course, a matter for judgment, but I think that the travel allowance limit will have had an effect on this; one has to look at the effect of the July measures as a whole, as a package designed to achieve these savings in our balance of payments. All this adds up to substantial evidence that the restrictions are providing a useful gain, even though the extent of the gain cannot yet be quantified.
The hon. Gentleman referred to evasion. There have been some articles 1088 in the Press about evasion of these restrictions and suggesting ways in which it can be done. There is evasion of all laws, but all the methods which I have seen discussed involve infringement of the Exchange Control Act. It is unfortunate that the Press which has given publicity to this has done so, and, in particular, has not pointed out that anyone who follows these measures will render himself liable to heavy penalties. The Treasury already has a number of inquiries on foot into cases of misuse.
The hon. Gentleman did not refer specifically to the anxiety of the travel trade for an announcement about what the arrangements will be for the next travel year starting on 1st November, but I know that he is aware of this point, and, of course, we are. We fully understand the concern of the trade. As I said in reply to a recent Question from the hon. Member for Blackpool, South (Mr. Blaker), my right hon. Friendhopes to make an announcement before long."—[OFFICIAL. REPORT, 6th June, 1967; Vol. 747, c. 162.]I am not in a position to make the announcement this morning, but I can tell the House that an announcement will be made before the end of this month.
Finally, the hon. Gentleman said that he thought these restrictions were leading to British people being held up to contempt abroad.
§ Mr. MacDermot
There are two major international bodies concerned with payments between countries—the International Monetary Fund, and the O.E.C.D. Our fellow members of these organisations have all agreed that we should impose these restrictions on travel. Some of them will feel the effect quite sharply, but in spite of this they realise that the Government are determined to put the country's balance of payments position right, and to strengthen the £.
So far from that earning us any contempt, or them thinking that we are humiliating ourselves, our determination to achieve this end, and the fearless use of measures which are bound to be unpopular, commands respect in all informed quarters abroad. It is worth 1089 adding in this connection that no Governments have pressed us to remove these restrictions, nor have any Governments taken any retaliatory action. We know—and we knew when we imposed them—that these measures are unpopular. These are not restrictions which any Chancellor —or any Government—likes to impose. My right hon. Friend will be delighted to raise them as soon as he can, but for the reasons which I have given we believe that they are making a useful contribution to the substantial improvement which is gradually taking place in our balance of payments, and we must ask members of the public travelling abroad to put up with the inconvenience which results from them.
1090 As I have said, and as the continuing large number of people who travel abroad shows, the restrictions are not prohibitive. They allow people to take holidays abroad. We are not trying to prevent them. All that we are seeking to do is to put some restraint which will operate in particular on those who have been putting a heavy burden on our foreign balance of payments position by spending sums considerably above the amounts which are now permitted.
The debate having been concluded, Mr. DEPUTY SPEAKER suspended the Sitting until half-past Two o'clock, pursuant to Order.
§ Sitting resumed at 2.30 p.m.