§ 4.12 p.m.
§ Mr. Ted Leadbitter (The Hartlepools)
I beg to move,That this House takes note of the Sixth Report from the Estimates Committee in the last Session of Parliament relating to the Promotion of Exports and of the Departmental Observations thereon (Command Paper No. 3854).I commend the Report to the House and take this opportunity to thank the President of the Board of Trade and the Secretary of State for Foreign and Commonwealth Affairs for their observations upon it and for their outstanding co-operation with myself and members of the Sub-Committee of the Estimates Committee on both sides of the House. The Committee would also like the sincerest thanks to be made to the officials of the Board of Trade, the Special Services Branch of the Central Office of Information, the Diplomatic Service, those representatives who came from research and consultative bodies, the representatives of export houses, associations, agencies and councils, and those representatives who came on behalf of industry, commerce and a variety of organisations, and who, during the 18 occasions when the Sub-Committee sat, gave their evidence.
I would also like to convey thanks to the many people who wrote to us. On 27th December, 1967, we published in The Times an invitation for comment from industrialists and businessmen. We were very pleased with the response. We had 70 replies and I want to place on record our estimation of their great value and our appreciation of the interest of these trade organisations and private persons, and their welcome response.
One of the special occasions during our examination of the promotion of exports was our visit to Birmingham. I would like to convey thanks to the officials of the Midland Regional Office 1690 of the Special Services Branch, the chairman and members of the Birmingham Chamber of Commerce. They provided us with a good deal of information, and the best thing that I can say about all of these gentlemen is the fact that we discovered each and every one to be excellent ambassadors of Birmingham and its surrounding area.
It is with a great deal of personal and exceptional pleasure that I finally accord thanks to our Committee Clerk who served the Committee patiently and extremely efficiently, with the diligence characteristic of the standards of the staffing of the House, and, in this case in particular, the Committee Clerks' Office and its Chief Clerk.
There is a tinge of sadness about the Report. It will be noticed that on the Order Paper the name of one member is missing. I would like to say how very sorry we are on the Estimates Committee that we do not have with us the late hon. Member for Chichester, Mr. Loveys, who did excellent work during the whole of the examination. It is a tinge of sadness, but this is an indication of his great value to the Committee.
I have already indicated the wide-ranging kind of work done by the Committee. It deals with the bread and butter of the nation. It has sought to evaluate the amount of Government assistance and the worthwhileness of it in the promotion of exports. It has certainly had available to it a wide area of knowledge, experience and professionalism. The Sub-Committee found men before it who were export-minded, export-poised, resilient, critical, essentially promoters of Britain. We found more when we went, informally, to the B.B.C. Overseas Services offices. This arose from its knowledge of our examination.
A point which concerns me and all members of the Sub-Committee and no doubt everyone in the country, is that against this background of good work and good will the B.B.C. at home often attempts to make opportunities to denigrate Britain. This is usually to be found in the national Press, although there are some exceptions. This succeeds in countering the good work of promoting exports and "knocks" Britain unjustifiably.
1691 Our recommendations are in more constructive fashion. Past experience and progress have produced the conditions for some reshaping, some retooling of the instruments, which we feel to be necessary to obtain for our exporting industries their marginal advantages, increasingly required in a competitive world. The Sub-Committee was satisfied with the response of Government Departments to these recommendations.
I take this opportunity to assert the need for a close and continuing consideration of our proposal that the Export Policy and Promotion Division and the Commercial Relations and Export Divisions of the Board of Trade should be combined into a single Department, having a distinctive name with a distinctivesituation. This would help to improve communications with the outside world and remove some of the confusion in communications. It would establish all the advantages of integration of services, including the use of equipment, the analysis of information, and the economic employment of manpower, comparable to the pace and demand of inquiries as well as the magnitude and the momentum of world trade.
There is too much one-way traffic within Government Departments. Renewed efforts should be made to exchange staff with industry. The barriers of status, training, promotion and restricted opportunities should be broken down to achieve the maximum two-way traffic. The Board of Trade's policy is in line with this aim. Industry should exploit it and encourage young men of ability, with flair and initiative, to follow this lead and do a good job for the country.
I should refer to the Departmental comment in reply to the recommendation on this matter:It is the policy of the Board of Trade to promote exchanges of staff with industry. In recent years three young men from industry have worked in the Board for a period, of whom two spent their time in the CRE Department.I was struck not with the naïvete of the Department, but with its complete honesty in telling us that during recent years three young men from industry have worked in it. That is hardly a good response to the effort which has been made to achieve the end-product 1692 of the exercise. I am not questioning the effort, because it is a sunny day and the trade figures have put us all in a good mood; we do not want to be too critical. But it is a matter of great concern that only three young men have come from industry to work at the Board of Trade during recent years. I hope that the situation will improve.
I have made a plea for integration. I hope that it will not be interpreted as meaning that there is a lack of thought about communications. One of our most delightful experiences was to discover the enthusiasm in Departments, and certainly in the Special Services Branch. It must be placed on record that the Export Services Branch has done something in the matter of communications. It is using the telephone and Telex services for industrial contact to very good effect. However, in spite of that, the Sub-Committee made a recommendation, and it is sufficient to say that more widespread use of the Telex services by industry would be welcome.
But efficient communications, with improved integration, are not the total requirement. Export information should be provided with speed, but at a price which people who wish to use it can afford. Speed by itself is not enough in this modern age. What is needed is speed of communication at the right price. Therefore, one of our recommendations to the Board of Trade is that there should be some alternative to the proposed computerised service, which we understand is to replace the Export Services Bulletin.
A related matter comes to mind. I refer to what is known as Call Export Intelligence. In our opinion, this advertising campaign has done its work. It has served a very useful purpose. However, for reasons which we give in the Report, we feel that it should be ended, at least in its present form. We believe that this kind of publicity might be done better through the export services regional officers.
We should like the President of the Board of Trade to feel that, although this might be a peripheral matter within the context of communications and information, the Sub-Committee considered this matter with special care. Although, in the reply to the recommendation, it is pointed out that previous experience has 1693 been discouraging, I am pleased that my right hon. Friend has indicated that he will consider this problem afresh. Perhaps when he replies to the debate he will give us his thoughts on this point.
The tenor of our Report is getting the best value for money. At one time political parties—and I will not mention names—put themselves before the public, saying, "We stand for getting value for money". That is now not the monopoly of any party. We live in an age in which we shall stand or fall on our ability to make the best use of money. Expenditure on export promotion is not a yardstick of real effort. It is certainly not a yardstick of efficiency. We should prove insistently and persistently the measure of export improvement related to the costs of promotion. Government aid is not the test. There should be a reciprocating response from industry.
There is evidence—for instance, from Eastern Europe—that British firms do not employ as many overseas salesmen as firms in other countries. There is need for greater emphasis to be placed on the selling of goods by agents and salesmen with know-how, expertise and salaries which reflect their competence.
My main point is that there is no point in spending public money on the promotion of exports if we allow ourselves to get into a mental lock and not consider the other parts of the business. I suggest that one of the main things to be considered is the reciprocating attitude of industry itself. We must have the men on the ground in the right place, men of the right calibre being paid the right salaries.
British firms often ask for incentives to make it worth while to export. In many respects they seem to fail to understand that long-term growth depends, in their own interests, on exporting their products. Once a politician poses that pertinent consideration private industry will not question it, but one must, nevertheless, within the general debate, counter it with something which affects the decision to promote or not to promote exports.
One must recognise that abroad one finds examples of unorthodox commercial activities. These can be very discouraging to the small or medium-sized firm which, within the climate of expanding world trade, is considering the possi-1694 bility of trading beyond our shores. I put this to the House now as a matter of fact, and perhaps later I might develop it a little to illustrate another related matter.
We can counter practices adopted by countries abroad by swinging back to our own achievements. Our major competitors are winning orders, and winning them on merit. Our industries, too, are winning orders on merit, and this they certainly must do. They should not allow themselves to diminish their activities by over stating the difficulties of unorthodox practices adopted in countries abroad.
The Government have a duty in this connection. It is no good saying to industry, "Go out and win markets on your merits". Nor is it any good saying, "We know that there are these unorthodox practices, but we can get over them by playing the game according to the commercial rules, or according to the established principles of G.A.T.T.", unless, at the same time, we ask the Government to recognise that these unorthodox practices exist. If we are to play the game according to the rules of G.A.T.T., everybody else in the team must also play according to those rules. If somebody in the team commits a foul, there should be a referee to blow the whistle.
We are all in the same boat. I hope that I shall not even once try to make a party political point, because I am dealing with a problem which affects us all. The Government, and their predecessors, have been very gentlemanly in dealing with people abroad who break the rules, and I suggest that if we are to give industry its head, if we are to respond to the intiative of industry itself, the time has come to keep a watchful eye on the trading practices of some countries, because many of them are not respecters of the commercial rules of the business.
I do not want to deviate from the Report, or from the principles to which I have applied myself, but I believe that it is legitimate to use our imports as levers to promote exports. Our importers should take every opportunity they can to use their purchasing power to influence foreign buyers in favour of British goods. Japan, and to some extent Western Germany, are not reticent about adopting that view, and they are doing so with considerable success.
1695 We have a remarkable amount of purchasing power in the world, yet of all the nations in the world we are saddled with perhaps the most aching import problem. We have turned our backs on import quotas. We have tried to use legislation to deal with import controls, and we have E.F.T.A. looking at us very angrily indeed. We are large buyers in the world, and I repeat that this provides us with a useful lever to enable us to say to the rest of the world, "We shall buy from you, but there is an export consideration here, too".
Some of our undertakings are the largest employers of labour in Europe. Three examples which spring to mind are the C.E.G.B., the British Steel Corporation—at Question Time today there was a reference to the amount of iron-ore coming into this country—and the G.P.O. Why cannot these large buyers, who negotiate contracts involving tremendous sums of money, and who have strong links abroad, award contracts with some positive assessment of the import consequences? Is it wrong to do that? Someone might say that it is morally wrong. This is an interesting argument, but it can hardly be said that it is economically wrong, because what I am talking about basically is the elementary principle of barter. It cannot be wrong on that ground. In spite of bilateral and multilateral agreements, there are nations in the world which adopt the principle which I have suggested.
We live in a densely-populated island, with problems which are unique in the world. We are bent on progress and on technological advance. As my right hon. Friend the Secretary of State for Social Security said the other day, we have a great population problem. The working population is now having to support a larger retired population, and a larger child and youth population, than ever before. It is a pity that our ingenuity, our ability, and our skills, are to some extent depressed because we are not using what might be called the modern practices adopted by other nations which leapfrog over the G.A.T.T. to obtain for themselves advantages from their import trade.
I have asked whether what I have suggested is wrong, and I must, therefore, give specific examples to make my case. 1696 The French use their purchasing power to support their manufacturers. I know of a British company which was interested in a French contract. It was told that the French authorities had ordered all firms working on Government contracts to delay placing orders.
A letter which the British firm received from its potential French contractors said:We are sorry to go no further with your proposal. In fact, a French contractor is going on with these electronic generators problems and our State customer requires us to order from that firm.That is the kind of competition that we are up against.
There is a second aspect of the problem. We are all vitally interested in East-West trade. How many times have Ministers come and gone from East to West, having signed statements and having talked about encouraging East-West trade? One supposes that on returning to their offices they have thought, "We have done a first-class job for Britain." But their hands are tied because to some extent we are made prisoners by the operation of commercial practices in the world over which we have no control.
I refer to the restrictive nature of the list of strategic items embargoed for Eastern Europe. I suspect and have no reason to doubt—I should be prepared to withdraw this statement if it were shown to be wrong—that certain items on the restricted list are removed only when there are American manufacturers ready to supply them.
There are two interesting examples. One relates to the import-lever principle to promote exports, and the other to the commercial chains, the links of which are taken out when it suits the United States. What is the point of having industry, skill and ingenuity second to none in the world if there are people who, for one reason or another, will not put our goods in their shop window, do not want to be our customers, or, as soon as they become our customers are wooed away by somebody else?
I hope that the Government, in their talks in E.F.T.A., with the E.E.C. and in the G.A.T.T. Round in relation to East-West trade will not be too deferential. We have heard for far too long the clap-trap that Great Britain is a 1697 second-rate Power. We have gone on long enough talking ourselves into lower and lower divisions. We are not second-rate. We have the armoury and we have a right to use it.
There is one method by which small and medium-sized firms can be helped to grow. Wherever possible British firms producing complementary goods should band together and employ overseas agents to sell goods when, individually, it is beyond their means to do so. This is a vital and major point. Perhaps the President of the Board of Trade would like to make some reference to this work of the Group Export Representative Unit.
The Sub-Committee, and, of course, the Estimates Committee, in its wide-ranging examination of the promotion of exports, has become aware of the many avenues of approach directly related to Government aid and industrial initiative in the great problem of increasing our earnings abroad. The technique and expertise required, as well as the hallmarks of confidence arising from our native skills, good workmanship, design, price, our after-sales services—I realised when abroad that after-sales service is a major matter which we should persuade our industries to improve—and our good delivery dates, which also could be improved, must be complemented with the ability to sell and the techniques of selling.
We in the Sub-Committee looked at this point and came to the conclusion that a shop window, in the form of a national exhibition centre, was of paramount importance. Not only should we be in a position to have a greater number of international exhibitions, but we should have a show room for the vast range of British goods which we can produce. Not only is the sales potential important, but foreign currency from visitors would be an immediate gain. There would certainly be a saving of currency which otherwise would have been spent by British buyers abroad. That would be a useful consideration.
What is clear is that Britain cannot afford to become a non-exhibiting country. I urge the Government and industry to grasp this project with courage. The clarion call should be: invest in Britain. All the ingenuity of British skills, our high standards and the creative impulses 1698 of the nation should be allowed to flower in the setting of a show centre where visitors to Britain could experience the combination of achievement and comfort, of business and leisure, of exhibition and conference, of accessibility and pleasure. Putting the pitch right at home and providing a good wicket for our industrial batsmen will not get us to the top of the export league tables. The away games have to be watched.
Our Diplomatic Service should consider what further improvements could be made abroad. We require high-calibre locally-engaged staff overseas, with improved conditions and status; our commercial officers should have better ladders of opportunity, promotion and reward. This could have a great influence on our trade in the world. But if they are not the right kind of people with the right kind of experience they could have the opposite effect. During recent years the Diplomatic Service has attended to this aspect. I know from the evidence which was given to the Sub-Committee, and certainly from my own visits abroad, that there has been a considerable improvement in the commercial offices.
The Board of Trade and the British National Export Council should examine another important matter. They should seek wherever possible to send delegations from suitable trade associations and other bodies to overseas conferences to obtain information and to assist in the marketing of exports. There may be difficulties, but they could be overcome and a good response from the Board of Trade would be valuable.
I suggest, also, that a close watch should be kept on all conferences abroad relating to industry, trade and commerce so that benefits can be searched out which may produce some unexpected dividends that, can be of advantage to trading organisations. As a result, a new avenue for tapping markets beyond our shores may be made available to them.
It might be convenient now to draw attention to some other specific areas for export promotion. However, the last thing that I want to do is give the impression that we do not have contacts abroad. The contrary is the case. We have a situation in which the Board of Trade, the British National Export Council and other bodies involved are 1699 doing an excellent job in sweeping the world with activity. During the financial year 1967–68, the revised Estimate for trade fairs was of the order of £4,363,300.
For the British Overseas Engineering Bureau, the Estimate was £35,000. For the United Kingdom Railway Advisory Service, it was £35,000, and the Estimate for trade missions was £20,000. On trade fairs alone, excluding the British National Export Council's valuable contribution, the Board of Trade's expenditure has risen from £516,000 in 1962–63 to £3,563,800 in 1968. Over five years, that is a measure of the improvement in the attention given to world fairs, trade missions and the like.
An analysis of the Overseas Trade Fairs Directorate's events for last year shows that there were 175 joint ventures covering Common Market countries, E.F.T.A. countries, Eastern Europe, North and South America and a number of other countries in the Southern Hemisphere. In addition, there were 16 events, including British pavilions, British fairs and British weeks held, and the number of store promotions totalled 2,016.
Without developing the point too much, the record export figures achieved are a reflection of improved export promotion. But the Report can be misleading if we take our conclusions from it to far. For example, world trade increased by 12 per cent. in 1968 both in volume and value compared with 5 per cent. in 1967. Some of our gains follow the trend of expansion, but we must not assume that our share of world trade has improved all that much. Nor should we assume that exports will not fall should levels of world trade diminish during the next few months, particularly in 1970. Perhaps a pithy sentence would pinpoint what I am trying to say. The advantages of devaluation and expanding world trade are not permanent. In spite of the trend, which is healthy and a great relief, we must bear in mind that complacency is not yet a privilege in which we can afford to indulge. In that context, our Report demands further drive and vigilance.
I have paid tribute to the level of trade fairs and the like, but I hope that the President of the Board of Trade will 1700 bear in mind that some of us are disappointed that no major promotions for 1970 have yet been announced. I make that point because, when I talked about trade fairs being a factor in the success of export promotion, it is important for the impetus to be maintained. If I may give an example, during the time that we were sitting, arangements were currently taking place for British weeks this year in Vienna and Japan, with which the British National Export Council is associated. If I may give a measure of their impact, the need for keeping up the impetus will become clear.
For the week in Japan, 15 simultaneous exhibitions have been organised, and approximately 1,000 manufacturers have been out there. Manufacturers of electronics, scientific instruments, cars, machine tools, toys and gift ware are all represented, together with many others. Earlier, I said to our industrialists that they can win on merit. Our exports to Japan have increased by 26 per cent this year, and our trading balance with that country is a favourable one. Including invisibles, it shows a surplus of about £50 million. That is a measure of our success in a highly competitive market but publicity, communications and the success which can come from having trade fairs and British Weeks abroad are relevant to the point that I am trying to make.
§ Mr. Tam Dalyell (West Lothian)
Having had the good fortune to be on the recent I.P.U. visit to Japan and having seen much of people in our embassy, may I comment on the extremely high calibre and excellent work done by our people there who are dealing with these matters? It reflects most favourably on the work of the Foreign Office, first, that the British Embassy should contain a higher proportion of Japanese speakers than any other embassy, and, secondly, that their work should be of such a high order.
§ Mr. Leadbitter
That is a very useful intervention, because it confirms what I tried to indicate originally. We cannot afford to allow the assumption to get abroad that the British Departments, particularly the Foreign Office, are anything other than highly efficient. All that I can say as a follow-up is that far too often we are unmindful of the good work that they do abroad.
1701 If the efforts outlined in our Report are projected, they will produce large dividends. Britain's prosperity is involved, and I suggest that any policies or attitudes militating against the maximum advantages of those efforts should be reviewed urgently. I fear, for example, that some of our fiscal measures may be damaging to the promotion of exports. In my opinion, all exports should be taken out of the present squeeze. Tax relief measures should be introduced for the marketing elements of our export trades. The Germans and Japanese do it.
If the Government say that it is contrary to G.A.T.T., I must ask again how long we are to observe every line of that Agreement. Australia operates tax reliefs for her personnel abroad to the extent of 4s. in the £. This principle should be applied so as to encourage better representation abroad for British firms on a permanent basis because, compared with that of many other countries, our representation is still very thin on the ground.
There is a tendency, when thinking of the promotion of exports, to think only in terms of visible exports and to relate these to the levels of imports and then to derive a state of happiness or unhappiness, of confidence or of uncertainty, from the resultant balance of trade. But I suggest that there is a case for taking more into account the value to this country of invisible exports. I have been a Member of the House for five years and I have not found this to be a matter which appears to be discussed too much. Hon. Gentlemen opposite have not got a monopoly on this subject, either—[Interruption.] Nevertheless, trying my best not to be deviated, and coming back to the theme of the totality of export benefits which I am trying to develop, during 1968–69 our invisible earnings were £3,500 million—an increase of 18 per cent. on the 1967–68 figure—representing—and we cannot dodge this—40 per cent. of Britain's foreign exchange earnings.
§ Mr. David Howell (Guildford)
The hon. Gentleman is saying some things about invisible exports with which I warmly agree. Will he agree that it would vastly help the point that he is making and the cause of invisible exports if the Board of Trade could see its way to publishing monthly the net invisible 1702 earnings in the private sector separate from the Government's contribution—or non-contribution—in this sphere?
§ Mr. Leadbitter
The President of the Board of Trade will have noted that comment, so there is no need for me to answer it.
Visible and invisible earnings, therefore, within the context of the national welfare, are complementary to each other over the whole commercial sphere. Our commercial transactions place this country in a state of actual surplus. The point I want to develop is that, commercially, Britain pays her way.
In 1968, our foreign income was of the order of £10,000 million—a higher rate of foreign earning power per head of population than anywhere else in the world.
§ Mr. Leadbitter
The hon. Gentleman says, "Hear, hear". We have been so used to looking at each other across the Floor. I hope that when speaking of the policy of this Government he will also say "Hear, hear".
§ Mr. Leadbitter
We cannot have a success story, on the one hand, and criticise it, on the other. I am sure that the next time we have a specific debate on economic policy the hon. Gentleman and I will recall this moment and will seek to pursue a line with which his whole party will have to agree that the Labour Government have done a damned good job for Britain.
§ Sir D. Glover
The hon. Gentleman must not get too carried away with his own eloquence. Because I interject "Hear, hear" does not mean that I have no criticisms.
§ Mr. Leadbitter
No, but this may arise out of the age gap.
There is a case for taking more into account the value to this country of the relative importance of both visible and invisible exports. I only note—it is not within the strict terms of the debate—that one of our difficulties is that our outlay in foreign currency on overseas defence and aid purposes is greater than 1703 that of any other country in the world, except America.
The reason I mention this is not to get out of order, but to demonstrate that, commercially and industrially, we are paying our way in the world. Basically, we have a problem which we inherited out of defence commitments and overseas commitments of various kinds. Put in that context, we can claim that Britain certainly is nowhere near, as some Press editors have tried to claim, being on her knees.
Clearly, the record does not demonstrate a failure of our commercial and industrial economy to hold our own against world competition. Our need for more success is just as clear, and the ability is there. I argue not from failure, but more in the direction of providing a further stimulant. We must maximise our opportunities.
I have tried to deal with the Report objectively. I have referred to the Board's response to our recommendations. At some points, I have been critical, but I hope constructive. Some useful suggestions have been posed, and I have concluded on a note evaluating our total commercial standing.
My theme throughout springs from a conviction of confidence in Britain and faith in the capacity of our commercial, industrial and Governmental institutions to pursue the aims of integration, harmonisation and dynamism to ensure the lasting greatness and influence of this nation. From today's trade figures and trading trends, therefore, I am encouraged to conclude with a brief yardstick of achievement and progress to round off this theme.
I refer to the export figures for certain manufactures in the period 1964 to 1968. Textile machinery. The value of our exports in 1964 was £66.8 million. In 1968, the value of exports of such machinery was £101.3 million. Road motor vehicle exports. In 1964, the figure was £538.4 million. In 1968, it was £659.6 million.
I can recall some very serious debates in the House on aircraft. Hon. Gentlemen opposite should listen to the figures. It is worth while pausing to allow this one to sink in. In 1964, exports of aircraft were £43.5 million. In 1968, they 1704 had risen to £135.2 million. This is a wonderful achievement. We can at least say that confidence in our policy has not been shaken and, at the same time, we can compliment the personnel and the industrialists in the aircraft industry on their remarkable achievement.
Exports of ships and boats in 1964 amounted to £30 million. In 1968, they had increased to £77.9 million. Scientific instruments, including medical, optical measuring and controlling instruments. In 1964, the value of exports was £62.7 million. In 1968, it was £100.2 million Clothing. In 1964, exports amounted to £43.8 million. In 1968, they reached £83.7 million.
I come from a part of the United Kingdom where, during possibly the whole of my life so far, we have known nothing but the vicissitudes of trade which affected us more in the climate of poverty than during the odd spasms of improvement in any of the working sections of the area.
Before I finish, I feel that I must say to those charged with the heavy responsibility of decision-making involved in the question of exports and imports—and I address myself not only to the President of the Board of Trade, but to the Officers of this House and to all who can hear me—how grateful I am as a Member of Parliament that, in my part of the country, I am able to talk about a story which can bring hope where many years ago, and even in recent years, there did not appear to be a glimmer of hope. We have had a difficult time trying to convince people who have, unfortunately, for 5d. got hold of the Northern Daily Mail and the Daily Express in these areas and thereby all the misinformation, that all our recent struggles have been to close the gap between the decline of our basic industries and the establishment of new ones.
I hope that no hon. Member, for the sake of a small party point, will flout the figures I have given, or will go against the tide of totality of success in commerce that we have in the world. I hope that no hon. Member will seek to charge that Her Majesty's Government are failing the people, because the contrary is the case. The reality of the position is that, in a democracy such as ours, no matter what parties there were, the same problems would exist. During 1705 four years, the Government have done remarkable things for the country and I am proud to have had the privilege of asking the House to take note of the Report. It does not provide all the answers or all the information. It is just the result of a job of work. I think that I have perhaps caught the right term. A job of work well done, no matter where it is done in this country, is, in my opinion, the best guarantee of the nation's success.
§ Mr. Deputy Speaker (Mr. Harry Gourlay)
I omitted at the start of the debate to tell the House that a large number of right hon. and hon. Members wish to take part in the debate, so perhaps succeeding speakers will be a little more brief.
§ 5.13 p.m.
§ Sir Keith Joseph (Leeds, North-East)
The House owes a great debt to the hon. Member for The Hartlepools (Mr. Lead-bitter) and his colleagues who spent so many hours studying the evidence we are now debating. Indeed, I think that all of them deserve a prize for the work they have done. Perhaps those of us who have read every word of the Report also deserve a prize, because it is a voluminous document.
It is quite by chance that this debate falls on one of the days in the year when the trade figures are published. The Government must have had a pang or anxiety when they realised that exports would be discussed, for the figures might have turned out to be bad. However, all of us wish to congratulate the President of the Board of Trade on the turn in the figures. They really are very welcome.
We are delighted, of course, that the visible deficit has fallen and even more delighted, I think, to note—I believe that this is the first time it has been published—the upward surge in the invisible surplus. I have in my hand the published monthly figures, which show that the invisible surplus during the first quarter of this year averaged no less than £47 million a month. That is a staggering figure, because the invisible deficit as published by the Board of Trade is struck after deducting from the gross invisible surplus the full weight of Government overseas expenditure.
1706 So what we are being told is that invisibles are now running at a gross surplus—or were doing so in the first quarter—in excess of £1,000 million a year, which, after deduction of roughly £500 million of Government overseas expenditure, yields an invisible surplus of about £47 million a month.
But I think that many hon. Members, even members of the Select Committee, will agree that an invisible surplus of that order has been achieved despite the Government and that it will be ironic if Ministers, who did not even during the Budget debate refer to invisibles, should find the country being rescued by the astonishing success of these invisible traders. I would not like it to be thought that we do not welcome, also, the change in the fortunes of the visible account. We hope that it will not be like those changes which came in November last year and January this year, which proved to be succeeded by bad months afterwards, but that they will be the beginning of a sustained recovery.
§ Mr. Donald Anderson (Monmouth)
Does the right hon. Gentleman think that our unusual surplus on the tourist account, due to the £50 travel allowance, has also been achieved despite the Government?
§ Sir K. Joseph
The scale of the growth in tourist earnings is because this country is a bargain shopping area due to devaluation.
§ Mr. W. Howie (Luton)
Am I right in supposing that invisibles have come to the aid of the economy in every year since 1807?
§ Sir K. Joseph
Certainly. We are an invisible surplus and a visible deficit country. But invisibles now are exceeding what it was estimated they would achieve by a substantial amount. Indeed, we appear to be in 1969 where it was hoped to be in 1971–72.
I ask the forgiveness of the House because I must leave to fulfil a longstanding committment at about six o'clock. I shall be away for about an hour. But I think that I can keep what I have to say relatively brief. The view on this side of the House, and probably that of a number of hon. Members opposite, is that export success is a function of efficiency and enterprise and that, if the Government, of 1707 whatever party, free the traders of this country to exercise their enterprise and efficiency and stimulate them to do so, then they will produce satisfactory trading results.
Witnesses repeated again and again to the Sub-Committee that their first need from the Government was not a broad improvement in export promotion, but a stable and rising home market, the encouragement of a tax system which takes incentive into account and intelligent Government policy at home. Those are the basic essentials and export promotion can only provide a reinforcement and help.
We believe that, of these background encouragements, the most indispensable is that of personal incentives and, therefore, we put tax reform and the cutting of public expenditure at the top of the conditions needed to encourage our traders and make them successful. Management is improving rapidly. Enormous talent is being used and is waiting to be used in our management echelons. The job of government it seems to us is to see that, through a combination of tax reform, competition and company law, the sleepers, where they still exist in company boardrooms, give place to the thrusters. There are more and more thrusters directing our companies, but some are directed by sleepers. The replacement of the sleeper by the thruster is the most immediate need for our balance of payments. Therefore, we hope that the President of the Board of Trade will tell us something about the Government's tax policy.
The right hon. Gentleman will not be surprised if we say again that we hope that he will do what he can to relieve the invisible traders of selective employment tax. We hope that he at least is fighting inside the Government to get personal taxation reformed, so that it is not so desperately discouraging at the margin. We ask him, in particular, for a progress report on the inquiry into the value-added tax announced by the Chancellor in his Budget speech in April, 1968.
I now turn to the work of the Sub-Committee. After commending very much its diligence and comprehensiveness, I am surprised that its members never seemed to ask themselves or, systematically, their witnesses, who does the 1708 exporting of the country and where the scope for increased visible exporting mainly lies. Unless the Select Committee and, particularly, the Government, identify the area where there is most scope, the promotion services cannot be fashioned and shaped to perform their function most effectively.
As far as I know, no one knows the current answer to this question, but I have the figures for 1966, when 140 companies were responsible for over £5 million of direct exports, totalling over £2,700 million, or more than 50 per cent. of our total invisible exports f.o.b. I should like to break the figure down. These are direct exports, and, in addition, many of the companies were, of course, responsible for a large volume of overseas earnings which came back to the credit of this country in remitted or unremitted profits.
No fewer than 11 companies, in 1966, each was responsible for no less than £50 million of direct exports, totalling over £1,000 million. We could all name most of them if we set our minds to it. Then, 24 companies exported directly between £20 million and £50 million; 105 exported between £5 million and £20 million, 350 exported between £1 million and £5 million and about 1,900 companies exported between £100,000 and £1 million. These 2,400 companies exported between them £4,000 million directly in 1966, or about 80 per cent. of our total visible direct exports that year.
The question which we must ask ourselves and which the Government particularly must ask themselves is: where is the scope? The giants, presumably, are self-motivated. They are sophisticated, powerful, well-managed. They need no encouragement. They need the removal of certain obstacles, such as the restrictions on foreign exchange, which even I, in full enthusiasm, cannot promise that we shall totally free, but where is the main scope? Is it in the middle-sized companies or in the smaller companies? Until we identify this scope, we cannot sensibly discuss effective promotion services.
There is evidence in the Report that the big visible exporters use the services to some extent. But they have their own very sophisticated service departments. Certainly, big companies need no encouragement and exhortation. The 1709 medium-sized companies, exporting £1 million or more each year, need the services very much but not much education or exhortation. The smaller companies need both the services and the encouragement and education.
There is a gulf also between those companies which are highly sophisticated in marketing and those which are still production orientated rather than market-orientated. We note the evidence of one witness that the difficulties of an exporter tend to increase—this is common sense, when it is pointed out—with the number of overseas markets which it tries to penetrate. The evidence is that the Board of Trade and the B.N.E.C. are primarily geared to help the smaller company, but is this the area in which they can be most effective? I do not see that the Report asks or answers this question and I hope that the right hon. Gentleman will give us his views today.
For instance, the campaign "Call Export Intelligence" was beamed at those already exporting but looking for new markets and those entering the export field—in other words, at the bottom of the size bracket. The campaign has not been proving successful and has been withdrawn. On the other hand, the C.B.I. and the Sub-Committee itself identified the scope, it appears from the Report, mainly with the 2,000 to 3,000 companies already exporting who, in their view, could do more. But there is no evidence in the Report to substantiate that point of view. It is just an assertion, and, if the Government believe that it is correct, we should be addressing ourselves, in discussing the promotion services, predominantly to those 2,000 or 3,000 companies.
We would say that it was the Government's primary job to make it in the interests of those companies to do more exporting by reforming the tax system and, possibly, introducing a value-added tax and other measures. I am sure that everyone will agree that it is no good the Government and their agents stimulating the odd, one-off export effort. There was a very vivid phrase in Paragraph 396 of the Report, talking of the "commercial commando raid", in the particular case, into Sweden, after the Stockholm Exhibition. We would all agree that it is for the Government to encourage, in the self-interest of the firm and the 1710 people concerned, sustained export effort and not the commercial commando raid.
Here, we should like to ask the Government to take careful note of the evidence of the Institute of Practitioners in Advertising, because—this is what we want them to accept—there is the closest possible link between what we call visibles and what we call invisibles. The I.P.A. says that most manufacturing companies with a good product try at first to sell their surplus output in one or more markets abroad. For that, they need certain services, but, as a company manufacturer gets bigger or better and comes to want to supply more and more of the market of another country, it can no longer succeed by exporting its own surplus output. It has to begin to invest in the overseas market itself. So, gradually, the export effort which is reflected in visibles becomes translated, in a free and efficiently working economy, into the overseas investment yielding invisible benefit to this country.
That transition from the visible benefit to the invisible benefit is frustrated by the restrictions on foreign exchange expenditure imposed by the present Government. Of course we admit that, in the situation into which this country has been led, there probably have to be some of these restrictions, but we would at least ask the Government to recognise the damage to the visible-invisible nexus, the complete earning potential of this country, which is imposed by the arbitrary ban on foreign exchange investment.
There was a comment which should be read and re-read, on page 109 of the report, by the C.B.I., which pointed out the absurd illogicality of a Government who, through E.C.G.D., take pride in allowing ever-longer credit terms for the same visible goods which they would not allow, on equally good and perhaps better credit terms, to be produced in the same market overseas. We are shackling our traders by our present policies and there is the strongest possible case, therefore, for a relaxation in the discretion to use foreign exchange.
We regret that the Select Committee did not identify where there is the most scope for increased exports, and we hope that the Government will do this identification for us. The promotion, 1711 which can be properly defined only when we know the answer to this question, is largely a matter of market intelligence, education and indispenable services like insurance. To provide these promotion services there is a complex of interrelated activities such as posts throughout the world, the Export Services Branch of the Board of Trade and other Government Departments. We have B.N.E.C., E.C.G.D., the C.B.I. Chambers of Commerce and a mass of others.
We acknowledge gladly the tributes which were paid to all these services by the Sub-Committee and the witnesses which appeared before it and we acknowledge that these services have all been much improved during the 'sixties, including the years when the present Government have been in power. We also acknowledge the great efforts, of all staff, professional and honorary, that have been involved.
The Select Committee points out that if it were possible to start from scratch with a clean sheet it would organise everything differently. However, it advises the Government not to interfere with processes which are working tolerably well by reorganising them now.
This debate is unfortunately timed, because the Val Duncan Committee has evidently handed its report to the Government. We would, therefore, like to hear from the President of the Board of Trade whether and when he will publish it. Without this report it would be presumption on our part to try to assess whether the posts abroad are commercially-minded enough. Obviously, many of them are, but there are difficult questions such as secondment and local enrolment which must be considered.
B.N.E.C. was set up to encourage and not to do. It is difficult for such a body not to topple over occasionally into exhortation, although I appreciate that it will try not to do that. Perhaps we should see the task of B.N.E.C. as providing supporting services; receiving and despatching missions, dispensing aid were necessary and, above all, educating newcomers to exports in the best practices.
I have heard it suggested that B.N.E.C. should provide voluntary teachers from the experienced sectors of industry to 1712 advise the beginners in the export sphere or run seminars to this end. All Governments tend to make too many calls on successful businessmen and the result is that the very best of our performers are distracted from doing their primary job, which is to serve their own markets, workers, consumers and investors.
It is notable that so many men of first-class ability give their time to B.N.E.C., but, as McKinsey is said to have told them, B.N.E.C. members must be appraised not on their conscientiousness but on their performance. The comments of the Chairman of the Select Committee at one of the proceedings is noteworthy, when he said that this was a private enterprise body publicly financed and, therefore, publicly controlled. Is it in the ultimate the most flexible animal since it is neither flexible like private enterprise nor totally official like a public body?
May there not perhaps be an argument for establishing a fact-gathering educational body—mission receiving, mission sending and grant dispensing—completely outside the Government? Might it not be more flexible, sensible and commercial to place inside such a body the services of the Export Services Branch, E.C.G.D. as well as B.N.E.C? In asking the question I admit that I have not found an answer. It would be interesting to know if the Government have considered this possibility.
If there were such a single body, serving all these multiple purposes, with the flexibility and commercial attitude that a private enterprise body could have, we might have some clearer leadership in this sphere. For example, we note from the answer to Question 335 that one of the main C.B.I. witnesses said, commenting on British Weeks:…It was an absolute miracle…that anything worked.He said that the concept worked, but that it was a miracle that it did. He pointed out that there was no one person in charge of anything, and that there was a mass of complicated ad hoc activities which crossed public/private frontiers.
§ Mr. Leadbitter
That is only one point of view. The chairman of the British National Export Council told me last 1713 night that his council attached great importance to British Weeks.
§ Sir K. Joseph
I mention this point only because there may be some confusion in the minds of exporters, with the result that there may be unnecessary ignorance of the possibilities for profit in certain markets overseas. Perhaps a single body might be able to overcome these difficulties.
In the light of the slanting comments which appear throughout the Report, it would be interesting to know whether the Government are considering reviewing relations between the official and unofficial bodies in export promotion and if they are considering the provision of guidance on markets as opposed to products.
The right hon. Gentleman might say how other countries, our rivals, deal with these problems. I do not want to give our rivals too much of a puff, but we are inquisitive about the alleged success of, for example, J.E.T.R.O. in Japan and the Italian Institute of Export. The sub-Committee did not inquire into these matters, although it referred to them. It merely paid an indirect tribute to the services that are provided in Norway and Australia, but with respect to those countries, they are not world markets on an international trading scale like Japan, Italy and ourselves.
I hope that the Government have taken careful note of the evidence of the British Export Houses Association, because when one considers what is happening in Japan with J.E.T.R.O., and developments elsewhere, one is reminded of the predominant position in, for example, Japan of the merchant houses. We in this country have pioneered the merchant houses and there are great British merchant houses in the Far East. About 20 per cent. of our invisible trade passes through merchant houses hands.
The British Export Houses Association claims that it needs help overseas and not at home. Why have our merchant houses achieved such success in the East but not in the West? Why was their practice so successful in China but not nearly as successful in, for example, South America. There are merchants in that part of the world, but they are not nearly as successful.
1714 The Report spends a considerable time on the subject of market research and the needs of individual firms in this connection. We are glad that the Government recognise the need for market research and that in July of last year a sum was provided to help firms in market research overseas. The President of the Board of Trade allotted £75,000 for 1968–69. How much of that has been taken up and has the right hon. Gentleman any further information on the market research side?
We note that market research needs to be done for firms and that it does not have to be done always at a Government post or by the E.S.B. It can be done by commercial agencies. One witness said that the Economist Intelligence Unit and other research bodies might well provide the sort of market research which posts cannot be expected to provide if the Government think that that is right.
I summarise the questions which I hope the President of the Board of Trade will try to answer. We want to know, as the hon. Member for the Hartlepools said, what the present position is about the National Exhibition Centre. Secondly, we should like to know something about the present fortunes of the Overseas Marketing Corporation. Thirdly, we should like to know whether the £100,000 consultants' fund has now been unlocked, or whether it is still tied up because of discussions. We hope to hear from the right hon. Gentleman about the Government's standing in the inquiry on value-added tax. We should like to hear where the Government think that there is much scope for export growth and where the main target for B.N.E.C. and the Export Services Branch should be.
Finally, will the right hon. Gentleman tell us whether the Government have any intention of inquiring into all these inter-related services to focus them on the identified target and to reduce what may have been confusion in industry. We recognise the great value of this Report and we hope that this debate and the President of the Board of Trade's speech will build upon it.
§ 5.41 p.m.
§ Mr. W. Howie (Luton)
I did not have the pleasure of being a member of the Sub-Committee. I am, therefore, extremely grateful to its members and for 1715 their very full Report. I am grateful to its chairman, my hon. Friend the Member for The Hartlepools (Mr. Leadbitter), for his exhaustive survey and comments on the Report. To some extent he did not leave the rest of us much to say, but I have no doubt we shall try our best to comment on those parts of the Report which he left out.
The Report shows, and his speech underlined, the great amount of work which is being done by the Government through a number of agencies to assist exporters to provide appropriate machinery. They show that considerable success has been achieved, partly by industry through its own efforts and through the assistance which the Government have been able to give. Despite all this, we are faced with a continuing balance of payments problem. It is improving and today's figures are encouraging, I gather, but the improvement is still fairly slow. This means that although the United Kingdom exports more, I believe, per head of the population than almost every other country, we have to do even more.
In passing, since we are talking about exports, I should mention that part of the gap in the balance of payments is due to imports. While exports are responding and have responded extremely well, I am not sure that our import performance has responded in quite the same way. Our continued failure totally to close the gap has suggested that the President of the Board of Trade might look at the entire question of more direct control of imports. Import controls have been rejected for a number of reasons, and many of those reasons are apparently sound. At the same time, the continued appetite which the country shows for imports hints that some sort of direct control of them might be looked at more closely by the Board of Trade than has been done up to now.
I shall speak briefly and refer to only one part of this very interesting Report. I refer to paragraphs 103 to 106, which deal with the British Consultants' Bureau, and the references in the evidence relating to those paragraphs. The job of this bureau, which was set up by both industry and Government acting together, is to promote overseas work among British consultants. The members of the 1716 bureau—there are about 180 firms—include consulting engineers, architects, consultants in economics and management planning and surveying. They do what they can to extend the amount of consulting work which we do in expanding overseas markets.
It is interesting to see from the Report that part of the philosophy and method of the bureau when faced with a contract, or a potential contract, is to find the most suitable firm for that contract and, in the words of the Report,to eliminate wasteful competition between British firms.That seems to be an extremely sound, sensible and thoroughly Socialist attitude for this non-party organisation to take. I am extremely pleased that the hon. Member for Folkestone and Hythe (Mr. Costain) is an ornament of that bureau and lends his efforts towards that very laudable aim. Overseas development particularly in the building world is very big business.
British consultants have overseas work in hand with a capital value of over £1,600 million. That is an enormous sum and it contributes to this country about £20 million in consultants' fees each year. That is perhaps a small contribution to the £1,000 million invisible exports mentioned by the right hon. Member for Leeds, North-East (Sir K. Joseph), but it is not a negligible one. It is earned by a very small body of men many of whom work not half a mile from this House. They are exporting something which the British can export par excellence—expertise, knowledge, know-how, ability and brains. This is a kind of invisible export which is all gain in the sense that none of it is a re-export. We invent the whole thing and it is a thoroughly admirable thing which we should blow our trumpets about it.
§ Mr. Howie
There are Englishmen and possibly Welsh, but I agree that many of them are Scots. This is a big business and a substantial contributor to our invisible earnings. The work of these consultants brings to our manufacturers a substantial body of orders for direct visible exports in machinery and plant.
There are two impediments to the work which these consultants try to do in 1717 expanding our share in those markets against some extremely sophisticated Continental engineering firms. The first impediment is selective employment tax. I wish to refer to this with a certain amount of care, because I have noted, from earlier speeches and from one or two interjections by hon Members opposite, that they do not altogether like this tax. Indeed, I suspect that they dislike it entirely, but I do not.
As I have said to them before, it is an excellent tax. Unfortunately, my right hon. Friend the President of the Board of Trade is not now present but I hope he will hear that I support the tax, as I have said on a number of occasions. What I like about it is that it is selective. This is why I am a little surprised that hon. Members opposite are opposed to it. They are always complaining that the Government have a too blanket approach to assistance to industry. They are always telling us to go for growth points and to be more selective. Here is a circumstance when, instead of giving to industry, we are taking from it and we are selective, but hon. Members opposite do not seem to like this, either. My only complaint is that we are not quite selective enough in this tax and that its incidence is a burden to consulting firms in the fields which I have mentioned.
The first point which is unreasonable about this tax in this context is that, while it is quite rightly levied on service industries, quite wrongly the work of the consultant—and in this connection I am talking more of the consulting engineer and the architect rather than some of the others who are members of the bureau—is regarded as a service. I do not believe that this is correct.
The consultant or technologist working at his drawing board becomes part of the whole chain of manufacture, beginning in a man's head and ending in a product which is placed in the field as a tangible item. He should be so regarded as part of that chain. The further anomaly which arises from this is that a man who is doing technological engineering for a manufacturing firm is relieved of the tax. Where the same man is doing similar work in a consulting firm separate from a manufacturing organisation, he will be taxed. That anomaly cannot be sustained.
I was bold enough to raise this question in the debate on the Finance Bill 1718 recently and my right hon. Friend the Chief Secretary told me that I was wrong. If he tells me that I am wrong in financial matters, I usually take his word for it, because he knows more about financial subjects than I do. For the moment, therefore, I was put off. Since then, however, I have thought a little more about it, and I would like to illustrate the anomaly by giving two examples.
If a draughtsman is employed by a manufacturer of prefabricated housing units who designs units for manufacture and sale to a client abroad, he is exempt from tax. That is admirable and has my full support. If, however, a similar draughtsman is employed by a consulting engineer to do the same job of designing units which eventually are to be put out to tender rather than made by his own firm, he is taxed. The work is precisely the same and I see no reason why this anomaly should be sustained. I believe that the tax should be refunded for that part of the work of the consulting engineer's staff which is devoted to exports.
I remind my right hon. Friend that the cost of this would be trivial. It would amount, I think, to no more than about £640,000 a year.
§ Mr. Tom Boardman (Leicester, South-West)
Remembering the hon. Member's speech on Amendments from this side on the Finance Bill on this important matter, in fairness to him might I ask him to explain what consistency he showed in his vote on the Amendments which would have achieved the objective which he is now praising?
§ Mr. Howie
I am flattered that the hon. Member remembers my speeches. I shall try hard in future to remember his should any of them come my way.
On the Finance Bill, I voted against the Amendments on this subject, which were wrong. My own Amendment happened not to be selected for a Division, so that the question of my voting for it did not arise. The hon. Member will, perhaps, have to wait until the Finance Bill next year before he trips me up in that way. The cost to the Exchequer of this much-needed reform would be trivial—about £640,000 a year.
During the speech of my hon. Friend the Member for The Hartlepools, it was 1719 said that we spend about £3½ million a year on exhibitions. I am not sure whether that includes trade fairs and the like. In terms of cost effectiveness, I wonder whether that £3½ million would bring greater benefit to our exports than the £640,000 of which I am speaking. I do not decry the advantage of trade fairs, exhibitions and the like. I would go many miles to hear the bagpipes in Brussels. I have no doubt that such a sound encourages the Belgians to rush out and buy British goods.
The point which I am trying to make is that the £3½ million spent in one way produces certain advantages. I suggest to the Board of Trade that it should look at my suggestion closely and come to a conclusion whether the £640,000 forgone in this other way might not bring comparable or even greater advantages.
The other problem to which I wish briefly to refer, which these consultants face and which arises in the Report, is the question of feasibility studies and the means whereby consultants might be compensated for producing feasibility studies at a loss.
This is a direction in which consultants, by the exercise of imagination, ingenuity and thrust—as the right hon. Member for Leeds, North-East (Sir K. Joseph) said—can generate new business and increase our exports. This, however, is a fairly risky business. In raising feasibility studies, consultants sometimes find themselves up against the kind of unorthodox financial practices which my hon. Friend the Member for The Hartlepools mentioned.
I remember about a year ago sitting in an hotel in a hot foreign place with the hon. Member for Leicester, South-West (Mr. Tom Boardman) while a British manufacturer told us stories of how his competitors from foreign countries behaved. They were all entirely new to me, but the hon. Member for Leicester, South-West appeared to be familiar with them. They showed that our manufacturers and exporters sometimes found themselves up against financial practices which were, shall we say, less than normal in our polite society.
Since this kind of problem can be a risky business, a fund has been set up by the Government to assist consultants 1720 partially to carry the cost of such studies. It was thought that the loss might be split fifty-fifty, the consultants sustaining 50 per cent. of the loss and the Government reimbursing the remainder. In cases of this sort, however, the loss might be substantial, amounting to several thousand £s, which would not easily be carried by a partnership, which is the form of organisation in which many consultants operate.
The feasibility fund does not appear to be working because consultants were very unwilling to carry their 50 per cent. of the cost, not because they did not like the idea, but because they could not afford to carry that amount of the burden. Alternatives have been proposed, but I think I am right in saying that no agreement has yet been reached on this matter. The Board of Trade and the consultants have been unable as yet, I think, to devise a system by which proper encouragement and protection could be given to these people.
I urge the Government to be as generous as possible in financing the feasibility studies, because the gain from them will be incalculable compared with the cost. I have put two proposals to the Government, each of which is relatively cheap for them to finance and would produce the promotion of exports and a substantial gain to the invisible part of our balance of payments, which would be of great value to our economy.
§ 6.0 p.m.
§ Sir Ronald Russell (Wembley, South)
I have not heard the bagpipes played in Brussels, but I have heard them played in both parts of Pakistan, even up the Kyber Pass, though this did not have anything to do with trade but with the Army.
I am not a member of the Estimates Committee, or the Sub-Committee which produced this excellent Report, but I am delighted to take part in the debate. I am sorry that there is so little mention in this comprehensive Report about exports to the Commonwealth. I know that the "Commonwealth" is a word that one sometimes almost has to apologise for nowadays, but the Commonwealth plus South Africa and the Irish Republic as a unit forming the Commonwealth preference area, still takes nearly 30 per cent. of our exports.
1721 As a body it is the largest single recipient of our exports, yet the Report contains a mention only in Annexe VIII, on page 24, in a Board of Trade memorandum and, again, at the top of page 25, where there is a reference to the Commonwealth preference area and system. I am surprised to find that there is no reference to it in a subsequent Board of Trade memorandum in Appendix 12, beginning on page 342, which deals with international trading rules.
The Report goes in detail into the G.A.T.T. and has a paragraph on E.F.T.A., but there is no mention of the Commonwealth or the Commonwealth preference area. Yet four years ago the Board of Trade published in the Board of Trade Journal two comprehensive articles on Commonwealth preference by Mr. R. W. Green, of the Statistical Department. The first appeared in the issue of 11th June, 1965, and dealt with Commonwealth preference on United Kingdom exports given by 24 Commonwealth countries, including the largest ones. The second, six months' later, dealt with the preferences given by the United Kingdom on imports from the Commonwealth, with which we are not concerned today.
Mr. Green pointed out in his first article that more than half the total imports into the Commonwealth preference area from this country enjoyed some measure of tariff preference over imports from most-favoured-nation countries, and half the countries in the area grant such treatment to 80 per cent. or more of their imports from the United Kingdom. That is a built-in incentive to exporters to export to those countries.
There is also a table in the article showing the average margin of preference on imports that enjoy preference in certain Commonwealth countries was as follows exclusive of the duty:—Canada 13 per cent.; Australia 12 per cent.; New Zealand 20–21 per cent.; India 7–8 per cent.; Pakistan 8 per cent; South Africa 4–5 per cent.; Irish Republic 7 per cent.; Jamaica 12 per cent.; Trinidad and Tobago 10 per cent. I could go on, but I will not weary the House with these figures, which are examples of the advantage our exports have in those Commonwealth countries.
It is a pity that more consideration has not been given to the advantages of 1722 this system, which dates back to the beginning of this century in respect of United Kingdom exports to the four older Commonwealth countries. I know that the present Ottawa system was introduced only in 1932, but before that, after the free trade era of the last century, it was the four Dominions, as they were then called, which led the way to Commonwealth preference and prepared the way for the system which still exists today, despite the long efforts of the Americans to abolish it and the General Agreement on Tariffs and Trade, which imposed a ban on any expansion or the introduction of any new preferences.
No Commonwealth country wants to abolish the system. At least, I have never seen a statement by any representative of a Commonwealth country saying that it wants to abolish it. The Commonwealth Prime Ministers' conference of last January reaffirmed its value, even if it did not use the words "Commonwealth preference". Paragraph 51 of the communique stated:While it was recognised that Commonwealth trade must be seen in the larger context of global trade of which it was a vital part, they"—the Commonwealth Prime Ministers—agreed there was continuing scope for the expansion of Commonwealth trade and for this purpose there was need to strengthen the well-established links amongst Commonwealth members.I take it that that refers at least in part to the Commonwealth preference system.
§ Mr. A. P. Costain (Folkestone and Hythe)
Did Mr. Green refer in his article to Commonwealth import restrictions? My hon. Friend will find on page 166 of our Report a reference against restrictions on imports to New Zealand.
§ Sir R. Russell
I appreciate my hon. Friend's point. I do not think that Mr. Green referred to them in that article. I have not had time to check that point.
I know that there are restrictions in Commonwealth countries, but our exports even to New Zealand enjoy a preference over those from all countries other than Commonwealth countries. They have that advantage over Western Europe and E.F.T.A., for example, and Japan and the United States. My point is that those advantages are valuable.
1723 If as much energy and effort had been put into pushing exports to the Commonwealth as has been expended in increasing them to Europe in recent years, our trade with the Commonwealth would be at a higher level than it is now. I hope that the Government will direct more effort to expanding trade in that direction from now on. Canada, Australia, South Africa and, to a certain extent, New Zealand are fast-growing countries. I am not neglecting the smaller Commonwealth countries as well. Their potential is enormous, and we still have the advantages in those markets that I have described. Let us make more use of them than we have. Let us make full use of them in the future.
§ 6.9 p.m.
§ Mr. William Hamilton (Fife, West)
The hon. Member for Wembley, South (Sir R. Russell) is right to emphasis the great importance of developing Commonwealth trade to a much greater extent than we have over the past 20 years. When one visits a country like Canada one sees the enormous potential for exports and the great desire of the Canadians to import from Britain. But it is fair to point out that the Estimates Committee Sub-Committee was not so much concerned with pin-pointing particular areas to which we could export as with the machinery of export promotion. From that point of view, the speech of the right hon. Member for Leeds, North-East (Sir K. Joseph) was slightly less fair than it might have been.
The right hon. Gentleman made some criticisms of the Report. It is relatively easy to pinpoint its omissions, but considering that the Estimates Committee and its Sub-Committees consist of ordinary back benchers who have little expertise to help them it is surprising that such valuable reports are produced. It is a great tribute to the staff, who are extremely able and conscientious people, acting as administrative assistants rather than as experts. It is well to remember the sterling and conscientious work that is consistently done by Sub-Committees.
It is at least 12 months since the Parliamentary Labour Party's Group on Parliamentary Reform suggested a Select Committee on Trade and Industry. The original idea behind Select Specialist Committees was to build up a body of 1724 expertise. In the Estimates Committee, with constantly changing personnel from Session to Session, it is difficult to build up the expertise necessary to produce a report on this subject, where expert outside assessment of what is happening within a Government Department is needed.
It is perhaps fortuitous that this debate is taking place on the day when the monthly trade figures have been announced; this is a monthly exercise on which our national neurosis feeds. It is trite almost to the point of boredom to say that we live in a Welfare State and that our standard of living depends upon vigorous export growth. It is a pity that attendance in the House is so thin for such a fundamental debate.
The figures produced are good, bearing in mind the usual proviso that one must not judge on a monthly basis. They are not as good as one would hope for, although the trend is upwards, the greatest failure is the apparent incapacity of the Government to control the import flow. That is outside the scope of this debate, but perhaps next Session, there might be appointed a Sub-Committee of the Estimates Committee to consider that aspect of our trade position and to deal with import saving and control. It might produce an extremely valuable report which could be set beside the one we are now considering.
The Sub-Committee of which my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) was Chairman concentrated on the machinery of export promotion and made 19 recommendations on how that machinery could be improved. Its first recommendation was that the several divisions in the Board of Trade chiefly concerned with export promotion should be amalgamated, so that firms would be in no doubt where to direct their inquiries. In reply to that recommendation, the Board of Trade said that some thinking was going on about organisational changes, but that many more bodies were involved in export promotion than were enumerated in the recommendation and it would be extremely difficult to amalgamate all these bodies into one. Will my right hon. Friend say what progress has been made in these organisational changes?
Recommendation 4 was that the Board of Trade should provide an alternative to 1725 the computerised service which is to replace the Export Service Bulletin. The computerised service is designed to ensure that all firms interested in exports will be able to get the information they require at a price which they can afford to pay and without spending too much time searching through the Export Service Bulletin.
It is true that most of our exports are by a relatively small number of large firms. Nevertheless, small and medium-sized firms are important, and information should be readily available to them at a price they can afford to pay. In reply, the Board of Trade pointed out that much of the preliminary work had been and was being done to substitute a computerised service for the Export Service Bulletin. It was anticipated that the computerised service would be operative by the end of 1968.
Will my hon. Friend confirm that the service is now in operation and, if it is, will he say what charges are made to the users, how it is operated and whether the Board of Trade expects to obtain a larger number of subscribers than the 4,000 mentioned as using the Export Service Bulletin? Will he also say what is being done to help the smaller and medium-sized firms, and if there is flexibility in charges so as to attract more users? What steps is the Board of Trade taking to ensure that firms which cannot use the computerised service will be able to get the information which they require? What steps are being taken to ensure that information about export opportunities is coming in as quickly as it is being put out by the computerised service?
Recommendations 6 and 7 deal with advertisement campaigns for the promotion of exports. The Committee recommended that advertising of exports should be on a regional rather than national basis. That was based on the evidence given by Sir Derek Pritchard, Chairman of the British National Export Council, who said, at Question 189, that in his experience and that of the council, many firms in provincial towns and cities were not aware of the services offered by the Board of Trade. That seemed to show that there was a lack of advertising information available or else that it was not used.
1726 The Board of Trade said that a full analysis was being undertaken of the scope and methods of advertising. There had been fairly poor results from regional advertising hitherto, but it did not say why. It said that it was examining the matter again. What progress has been made? What is the new form of national advertising, and what is it costing?
In Recommendation 9 the Committee emphasises the importance of recruiting local commercial officers, who could ensure an element of continuity of service which is inevitably lacking in the diplomatic service. The diplomatic service had not noticed any marked improvement in the status of the locally recruited commercial officers consequent on the recommendation of the Plowden Report, but it was the unanimous view of the C.B.I. and the chambers of commerce that such locally recruited personnel would be invaluable and that the inducements offered to such men by way of salary and career prospects should be sufficient to attract and retain men of the very highest calibre.
Some evidence was given about the promotion prospects. The Ministerial reply to the recommendation showed that improvements in the conditions of service of these people would be extended when possible. Can my right hon. Friend say a few words about the enlarging of career prospects, introduction of local pension schemes, and so on?
One other point which has been a common factor in most speeches deals with Recommendation 15, the new national exhibition centre near Northolt Airport. The Board of Trade recognises the need for such a scheme and said that discussions are going on with industry. This has been in the air for a long time. I live not far from the Crystal Palace site, and there is an important site just waiting for development there. Apparently that site has been abandoned, but I hope that the President of the Board of Trade will be able to announce very quickly that agreement has been reached with industry as to the capital financing of the site. Is it still a fact that industry is prepared to pay rent for exhibition space, but not prepared to help in the capital cost of the site?
Is it still a fact that the Government are completely unwilling to shoulder the whole burden of the capital cost? There 1727 must be some area of agreement and compromise. If it is in the national interest that there should be such an exhibition centre, it should not be beyond the wit of Government, industry, or both, to reach a satisfactory solution. There must be alternative methods of financing the scheme. The Committee, particularly the chairman, are to be complimented on producing such a Report and for giving us this opportunity to debate one of the most important problems this country is facing.
§ 6.26 p.m.
§ Mr. A. P. Costain (Folkestone and Hythe)
It is always a pleasure to follow the hon. Member for Fife, West (Mr. William Hamilton), particularly since, in his capacity as Chairman of the Estimates Committee, he has ipso facto the right to attend our Sub-Committee meetings. I join with the Chairman of the Sub-Committee in congratulating the staff who helped us so much. I should like to associate myself and my colleagues with the tributes which have been paid to one who has departed from the Committee. It was interesting to see how many questions which he asked in a penetrating fashion have been pointers for today's debate. We shall miss him very much.
It was also interesting to hear the hon. Member for Luton (Mr. Howie) make the same points on S.E.T. as he made on the Finance Bill. I was amazed that his memory should be so good about one thing and yet so hazy as to how he voted. We both spoke with the same voice, but we walked with different feet. I support him in his appeal to the President of the Board of Trade.
§ Mr. Costain
On the day after an important cup final, we had better keep to the business. It was obvious during that debate that there was a powerful case. The President of the Board of Trade should bring to the attention of the Chancellor once again these important points. It is ridiculous that people making a model for export are not subject to S.E.T., yet someone drawing up a plan is. It is putting an unnecessary burden upon professional people. The hon. Member for Luton would not admit that the man who drives the lorry to 1728 deliver the goods to the docks is still subject to S.E.T., because he is part of a team. However, this is not a debate on S.E.T. but on exports.
I want to thank the Chairman for the very tolerant way in which he gave other members of the Committee the opportunity to ask questions. Having heard him today for an hour and ten minutes, the House will realise that he is not a man easily suppressed. It was fascinating to hear him making a speech of such a non-controversial nature. It is so unusual for him. I was surprised that at one moment he slipped from grace.
The Chairman of the Estimates Committee made a special point about the terms of reference. Debates on the Committee's Reports present an opportunity for marking the examination papers done by other hon. Members. I very much welcome criticism because, as the hon. Member for Fife, West said, we are not infallible and we are not all experts. One great advantage of the House of Commons is that, by sheer fluke, there always seems to be a Member with specialised knowledge of whatever subject is under consideration.
My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) wondered why the Committee did not probe more deeply into the opportunities for exports. I am sure that members of the Committee would have been delighted, even during the recess, to visit Japan to study the position there. It is well known, however, that there are not funds available to go wherever we like. We should have to get special permission even to go to Belgium.
I know that my right hon. Friend the Member for Leeds, North-East is most studious and conscientious in his work, but I wonder whether he read the evidence which we heard rather than the memoranda, in which there was a lot of reference to this matter. An article in the Financial Times of 21st January expressed disappointment with the results of the Committee. The headline was:Overhauling, not tinkering, needed for the export machine".It was critical that the Committee was not capable of producing a miracle, Only one Member of the House thinks that he is capable of doing that, and he is not here at the moment.
1729 It is right that I should declare an interest. The hon. Member for Luton hinted that I was on the Export Group of Construction Industries. I have been a member of that body for a number of years. My first export contribution was made as far back as 1935, when my group was building a railway then known as the Trans-Persian railway, now known as the Trans-Iranian Railway, except by the B.B.C., which always refers to Iran as Persia, and I never know why. In the years before I became a Member I was responsible for the majority of the exports of my group. It gave me the opportunity to visit many parts of the world and to meet the members of the staffs of embassies. The change in attitude which has taken place in embassies during the last 35 years is fascinating.
I well recall—I have mentioned this in the House before—that in 1934 the British ambassador in Persia did not get the enthusiastic welcome which is given today. He thought that any British firm going out to work in such a country would probably add to his diplomatic difficulties. He did not say that we were a nuisance, but he gave every indication that he was not sure that we should be there. Today, from the ambassador downwards, it is appreciated that the development of trade is one of the important features of the job. The Association of British Chambers of Commerce made particular reference to this on page 83 of its memorandum. It says that there are different standards in different British embassies. My experience is that our embassies vary, but that the best are some of the best in the world and that the worst are not as bad as some visiting business men think.
Reference has been made to the importance of recruiting staff locally. Locally recruited staff are an important element in the embassy. Recommendation No. 9 in the Report was referred to by the hon. Member for Fife, West. I was fascinated by the Board of Trade's reply to it:The Diplomatic Service should consider what further improvements can be made in the conditions of service and status of locally-recruited commercial officers".In the evidence given to the Committee, the question arose whether these people were accepted in the social life. In my experience, particularly in the East, the effectiveness of a man in his job depends very much on the face that he is able to 1730 present and the importance which he has in his own organisation. We made recommendations and, in the main, they have been accepted. But I was surprised that the hon. Member for Fife, West missed this point.
The Board of Trade, in its reply, said:The Diplomatic Service is conscious of the need to improve the status of locally-engaged officers where practicable. Within the post there is of course no intrinsic reason why local commercial officers should not be brought into its social life. This is not so much a matter of status as of the individual himself".This seems to be a case of inverted snobbery. But is it not obligatory on embassies to realise that they should recruit the type of person who is accepted in the social life.
My experience orginally was confined more or less to selling capital goods—railways, docks, harbours, and factories. This involves a different type of selling from the normal run of exports. It is a matter of regret to my industry that the Prime Minister will not even make us eligible for the Queen's Award, because we think that our contribution to exports is very great.
Another factor referred to in the Report is the work done by the Export Credits Guarantee Department. When it started it did not have much success, but over the years it has made an enormous contribution. The Association of British Chambers of Commerce made some criticism of the E.C.G.D. We have found it to be very good. However, when an exporter goes overseas to sell a product, the more he knows about the product and the credit terms he can offer, the better are his chances and ability to sell. One of the grouses made against the E.C.G.D. is that it will not give exporters a blank cheque. I see its difficulties, and the President of the Board of Trade sees its difficulties. But there is room for a certain amount of latitude to be given, just as a bank manager will give a customer a certain amount of latitude over a short time.
What worries me—and this point emerges again in evidence on page 317—is that the staff of the E.C.G.D. is very specialised. We are most fortunate in the senior officials there. They have learnt the hard way. They have the ability to know what risks can be taken. Indeed, 1731 their job depends on that just as the bank manager's does. But the Report says:The main problem foreseen in meeting the extra demands is in producing the staff required, especially managerial and trained staff. The numbers involved are not large but much of the work is highly specialised and skilled technicians take time to produce. At senior levels they can be appointed only after considerable practical experience.I ask the right hon. Gentleman to give this vital point special attention and consider whether there cannot be greater efforts to train up staff, because those in charge now are not long off retirement and it is essential that their good work should be continued. Just as the House is entitled to acknowledge the hard work of the Committee, it is entitled to know what the Government are doing to meet these requirements.
The other main object of the debate is to highlight the problems of British industries wishing to export, to give some greater publicity to the facilities available and to point out where we are lagging behind other nations. From my own experience, I should like to offer some ideas on what is necessary to hit the jackpot in exports. There are five "rights" involved.
One has to have the right material of the right quality in the right place at the right time with the right service. This is not a jackpot one gets by pulling a handle and hoping that all the numbers will come into line. It is much more akin to those puzzles which we sometimes do at Christmas where one has to get six balls into six little holes. A child of four can get one ball in a hole; a child of eight can get two in, and a child of 10 can probably get three in. But if one tries to get all six in, then skill really becomes necessary, and determination as well.
What the exporters do not want or should not want is direct Government assistance in how to solve their own problems. What they want and have a right to expect is for the Government to explain the rules and tell them how other people have solved these problems. If we get that point right, it is much easier to see what is expected. Three hon. Members in the debate have made references to the suggestion for changing the name and concentrating the export organisations. I have a special point on this, 1732 because it comes out clearly. I hope that the right hon. Gentleman will not take this as criticism of this Department because I want him in a good mood when he replies.
Industry gets so many forms from the Board of Trade, so many inquisitions, that it is becoming a little suspicious and is wondering whether, if it fills in any other forms, the Board of Trade is going to do something to help or whether it is another police effort. There is a wonderful document about exporting which all of us need to know but I feel—and this emerges in quite a lot of the evidence—that it might be done under another name, such as "Great Britain Exports Ltd." or something like that, and that at the same time the structure of the E.C.G.D. should be amended so that commercial officers could make a career in our embassies.
Under the present structure, the period of time served by a commercial officer in that job at the Foreign Office is just a step in the career of a budding ambassador. It is done on the way up the ladder. The time has come when this job should be a career in itself, because the fair criticism has been made that a commercial officer never stays in his post long enough. I spent seven years in Persia and from that experience I believe that it is only after such a period that one really gets to know a place, meet people and gain respect. But by the end of such a period, a hard-working, ambitious and efficient commercial officer—and if he is not all three we do not want him—is ready for promotion and, of course, it would be wrong to keep him in post if he is worthy of promotion.
The Government should consider making a special department for exports with the highest posts available to commercial officers and so create a proper career structure for men able and willing to stay in post for some time. In my own firm's experience, if we want men to stay in the not too pleasant parts of the world for some period, we either have to arrange a generous system of early retirement or indicate to them that the highest posts at home are open to them and that they are doing right for their careers in staying overseas. If the President of the Board of Trade looks into that aspect, he will do much to help exports.
The right material of the right quality is very important. That immediately 1733 brings to mind market research. I cannot deny that the best market research is for an industrialist to send out his exports to an area to make a proper survey. There is little difficulty in that for the larger firms like I.C.I. and Hoover. The evidence given to the Sub-Committee by Hoover, an international firm with branches all over the world, was fascinating and it appears on page 219 onwards. It explains the approach which other nations make to their factories. It refers to the survey made by the Australian Government when Hoover (Australia) Ltd. wanted to develop in the Singapore area. In 1965 they were critical of the then staff of the British office in Singapore. I know from my own experience that that is not a valid criticism today. Evidence was given to the Committee of a confidential nature and I am sure that the hon. Member for The Hartlepools will confirm that it was fascinating to hear about the amount of data which had gone out from the Australian Government to help exports.
Market research, as I have said, is a two-way trade. The commercial officers, as the senior staff responsible in the embassies, should be given opportunities to come back more often to the United Kingdom. I think of my old Sunday School days when the missionaries used to come back from overseas and tell of the thrills and excitements of their missions. If the commercial officers were invited back more often to this country, they could be given opportunities to speak at chamber of trade lunches, rotary clubs and at other industrialists functions. That more than any advertisement would stimulate local industrialists to take more interest in exports. I do not believe that many industrialists read advertisements, and criticism on this score is made in the Report.
Most industrialists are always fascinated to read about the successes of their competitors. I know the excitement in my own group when one of our competitors lands a contract that we had never even heard of. The office buzzes with the news. I suggest that through the embassies much more publicity could be sent back about successes, not only by British firms, but by other nations. I am sure that this would stimulate a competitive spirit among British industrialists.
§ Mr. Dalyell
In support of the hon. Member's argument, may I ask whether he is aware that every fortnight a plane is run by the Ministry of Technology from Britain to Adelaide and Woomera in Australia. There are usually empty seats on the plane which could easily be occupied by some of our valuable commercial staff in Australia. Such a proposition could equally apply to the Far East, where Forces' planes go to and fro.
§ Mr. Costain
That is a most helpful intervention. I was not aware of that fact. I hope that the President of the Board of Trade is aware of it and that he will take the opportunity to find out whether the plane could be diverted en route.
A great deal of time and energy is devoted by British industrialists to the work of British National Exports Council. The House should pay tribute to those industrialists who carry out this work quite free. In some instances they are helping their own competitors, but they are undertaking a most valuable job.
My third point relates to the time scale in relation to trade, which is a most important consideration. More trade is lost because goods fail to be delivered on time, or because goods are not available for a number of months, than any statistics could ever show. I shall not develop the arguments about all the problems caused by strikes which directly affect exports, or the argument that those who feel it their duty not to become blacklegs may, in their innocence, become export saboteurs since their failure to deliver a product amounts to export sabotage. I suggest that when these commercial officers come back to this country, they should take the opportunity to visit firms, as was done during the war, so that they could talk to individual workers and to stress how their efforts can help our exports.
The House will know of the severe restrictions of G.A.T.T. The Sub-Committee took evidence from the Birmingham Chamber of Trade, and I asked one witness how the Agreement was being operated. I suggested that we were operating the Agreement as if we were playing a cricket match, but that the other nations were playing the Cup Final. The witness said that it was even worse than that.
1735 I have been talking with experts about ways of getting round G.A.T.T. in order to help our exports. I suggest that in areas where there are no British agents, or indeed any agency in existence, we should build advance factory warehouses on the sort of basis that we build advance factories in development areas. In this way we should not contravene G.A.T.T.
I suggest that British manufacturers should put a small stock of their goods in these warehouses so that those goods would be immediately available. It would be possible in the distribution of machinery to use the ordinary agencies, but we have now got the O.M.C. which possibly could be developed. Would the President of the Board of Trade give the matter special thought, and could he say whether this suggestion has possibilities and whether it would comply with G.A.T.T.?
I now come to my fourth point: what is the right price? How is it established? Is it a market price, is it a profitable price, or is it a price calculated because the quality is above the market quality? It is only by visiting and sampling that this aspect can properly be appreciated.
It is important that the Government should not take measures which make the British price of goods for export noncompetitive. The hon. Member for Luton has referred to the selective employment tax. Certainly the Budget increases will add directly to the price of goods. The transport and shipping of goods are just as much elements in cost as is manufacture.
Could there not be some form of rebate? The hon. Member for Luton said that consulting engineers should be allowed to be free of S.E.T. in the export of plans. He has obviously forgotten the argument, which no doubt the President of the Board of Trade will later deploy, that under G.A.T.T. one cannot exempt a particular function of an organisation because it is doing export work. That is rule number one of G.A.T.T. There is of course the argument that S.E.T. should be abolished altogether. But if that cannot be done and the President of the Board of Trade would consider freeing from S.E.T. all consultants and architects, I am sure that that would not be a contravention of G.A.T.T. We 1736 should then leave the industry to get on with the job.
To come to my fifth point. The place where the goods are needed—
§ Mr. Deputy Speaker (Mr. Sydney Irving)
Order. I would remind the hon. Gentleman that he has been speaking for 30 minutes and that there are a number of other hon. Members who are still waiting to speak.
§ Mr. Costain
Thank you, Mr. Deputy Speaker. I wondered whether you were getting restless. I apologise, but I do not often make 30-minute speeches. Of course, I will take the hint.
In conclusion, perhaps I might echo what my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said. If the Government will let industry get on with the job, arrange taxation to encourage efficiency and make available in our embassies overseas the necessary specialised services, even today's encouraging export figures will grow better.
§ 7.0 p.m.
§ The President of the Board of Trade (Mr. Anthony Crosland)
I am sure that I speak for most hon. Members when I say that I was not getting restless with the speech of the hon. Member for Folkestone and Hythe (Mr. Costain). I was greatly enjoying it, and I rise now obviously with no desire that the debate should come to an end, but simply because a number of hon. Members have raised the same questions, and it would save time to answer some of their specific points at this stage.
To begin with, like other hon. Members who did not serve on the Sub-Committee, I want to record my warm appreciation of the work put in by my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) and the members of his Sub-Committee. Their Report has been of great value to us in the Government and has also stimulated a constructive public debate about our export services. We all owe them a debt of gratitude for their efforts.
In a Report of this kind, we are not necessarily looking for expert professional advice, because probably that can be obtained from other sources, but for an outside look at an aspect of Government service which is made by experienced people of good judgment. From 1737 that point of view, the Report has been extremely useful.
Before coming to the Report, I must say one word about today's trade figures and the way that exports are going generally. They are the background to all the work of export promotion. The House will know by now that in May exports reached the record level of £567 million, seasonally adjusted. The right hon. Member for Leeds, North-East (Sir K. Joseph) congratulated me on the good fortune that this debate coincided with a good run of export figures, and I am very conscious of that.
However, as I do not like to push my luck too far, I reiterate what I have said many times before, that we must not read too much into a single month's figures, and, certainly, we do not want to encourage further what my hon. Friend the Member for Fife, West (Mr. William Hamilton) called the national neurosis of paying far too much attention to one month's figures, whether they are good or bad. Nevertheless, it is encouraging to see our exports to North America regaining, and, indeed, surpassing, the high rate that they had achieved before the American dock strikes.
Looking back at the record for 1969 so far, exports have averaged £547 million a month compared with £536 million in the second half of last year. Perhaps this is not an enormous increase, but it has been achieved despite the effects of the United States dock strikes, our own strikes in the motor industry and the marked lull in deliveries for export of ships and aircraft. The May figures show an improvement in respect of each of those three factors. The recent monthly figures also give reassuring indications about our main markets, with strong recovery to the United States, resumed growth to Western Europe, and a continued increase in shipments to the sterling area.
For the rest of this year and into 1970 our exports will be influenced strongly by the development of world trade. Clearly, we cannot expect a repetition of last year's sensational increase in world trade. Nevertheless, the flattening out in the growth of world trade which has been much heralded and so long prophesied has yet to appear, and present indications are that we shall see a good growth, although rather slower than last 1738 year. Within that growth, there should be ample opportunities for a substantial rise in British exports.
I say that for two reasons. The first is that our export performance has improved since devaluation. The second is the benefit still to come of the very substantial increase in engineering export orders achieved in recent months.
On the first point, since the beginning of last year we have come very close to maintaining our share of world trade, which is something that we had very seldom achieved in the years before devaluation. Moreover, we did it in a year of very fast growth in world trade, whereas in similar periods in the past we tended to lose our share rapidly. Over the period since devaluation, our exports have grown in volume by 17 per cent., equivalent to an annual rate of 9 per cent. or nearly three times the average rate over the previous decade.
A substantial part of the cost advantage from devaluation remains and should bring us further benefit this year. I have said on many occasions that the full benefits of devaluation will take time to develop. It often takes more than a few months for a firm to redirect its marketing efforts towards a higher level of export sales, to expand its sales networks, to develop goods designed specially for world markets and in the case of capital goods, to negotiate and fulfil orders.
Exports of machinery, which account for over a quarter of our total exports, have increased since devalution by only about 25 per cent. in value, compared with 30 per cent. for all exports, 43 per cent. for motor vehicles and 50 per cent. for clothing and footwear. But, with engineering orders up in volume by 20 per cent. in the second half of last year and by nearly 50 per cent. in the first quarter of this year, compared with the second half of 1967, I think that we shall see a substantial rise in machinery shipments later this year and next.
In this analysis, I have not taken into account the extent to which published export figures may underestimate the full measure of our exports. This matter was referred to in the Press notice about the May trade figures which was published this morning.
Considerable reference has been made to "invisibles" by a number of hon. 1739 Members, especially by the right hon. Member for Leeds, North-East. They all spoke of the continued contribution made by invisibles to our balance of payments and, in particular, of the remarkable figure of £47 million for the net invisible balance which has been the monthy average in the first quarter of this year. I gladly join in all the glowing comments about the performance of the invisible balance, from whatever part of the House they came. I say that because, for some reason, those tributes came most conspicuously from the Opposition benches, as though hon. Gentlemen opposite had some proprietary interest in invisibles and invisibles were idealogically their property. I fail to see why that should be so. I do not see why the Conservative Party should be in a position to claim credit, whether practical or ideological, for the excellent behaviour of tourism, shipping, aviation and other aspects of the invisible account.
We have to bear in mind that by far the largest reason why invisibles are doing so well at the moment has been devaluation, which has had a very marked effect on tourism, on the travel section of invisibles, and most conspicuously on the figure for profits and dividends.
§ Mr. David Howell
Arising from that, is not the reason for the praise appearing to come mostly from this side of the House a negative one in the sense that there appears to have been so little praise in the speeches of Ministers? If the President of the Board of Trade looks at "The Task Ahead", which is meant to be a projection of the Government's economic policy, he will find scarcely any positive proposals concerning the development of invisibles.
§ Mr. Crosland
No doubt I shall have to refresh my memory about the details of "The Task Ahead". It was a long document. I read it when it was published, but that was some weeks ago. Whatever is said by "The Task Ahead", I would repeat what a crucial part in our total performance is played by the invisible side of the account, and with increasing success, despite S.E.T.
The argument about S.E.T. gets totally out of perspective when we are discussing invisibles. The tax affects only a proportion of those responsible for in-1740 visible earnings. If we go through the different categories of invisibles, it affects most of those only to a very small extent, quite apart from what was mentioned by the hon. Member for Folkestone and Hythe about the difficulties that we would have with G.A.T.T. if we explicitly differentiated in respect of S.E.T. During the months that we have been arguing about S.E.T. and its disastrous effects on invisibles, the fact is that the invisible surplus has shown a continuing improvement.
§ Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)
The point we are trying to make is that it is very hard for people to respond to the right hon. Gentleman's encouragement when they are at the same time being clobbered. Surely the effect of the Government's attitude on exporters is significant.
§ Mr. Crosland
I do not think that anybody in this field can describe himself as being clobbered. I am aware of the attitude and criticisms of the British Export Houses Association and others. Reference has been made to them this afternoon. But if we look at the proportion of their turnover that S.E.T. represents, the word "clobbered" has absolutely no relevance of any kind. In any case, they do not act as though they have been clobbered, because they continue to give us a larger and larger invisible surplus as each quarter goes by. The right hon. Member for Leeds, North-East mentioned one or two other general points to which, as a matter of courtesy, perhaps I should reply. He asked: what is the state of play on the inquiry into the value-added tax? The state of play is that the N.E.D.C. has been looking at the problems involved. I understand that its report is in an advanced state of preparation, although no date has yet been fixed for publication.
The right hon. Gentleman also referred to overseas investment and the restrictions placed upon it. There is a great deal of public misunderstanding about this subject. People talk as though there was a total restriction on overseas investment, but that is not so. There are certainly restrictions, but the volume of overseas investment, partly in consequence of borrowing overseas, is very substantial and is rising.
Perhaps I might briefly give the figures since there is so much misunderstanding. 1741 The net outward investment of United Kingdom resident companies in 1967 was £281 million. In 1968 the figure was £372 million. In the first quarter of 1969 it was £135 million, which is an annual rate of £540 million. So that, despite the restrictions which exist and which I know in certain types of company can be a great irritation—I am very conscious of this—our private overseas investment is running at a very high level historically.
My hon. Friend the Member for The Hartlepools raised another general point when he said that in general we were gentlemanly in this country and did not break enough G.A.T.T. rules sufficiently often. I accept the suggestion that we are gentlemanly. All I am concerned about is whether we are more gentlemanly than we ought to be or than other countries are. It is worth remembering that, compared with other major trading countries, over the last five years we alone have had a substantial devaluation and we alone have introduced import deposits. So we have taken more direct measures affecting our balance of payments than any other advanced industrial trading country.
Certainly, when I go to E.F.T.A. conferences—which I do twice a year—and argue about smelters or tariffs on frozen fish fillets or other things, about which there has been criticism this afternoon, I do not find that Britain is thought of as a country which alone, in contrast to all other major countries, is accepting all the rules of international behaviour. In this sphere every country that one visits thinks that it is standing in a white sheet and that everybody else is breaking the rules. So when we in this country sometimes say this, it is not substantially different from what is said in many other countries.
I turn rapidly to the Report of the Estimates Committee. My right hon. Friend and I have given our answers to the recommendations in Command No. 3854, so this afternoon I will select only a limited number of the most important points which have been raised.
The first of the recommendations referred to this afternoon was that the various parts of the Board of Trade dealing with exports should be…formally combined in a Department within the Board and given a distinct name 1742 to indicate to industry and the public the Department's concern with export promotion.In my response to this recommendation last December, I made it clear that I accepted fully the need to get right the structure of our direct export services and to get these organised along the most efficient lines. I am not yet satisfied that we have fully achieved this. I indicated in the White Paper, which was our answer to the Select Committee, that we had already taken the first steps in this direction.
To be explicit, I said in the White Paper that, as a first step, the Trade Fairs and British Weeks and Store Promotions Branches had been amalgamated and would now be located with the Export Services Branch in a single building in the city. But I have now gone a stage further and amalgamated the former Export Services Branch and the Fairs Branch into a single organisation within the Board of Trade. This new organisation, in conjunction with the export sections of our regional offices, will provide the focal point of contact for British industry and should be a significant step forward.
I have also set in hand, because I am not yet satisfied that we have achieved completely the right organisation, a thorough review of all those parts of the Board of Trade which deal with exports. This review will be conducted by a senior official of the Board who has had recent experience of the work of our commercial posts overseas. I have been fortunate enough to persuade Mr. Hector McNeil, who is known to many in the House as the chairman of one of our largest exporting companies and Chairman of the Export Council for Europe, and Professor Elliott Jaques, of Brunel University, to collaborate in this review and to offer their advice and guidance. In their review they will take fully into account all the points made by the Select Committee in its Report and the evidence which was put to the Select Committee by the C.B.I. and other bodies.
§ Mr. Anderson
I understand that the survey is only concerned with the internal departments of the Board of Trade. Because of the danger of overlap between official, semi-official and nonofficial bodies, would it not be more 1743 valuable if Mr. Hector McNeil had a much larger remit and was asked to look at the whole sphere of export promotion overseas, official, semi-official and nonofficial?
§ Mr. Crosland
I was coming to the point about our relations with other bodies. For the moment, I am on the point raised in the Report of the Estimates Committee about the organisation of the services within the Board of Trade. Perhaps I might conclude that point by saying that I agree with the right hon. Member for Leeds, North-East that the timing of our debate from this point of view is unfortunate in that we shall now have to consider the report of Sir Val Duncan's Committee which will open up a great number of these issues. I wanted the review that we are conducting to have got off the ground and to have started in preparation for anything that the Duncan Committee may also recommend on how our export services generally should be organised within the Board. Sir Val Duncan presented his Report to my right hon. Friend the Foreign and Commonwealth Secretary on Monday and my right hon. Friend will inform the House as soon as a decision on publication has been taken.
The right hon. Member for Leeds, North-East also mentioned, as did my hon. Friend the Member for Monmouth (Mr. Anderson) just now, the different question of the relationship between the Government's export promotion services and private ones, in particular, to the N.E.D.C. and whether we should seek drastically to reorganise and alter this relationship. I have thought a great deal about this and have come to the conclusion that at this time it would not be right to do so, and the Estimates Committee did not so recommend. On the whole, the preponderant opinion, not only in the Government but within N.E.D.C. and private industry, is that the present set up, though it looks untidy on paper, works well and operates efficiently and there is no sufficient cause for a radical change in the relationship between the Government and the N.E.D.C. Having thought it out, that is the view which I take at the moment and shall stick to.
§ Mr. Tom Boardman
The right hon. Gentleman will bear in mind, I hope, paragraph 9 of the Report, which said that the Committee would not wish to pronounce against such an inquiry at a future date. That was published over a year ago. Has he had that in mind in considering the terms of reference?
§ Mr. Crosland
I will certainly bear that in mind. I am not against an inquiry at some future date, but, at the moment, when Government services are under such scrutiny, both by this internal review and by the Duncan Committee, we had better leave it for the time being before we set up another inquiry into this much wider issue.
I turn to another step which we are taking, very much in line with another important recommendation of the Sub-Committee. I am glad to inform the House that work on a computerised service of export information for industry, instead of the present Export Service Bulletin, is now well in hand. There are some complicated details relating to the new service still to be worked out, including the very pertinent one of what the British exporter should be expected to pay for the service, but I see no reason why this considerable step forward in rapid and selective dissemination of export information should not come into effect at the beginning of 1970.
The Sub-Committee rightly paid a great deal of attention to our work in promoting British participation in fairs, exhibitions, store promotions and British Weeks. This is a very important and rapidly growing form of assistance. For instance, in 1966, support at Trade Fairs was given to 3,800 firms at 155 events, whereas, by 1968, we were supporting 5,300 firms at 239 events. In money terms, expenditure rose from £1.3 million in 1966 to, I estimate over £4.2 million in the current year.
The question of British Weeks was mentioned in the Report and again tonight. The British Weeks in Tokyo and Vienna later this year will conclude the present series of major British Weeks. I have already, in my response to the Report, indicated how hard it is to evaluate the British Weeks in hard terms, but there is no doubt that they have endeared themselves to some sections of 1745 British industry. There is almost a "Save British Weeks" movement growing up. This may be because there is some misunderstanding in industry about our attitude to such large scale promotions.
I have no wish to lose the best features of the formula which has been developed for these Weeks and I am sure that some of the more successful of those which we have staged over the last few years have enabled British exporters to achieve a permanent penetration into new and valuable markets. But we must obviously tailor our major efforts to meet the specific requirements of particular markets, so that we get value for money in terms of long term growth in our exports. It must be sustained and long term growth, as the right hon. Member for Leeds, North-East said.
The British Weeks formula is clearly not suitable to every market in every country. It has evolved a good deal since it was introduced in 1964 in Dusseldorf, but it remains essentially a method of promoting exports of consumer goods. I have definitely not abandoned the concept of making major export efforts on the scale of these Weeks and do not rule out the possibility that further Weeks on the established pattern may be held in markets where they are likely to be particularly successful—but we do not want to go on repeating an existing formula which, although it has succeeded in the past, has been shown by experience to have distinct limitations. We must be prepared to try out new forms of promotion to meet different market situations.
§ Mr. Dalyell
Is it not important not to confine Brtish Weeks to a capital or metropolitan city, but to see that the effort is diversified around the country? For example, too much attention on Tokyo might, in some circumstances, be a loss in relation to the large market in Osaka.
§ Mr. Crosland
This is something of which we are conscious. After we have held the British Week in the capital, we try to follow up in some other part of the country, just as we are following up the British Week in Stockholm last September with a major effort in Gothenburg.
The Sub-Committee referred to our advertising, and I have said in my reply that we would be changing our approach in our new series. The previous series, 1746 "Call Export Intelligence", which was a good deal criticised, has come to an end, and we are concentrating on advertising specific markets and aiming to draw specific opportunities to the attention of those sections of industry which we believe to be really capable of achieving higher exports. In other words, we are trying—I think that this was in the minds of the members of the Sub-Committee—to introduce a policy of selectivity in our advertising.
But this goes well beyond advertising and will increasingly apply to all our services. Our resources are not unlimited and we must move away, as we have already done to a considerable extent, from the principle of non-discrimination among firms. With limited resources, we cannot pay equal attention to all firms, regardless of their true export potential. We must be selective and give priority to the successful and established exporters, and those most likely to achieve success—again, the right hon. Member for Leeds, North-East had a graphic phrase which I noted down—"those who are likely to maintain success over time."
The right hon. Gentleman also raised a most interesting question of whether this selectivity should be by size of firm. It is certainly not our experience—I think that the hon. Member for Folkestone and Hythe would agree with me—that the largest firms make little use of our export services—often, rather the reverse. Some of our biggest exporters are amongst the most regular and demanding of our customers.
At the other end of the scale, there are small firms with excellent export records, whom we also support to the utmost. In the past, partly, we hope, as a result of our help, some of these small firms have been so successful in overseas markets that they have become winners of the Queen's Award and, in many cases, household names as brilliant exporters.
Therefore, although we are now adopting a more selective approach, we do not regard size as the essential and meaningful criterion. We would judge that it is the established and successful exporters who will be able to give us the biggest improvement in exports over the next year or two, so we are giving priority to their needs. But that does not mean that we shall judge them by size or neglect 1747 the smaller firms or those which have not yet begun to export on a significant scale. All that we are concerned about is their export potential.
I will not catalogue many more of our services. One which does not get much publicity, but which is important, is the attempt to simplify export documentation. Accurate recording is of crucial importance, as our press statement today emphasises, but anything which we can do towards further simplification and increased use of computers and so on is highly desirable. Here, the Report of the Committee under Lord Thorneycroft, which will go to the Movement of Exports "Little Neddy" at the end of the year, will be of great value.
Of specific Board of Trade initiatives, I do not want to repeat announcements which I have already made to the House, so I will merely refer to the Overseas Projects Group, the export marketing research scheme, and the work of the Group Export Representation Unit. These are now under way and in hand. I also will not take up the point about E.C.G.D., to which I was glad that the hon. Member for Folkestone and Hythe paid a tribute. I take his point that we must watch the future, in view of pending retirements and the like, but this is very much in my mind, as is the question of flexibility.
But it would be generally agreed—I know that the hon. Member for Hove (Mr. Maddan) is in dispute over a particular project at the moment—that, in recent years the Department has tried to find new opportunities, such as buyer credit at the moment, to improve the efficiency of their services.
But I must refer in a little more detail to the National Exhibition Centre. This has been a long-drawn-out, and to me intensely exasperating and frustrating story. My hon. Friend the Parliamentary Secretary outlined it to the House in an Adjournment debate last February, and I shall remind the House only of the essential features.
In 1962, industry was prepared to play a positive rôle in financing a National Exhibition Centre at Crystal Palace. But the Confederation of British Industry—the Federation of British Industry as it 1748 was—advised that the terms of the G.L.C. trusteeship of the Crystal Palace site made it impossible for the land to be security for a debenture issue, and it left the finance to others. Despite that, the Government were ready to give serious consideration to financing the Crystal Palace Centre jointly with the G.L.C.
But a combination of rising costs and growing doubts, in industry and in the Government, about the suitability of the Crystal Palace site led eventually to the abandonment of these plans, and a committee was set up under the chairmanship of my noble Friend Lord Brown to find a new site. This committee included representatives of the C.B.I., the British National Export Council, the Association of British Chambers of Commerce, as well as the interested Government Departments.
After intensive study the Committee recommended a site near Northolt Airport, and I accepted that site as being the best, but there still remained the problem of finance. Neither the Government, at a time of stringent control over public expenditure, nor industry collectively, were willing to commit themselves definitely to the large sums of money involved. But I have now had certain proposals put to me by a private developer which may enable the scheme to go ahead more economically. I am awaiting detailed information about these proposals, and at this stage, therefore, I cannot tell the House definitely whether the project will go ahead, with or without support from public funds.
I wholly share the general impatience and disappointment that events have not moved faster. Many of us who go abroad see fine exhibition centres on the Continent and elsewhere. These centres typically were created, not by finance from central Governments, but by municipalities and local industry which saw the advantages of a major exhibition centre to the locality as well as to the country. We have not had the benefit of such municipal initiative in our case, and those sectors of industry which have persistently urged the need for a centre have not always shown an equal readiness to back their support with the necessary finance. Given, also, the Government's reluctance to find large sums of money at such a time, the blame for the delay is probably 1749 fairly widely distributed, but for my part I am still determined to see the project become a reality.
§ Sir K. Joseph
Will the right hon. Gentleman bear in mind the possibility of substituting a Government guarantee for use of public money as a possible way of unlocking private resources?
§ Mr. Crosland
I shall gladly bear that in mind. It is something that we have considered. I do not think that there is any method of Government support or financing at which we have not looked with the most meticulous detail, and, indeed, which has not been looked at by those representative bodies in industry which are as anxious as we are to go ahead.
As a number of hon. Members said, export promotion does not involve simply the Board of Trade. It heavily involves the Foreign and Commonwealth Office, particularly its commercial officers, and I think that the timing of the debate is a little unfortunate, because the Duncan Report will have a great deal to say on that aspect of the matter which is not primarily my responsibility. I should like to say again—as one or two hon. Members have said—that on going round the world—as I do a great deal whenever the hon. Member for Folkestone and Hythe is not raising awkward matters, such as the Duccio—I have been very impressed with the calibre of the commercial officers and staff in our embassies abroad.
From everything that I hear, it is much higher than it was a few years ago, and what is also striking is that, at any rate outside three or four major countries, it is not merely the commercial staff, but the whole of the embassy from the ambassador downwards who are actting as trade promotion officers. I found the atmosphere in these embassies intensely encouraging and exciting, but I shall not go into more detail simply because of the pending Duncan report.
I conclude by saying that I am determined to make sure that our services will give the proper support to industry's export efforts. I hope that the growing success and growing intensity of our efforts will be apparent from the rising expenditure—up from £1 million in 1965 to an expected £6.5 million this year— 1750 from the large number of new initiatives that we are taking and have been taking, some of which I have mentioned this afternoon, and, above all—because this is what I find most heartening—from the growing reputation—I do not think I am claiming too much—which our services enjoy in industry.
We commissioned some independent market research for our proposed computer service. It showed, incidentally, that over half of our exporters learned of export opportunities from the Government services. It also showed that there was in industry an enormous reservoir of good will towards the Board of Trade in its efforts to assist British exporters. Without being in the slightest degree complacent, I take pleasure in that, but I am certain that we can, and should, be doing even better than we are doing now.
§ 7.35 p.m.
§ Mr. David Crouch (Canterbury)
It is a rare pleasure for me to follow the Minister, and even tempting to take up every point that he made, but I shall not be so tempted because, Mr. Speaker, you have reminded us to be brief.
I think that the Report is a good one. It is good in the sense that it has produced this debate. It is good in the sense that it has produced such good speeches from both sides of the House, and two such constructive speeches from our two Front Benches. We are grateful to the right hon. Gentleman for having, as it were, taken this investigation by one of our Select Committees to this stage of some constructive proposals. This is what we have Select Committees for, and I wish I could say that all Departments brought the matters on which Select Committees report to the Floor of the House, even within a year.
I think that I can describe myself as a person who has for many years been an international marketeer. I have practised this business of international marketing in many countries—in the Commonwealth, in Europe, in Russia, in Japan, in the Far East, and in the United States. I am not alone in this House in that sort of experience—my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has been at it for longer—but I have been concerned with the international marketing and promotion of consumer goods, served by a 1751 very large company, rather than capital goods.
I, too, have seen changes in the attitude in our embassies and our ambassadors and their staffs—not only commercial counsellors, but the whole staff—as they have moved from being concerned only with political activities, towards commercial reorientation, and this has undoubtedly been a great service to British industry. I hope that the change will continue to develop and grow.
I was recently in a South American country where I was vividly struck by the commercial orientation of our ambassador himself. When talking to a delegation of politicians on a political visit he was able to paint for us in very clear detail the commercial scene against which we could see the political picture as well. And the same could be said for his supporting staff.
It was very encouraging, particularly because I once had to prepare a survey of South American countries for an organisation in this country which did not know the pattern there. On that occasion I found that I could not get much help from the Board of Trade. This was about five years ago, but I should explain to the right hon. Gentleman that I was looking at the textile industry, in which there was not much interest in the sale of products and machinery to South American countries, and so, unfortunately, the files in the Board of Trade had become rather thin with the years, particularly since the war.
One must seek other sources of information, and there are sources other than those mentioned today. For example, in addition to the United Nations, there are the resources, in the case of South America, of the Bank of London and South America, which has in its files some of the best information available about that area.
This may sound surprising, but I do not believe that exporting is really the natural element for the British. We have for too long been distributors to a tame market. About 15 years ago I went into one of our largest industries—the textile industry of Lancashire—in search of the support of a big British textile manufacturer in an effort to persuade him to consider exporting. He had 500 looms, a fair size of business even for Lanca-1752 shire, but his answer was, "How do I go about it?"
That was the reaction of the chairman of certainly a medium-sized firm 15 years ago. He did not know how to appoint an agent or about the size and potential of markets, even on his doorstep in Europe. Admittedly perhaps in that industry some of his products found their way abroad as a result of the activities of the Manchester confirming and converting textile houses. He did not know how to go about exporting. I had visited him on behalf of my company which was prepared to pay 90 per cent. of his expenses; we like a token 10 per cent., I told him, when initiating a venture abroad. He was hesitant about agreeing to my proposal and suggested that we had lunch. We got into a fine extravagant motor car and had a fine extravagant lunch.
Just as our ambassadors and staffs in our embassies have changed over the years, so too the leaders of our industry, in both medium and small firms, have changed their views and there is now a greater awareness of the potential and opportunity of export markets. I agree with the attractive phrase used by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) when he said that the thrusters were emerging in British industry. We want more encouragement given to the thrusters who are taking control and running British industry.
I wish to take a closer look at the question, "How do I export?" The Select Committee considered the aspects which lay around that question and it has provided us with a valuable Report in which it has sought to recommend the answers to the Government on how that question can best be answered. While Government information, advice and help, in this connection is good, it is good only to a point. It is helpful concerning overseas markets, where Government legislation in those countries requires diplomatic intervention. In countries in South America it can be particularly helpful for currency reasons and difficulties in exchange. In the Far East it can be helpful in understanding the eastern mind.
In this connection, I recall that on my first trip to Sweden the British commercial councillor in Stockholm reminded me 1753 about the Swedes' meticulous care for timing. They are meticulous about keeping appointments and he told me that if one had an appointment to visit a Swede, and particularly somebody at the Swedish Foreign Office, one should be there five minutes early, even if it meant marching up and down the pavement outside to enable one to enter the door at precisely the right moment. This may sound a tall story, but it is true and I speak from experience having visited the country about 50 times. People of other countries like to think that we take note of their ways and customs.
The Board of Trade has been helpful in its publications to British businessmen about countries and markets. Often simple advice about social habits and customs can be of the greatest value. There are, in addition, many other bodies from which one can gather information. Some of them take a more specialised, even a more commercial, approach than the Board of Trade. This is not a bad thing, for varying forms of suppliers of information can only be to the good.
I may differ from some hon. Members in welcoming the fact that the President has not decided to wrap up B.N.E.C. with the Board of Trade, since it is helpful, if the Board of Trade is unable to be of assistance, for one to be able to obtain another angle, perhaps a more commercial approach, from people outside the Civil Service; and in B.N.E.C. one finds people with considerable knowledge of industry and markets working voluntarily.
In considering the question, "How do I go about exporting?" there are seven points which are essential and which I hope the Board of Trade will note. They are particularly essential for the middle and smaller-sized industries in Britain to consider when looking at opportunities of selling more, which really means selling in markets outside this country.
The first requirement—my right hon. Friend the Member for Leeds, North-East referred to market intelligence—is the need to survey markets and, in this connection, the Board of Trade, the Foreign Office and other bodies can help. The British manufacturer can also find help by visiting in this country the embassies of the countries in which he is interested. There are in Britain some embassies and high commissions with 1754 trade departments, and they can be of considerable assistance.
Trade associations can be valuable and some of these could be enjoined to become more internationally market-orientated. Perhaps the Board of Trade could remind some of the less good ones to think in terms of world markets. Besides them, there are the banks and publishers, particularly the publishers of trade journals. I have found from experience that these publishers are often good sources of information about overseas markets.
Secondly, the good survey should reveal the effort required and the scale and method. What is revealed for the manufacturer may be daunting and the size of the problem may seem too difficult. One need only consider the problem of exporting to America to see how daunting a problem it can be. This is a vast continent, some 2,000 miles across, with different climates and ways. The cost of matching the competitive atmosphere of business there frightens most British businessmen. They should be frightened because they can easily burn their fingers trying to get into the American market.
The first survey is the most important. It should reveal not only the size and scale but the method and tactics. One should not necessarily try to sell, say, a consumer product in New York. It may be better to sample it by selling it in Phoenix, Dallas, Minneapolis or even on the other coast where the tempo of business is not as high-pressured as it is in New York. In other words, one should try the market on a scale smaller than New York, and this is what a good survey should reveal. I am not holding this out as an overall general rule, but as an aspect which ought to be thought of.
I have found that when the size of an operation seems too big for the medium or smaller sized industrial organisation here is something on which we can learn about co-operative effort. It is here where initiative by the Board of Trade could bring together manufacturers and merchants through their trade associations, or groups of associations, representing individual preferences but forming a group measuring up to the scale of the operation. I have seen this at work in the way the Japanese tackle selling 1755 in America and Europe. They are operating what actually is a British nineteenth century method by having great wholesale houses which have behind them a consortium of mixed manufacturers of the same kind of product. Through their groups they establish offices and employ staffs of first-class men. They speak, not only English, but probably German and French as well.
That wholesale consortium will also be staffed with technical men to provide technical services, because Japan is 6,500 miles away, yet still they can succeed in the highly competitive atmosphere of Europe and America. We think of their success in selling wool textiles in America with these techniques and money which give them the opportunity in any market to take the cream away from the top of the market even in the United States. Some 25 per cent. or more of the suitings sold in the United States are made by the Japanese. Their suitings are best for the American market because they make them to American tastes and not to Japanese tastes.
Japan is not a big country and it has only 90 million population. They do not model themselves on Americans but on us. We are a small island and we do not attempt to model ourselves on the United States. I do not say that the Japanese are better at exporting than we are, but they have a technique which we developed successfully in the nineteenth century. That is the collective strength of the great wholesaler. I do not think we in this country will ever get back to that. The collective strength of the wholesaler in Japan is collective in the real sense for he is a banker as well. Through him the finance can be provided and that is a great help.
I wish to say something about the pig-a-back method of the large manufacturer helping the smaller manufacturer. The large manufacturer produces a semi-manufactured product, such as synthetic yarns with which I have been concerned, and can take 20, 30 or 50 manufacturers with him to show in markets overseas examples of what can be made from his product. The big man at the centre, in this case the chemical industry manufacturer, with large resources can face the scale of operation and can be helped 1756 by having manufacturers with him to show examples of what can be produced.
They not only show what can be done; they also sell the products. Sometimes they can enter a market or even the export business for the first time under the comforting umbrella and strength of the large manufacturer who has offices strung across the world and resources and contacts. This is an experiment which certainly should be pursued with the top ten in industry who are leading our exporters. They should be encouraged to look outwards. I know that the B.N.E.C. groups are doing that.
In Sweden in 1957, having failed completely to penetrate the Swedish market, the Swedish agents of my company on the spot advised my board of directors that there was no future for the product in Sweden. That should be daunting enough for any rising young executive. I then had an approach from the second secretary in the Board of Trade, who said, "Surely you are not going to give up after that?" That was a rather challenging statement and I did not give up. By breaking a certain amount of red tape, I persuaded my company to have another go at the Swedish market. It turned out to be successful to the tune of well over £1 million business which subsequently resulted.
That was not only because of advice from the Board of Trade but because of pressure and encouragement. Sometimes an executive in business is encouraged if someone from the Board of Trade gives him a good idea. He can then go to his managing director and say "The Board of Trade says we should do this". One should not be afraid of the Civil Service.
The third point in my summary of how to export is that, having surveyed and measured the scale, there is the need to visit and appoint an agent in order to make a deal. The fourth thing is to support with technical advice. All products today must be supported by continuing and continuous technical advice of a calibre and quality as good as that which is in competition. Fifthly, there is the need for promotion, advertising, merchandising, and follow-up by perhaps a specially trained local sales force which can perform the merchandising task. We should look at what the successful exporter to this country does and we 1757 should remember that this is a very competitive market. We should see how the exporters of Swedish and Finnish foodstuffs work in this country and how successful exporters of drink from France operate their techniques.
Sixthly, there is the need for effective supply in a competitive manner, in proper packing, good shape and on time. The seventh point is most important. These are not once-for-all commando raids but, having established a foothold on the beachhead, we must go on to the bridgehead and expand and hold a portion of that market. That will mean more regular visits to achieve such expansion. I am glad that the President of the Board of Trade is still present and that I have not bored him too much with this child's guide to what he already knows.
At home we still need more information and persuasion. This may have to come from more things than print and advertising, which I am not against. I should like the President of the Board of Trade to see that his officers get out into industry even more than they do to hold seminars, meetings and conferences, to show those in industry the opportunities and explain to them that the difficulties may not be as big as they think.
My only criticism overseas is that commercial officers in our embassies should try to become even more detailed and experienced in their knowledge of the market, and of the manufacture, too, of products from this country. It is mentioned, wisely and rightly, in the Report that it would help enormously if, by visiting the factories, our commercial officers had a glimpse of some of the principal products which go to other countries. It is possible to speak with some authority when one can say, "When I was in England last week, I visited the Rover factory and I have seen exactly how they make a Land Rover", or describe a visit to the textile industry, the standards and machinery of which are second to none. This could be of immense value.
There is a valuable quotation on page 123 of the Report from a paper submitted by the Institute of Practitioners in Advertising:Marketing is the ability of the manufacturer to identify, anticipate and satisfy the 1758 wants of consumers. The theory is sometimes understood by the layman, the practice almost never.I stress that only because it is a good quotation. It is very true.
We must still go on recognising that marketing and the practice of marketing is so seldom understood. The more information we get, the more we will be able to succeed. What we have to do is not so much to have a greater development of things British in British Weeks. We must seek an extension of our home market into E.F.T.A. and, subsequently, into the rest of the markets we supply in the world.
§ 8.2 p.m.
§ Mr. Donald Anderson (Monmouth)
As the hon. Member for Folkestone and Hythe (Mr. Costain) has said, the joy of an occasion like this for members of the Estimates Committee, like himself and myself, is that it gives an opportunity for other hon. Members to mark our examination papers. I am delighted that the hon. Member for Canterbury (Mr. Crouch) has given us such a good mark. It is also a useful opportunity, and good for our own souls, to mark our own papers a year after the Report was drafted.
I have two broad heads of comment, one on the Diplomatic Service and the other on the Board of Trade. The official claim, which was given to our Committee by the representatives of the Diplomatic Service, was that they were now far more commercially oriented and, since the publication of the Plowden Report, there had been a quiet revolution. That claim was largely accepted by the expert witnesses from industry who appeared before the Committee.
I tried also to test that claim by comparing the official lists of our representatives overseas, which I last saw in 1964 when I was a member of the Diplomatic Service, with the present-day list for 1969. It struck me markedly that there is, at least in terms of personnel, a far greater emphasis on the commercial side although there certainly are some rather unusual exceptions which, perhaps, the Val Duncan Report will help to iron out—for example, that in a country like Thailand, of the 23 officers of third secretary rank and above, only two have a specific commercial designation. Similarly, in 1759 Morocco, of the nine officers, third secretarys and above, only one has a specific commercial designation.
There may be special factors in those markets of which I am unaware, but, certainly, the overall story is of a considerable change since the publication of the Plowden Report. More commercial officers are No. 2 in the post and, from a subjective test, it certainly appears that some of the ablest members of the diplomatic service are now in commercial posts. This should be so. As the B.N.E.C. representatives said to our Committee in reply to Question 174:…in a country like Canada…there is not much else for them to do.In other words, in many countries the only justification for a British overseas presence is commercial. That is the only justification in some and the major justification in most. All decisions in terms of staffing should now be taken in the light of this overall priority.
I suspect that old traditions still die a little hard and that the inner circle—the European posts—are still, perhaps, given rather too much cachet in the present service. As a quick example, two very large contracts have been gained by this country, each worth over £100 million, in the relatively small market of Libya. In a relatively unsophisticated country like that, with immense oil revenues, the returns per commercial man placed there are likely to be far greater than in a more developed market like Italy, for example. I hope that suitably, too, the cachet which will ensue to a commercial man in a post of that sort will, in time, post-Plowden, post-Val Duncan, be greater than of his counterpart in the inner circle-type posts.
The reply to recommendation (9) on the status of locally-recruited officers was that it is common for such officers to supervise the work of the home-based staff. It would be interesting to know what level of home-based staff are supervised by those officers. Clearly, career officers should be forewarned and told to expect to learn in this way.
One of the frequent criticisms made by industry is that the commercial officers are moved about too quickly and do not stay long enough in one post. There never seems to have been any trial of the 1760 sort of experiment that one saw in the old Oriental counsellors, where a person could be a fully integral member of an embassy at senior rank, at least at the level of counsellor, and have a specific commercial designation.
I know of at least one Western European post where, on the political side, there is a person of counsellor rank—at least, there was until recently—who had remained in the post for over 20 years. There still seems to be a reluctance to try, on a sort of Oriental counsellor basis, to set up a man of experience who will spend his whole time at a senior level on the commercial side of an embassy.
It is in the Diplomatic Service that one should examine rather more the scope for the extension of British houses, particularly in various Continental posts where, in one building, one can, for the convenience of the British exporter, group together the local British banks, the local representative of the chamber of commerce, the B.E.A. representative and, of course, the commercial section of the embassy.
One problem which, perhaps, has not been given sufficient prominence is the relative inexperience of most Board of Trade officers, particularly in the Commercial Relations and Export Divisions, and, especially since the demise of the old Trade Commissioner Service, lack of experience abroad of the problem from the point of view of the post abroad. I hope that the problem of exchanges between the C.R.E. branch of the Department and posts abroad can be looked at perhaps, more closely by my right hon. Friend the President of the Board of Trade.
One general problem touched on by the right hon. Gentleman is that as it is a Government Department, subject to political pressures, it dare not be too selective. I welcome the evidence given by my right hon. Friend that official services are becoming more selective, but the problem remains. The vast bulk of our exporting is done by relatively few firms and on a cost-benefit basis probably our best returns would be by concentrating on them rather than going in for what is often the time-wasting procedure of assisting very small companies which one is convinced are unlikely to give the returns to this country.
1761 It would also be useful to know who our exporters are. Then when we are, as we hope, more selective, we shall know in respect of whom we should be more selective. Here I take up a point made by the right hon. Gentleman, and which was made to our Committee by the representatives of the C.B.I.
I also take up the point made by my right hon. Friend that there should be a survey of the various branches of the Board of Trade dealing with export promotion, and I follow up my intervention then that a problem for our exporters, underlined to our Sub-Committee by the C.B.I. representatives, is the proliferation of agencies, governmental semi-governmental and non-governmental which face them—the export Services Branch, the C.O.I., the "Little Neddies", the B.N.E.C., the C.B.I itself, and the chambers of commerce, all operating largely in the same field.
It is the usual British story. In a nutshell, it is Topsy with an added large dash of Parkinson. That is why the C.B.I. urged a study by a well-qualified individual with the objectives set out on page 103 of the Report. To meet the case for selectivity and the political difficulty I mentioned earlier, it is at least worth considering the case for a semi-independent body, a national export agency, which I understand almost got off the ground around 1965.
With regard to the question of Topsy and Parkinson, the institutions which just develop and gather bureaucratic and Civil Service-like tendencies, the history of the B.N.E.C. well illustrates the way in which bodies have been allowed to develop without reference to an overall strategy. I first came across the old Export Council for Europe in 1962, when I was the desk officer in the Export Relations Department of the then Foreign Office. It had only just begun and was a small, fairly friendly organisation with about five executives and five girls. It had achieved considerable success in education and propaganda, particularly with the very useful path-finder missions it had spearheaded to various European markets. It received its financial resources on a matching grant basis.
Seven years later this earlier free-wheeling toddler has developed into a many-headed monster. The new B.N.E.C. 1762 has a staff of about 150 and has formed committees for every area; it has 12 area committees regardless of whether there is a need in that market or an export potential. How, for example, can we justify a special area committee, with the proliferation of the business committee attached to it, for a market like New Zealand or an individual market like Israel, overlapping the many other agencies involved?
The most important change in the B.N.E.C. during this period is that its total normal running expenses are now met by the Government. It has become just another Government agency, with its independence of action eroded. It is expected, we were told in reply to Question 698, that this year only £100,000 will be contributed from the whole of British industry to the work of the B.N.E.C., whereas over the years 1965 to 1968 an average of £300,000 per annum was provided by British industry. One cannot blame ordinary firms for this reluctance to contribute. How can one convince a firm that it should contribute to what is now a Government-sponsored venture?
In criticising the organisation of the B.N.E.C., which I say has been allowed to develop without reference to any total objectives, I do not wish to criticise individual businessmen who have given immense time over the years since its inception, and for whom I have the greatest admiration. But surely a crossroads has now been reached? The B.N.E.C. should be wound up on the grounds that it has achieved its basic aim and become so official that its unique advantages of informal contact with businessmen and the extra flexibility in terms of entertainment, for example, which it formerly enjoyed, have disappeared. All this immense expertise and public spirit of the businessmen should be used as part of a new national export agency.
There is a need to examine the possibility of insisting on payment for some of the services now provided by the Board of Trade. The B.N.E.C. representatives, in Questions 216 and 217, the C.B.I. representatives, in Question 292, and the representatives from the Diplomatic Service, in Question 1110, saw no objection in principle to charging for specific services now provided gratis by the Government. The United States governmental agency already charges for a large portion of its 1763 services to exporters. Why must we imply in our advertising, "Come to us and we shall tell you how to do it without it costing you a penny. Call Export Insurance and get something for nothing"? My reaction to this something-for-nothing philosophy is that it cannot be worth very much, and I am sure that that is the reaction of many business men. It must turn away a fair portion of the potential customers.
We are in danger of molly-coddling industry too much by the refusal to look seriously at the possibility of charging for specific services. If we frighten some faint hearts as a result of charging I am confident that the inquiries received will, therefore, be serious. If the information and advice, the market information research, is worth receiving, it is worth paying for. At the very least we should insist upon payment for things like book lets, "Hints to Businessmen", and possibly the larger-scale market reports.
I would make the same point about the British Weeks, where we have spent a large amount of money on the supporting events—the Welsh choirs, the London buses, and so on, and the ballerinas. There is no reason why the great bulk of these supporting activities should not be self-financing if they are worth having.
On the whole, the Sub-Committee found from the witnesses who came to us a general satisfaction with the quality of the service provided. This perhaps is not surprising, since we were dealing with a group, and there is a sort of social incest amongst the senior members of the Foreign Office, the senior officers of the Board of Trade and the business men who sit on the chief committee of the C.B.I. and who man the relevant committees of the B.N.E.C. There is a special need for an outside body to pry, to ask awkward questions and to ask, as I do, why, for example, we do not insist on payment for specific services, and why there should not be a high-ranking investigation into the proliferation of agencies which now overlap in trying to provide services for our exporters
§ 8.20 p.m.
§ Mr. Martin Maddan (Hove)
I join with hon. Members who have paid tribute to the Sub-Committee on its Report. 1764 To illustrate my point on the E.C.G.D., I will take up the reference which my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) made to page 317 of the Report about the problems of further training for staff. In page 318, the E.C.G.D.s memorandum states that various types of guarantee are available and thatStandard variants of the Specific Guarantee are available…special adaptations are 'tailor made' to fit the needs of particular non-standard cases.I wish to give a glaring example of how this is not being done. I refer to an order from a Danish partnership for a special ship costing £6 million which has been started by Vickers at Barrow-in-Furness and which, if successful, is likely to be followed by orders for three more ships, each to the value of £6 million, the total value of the four ships being about £25 million. The contacts that have been made with the customers in Denmark have led to inquiries about further ships of a different sort to the value of £10 million or £12 million. I say this to emphasise that I am not talking about small beer.
The President of the Board of Trade, when he saw me sitting on the edge of my seat as he was speaking of the E.C.G.D., said that I had a dispute with the E.C.G.D. I personally have no interest whatever in this matter and, therefore, have no dispute My case is based on data contained in a memorandum from the Ionian Bank.
The project concerns a floating package tour hotel or ship. We in this country do not understand much about package tours as they are operated from the United States. All the projections show that the tourist trade will increase at a greater rate than can be coped with by the hotel industry in Europe. Some enterprising Danes hit upon the idea of building a floating hotel to be anchored at a suitable sunny spot off Europe to accommodate tourists on package tours, the ship being geared to travellers arriving in Jumbo jet loads.
The name of the partnership is Nordline. It is important to emphasise that this is a partnership and not a limited company. Because of the operation of the Danish tax laws it is much more advantageous to the Danes to operate as a partnership than as a limited company.
1765 Through their bankers, Glyn Mills, Vickers have sought E.C.G.D. backing to borrow money for the building of the £6 million ship at an interest rate of slightly over 5 per cent. rather than at the commercial rate of 10 or 11 per cent. The difference between these rates of interest amounts to £1¼ million, and that factor will determine whether the order is to be completed in this country or cancelled. The ship has already been started because, as many hon. Members have emphasised, promptness of delivery is essential and, if the ship cannot be delivered by the end of next year, the whole venture will for technical reasons be fruitless.
The E.C.G.D. have stated that the number of Danish partners subscribing three-quarters of the money must be limited to 70, but by the time this was known there were already too many partners to fulfil this requirement. It is a very recent additional condition, and if this is an example of the way in which the E.C.G.D. operates the tributes which have been paid to it cannot be justified.
On 4th November a letter was sent by the E.C.G.D. to Vickers' bankers, Glyn Mills, setting out the conditions on which backing would be given. In my presence the head of E.C.G.D. has said that the letter could be regarded as being as valid as a contract. The letter did not mention the requirement that as few as 70 partners should have subscribed three-quarters of the capital.
The E.C.G.D. sent a further letter on 6th March, again setting out the conditions, but again not mentioning this new condition. It was not until later in March that the new condition emerged, by which time the partnership had been formed with a membership and subscriptions which made fulfilment of the requirement impossible.
In the memorandum from the Ionian Bank, referring to the suggestion by E.C.G.D. that there had been previous notice of this, it was said:No record or recollection of any such proposal exists, either with ourselves or with Glyn Mills and Company. In fact, this fresh condition was already incapable of fulfilment before it was imposed and in a letter to Sir Anthony Percival"—head of E.C.G.D.—Mr. Baird"—1766 the managing director of the Ionian Bank—made this point clear, adding that information indicating this fact was in the Department's hands before 18th March.What is happening is that the rules of the game are being changed as the game is being played. In effect, the ball is ready to be got through the goal and then we are being told that the goal is not there.
Some people may think that there is some validity in the requirement made by E.C.G.D. There are 834 Danish partners, and they are people who are running their own businesses or managing directors of business, professional people, accountants, lawyers, doctors, dentists, and so on. In a country such as Denmark 834 such people have a great deal of influence. Many of them were active in the Danish Resistance movement and are very keen that this and subsequent orders should be carried out in Britain rather than in Germany from whom approaches were also received. They are strongly pro-British.
There is nothing wrong with their credit. All inquiries suggest that their credit is quite up to the commitment they are making. The Department seems to take the view that unless there are very big people behind the venture, there can be no confidence in it. In Denmark there are particular tax reasons why the set-up is different. Even so, I would have thought that there was a great deal to be said for not having all of one's eggs in the same basket. It may be inconvenient, if anything goes wrong, to have to collect from a lot of small people, but it is not for E.C.G.D. to base its policy on convenience. The question that it is a matter of E.C.G.D.'s convenience is contested but there can be no other explanation, unless it is that E.C.G.D. thinks that because a man is small he is ipso facto uncreditworthy.
When we are talking of people such as these 834 partners, such an assumption can be very damaging, not only to this project but to our trade with Denmark generally. The Minister of State, Board of Trade, Lord Brown, said:The apparent failure of the Danes to attract anyone who is both able and willing to invest a really substantial sum in this partnership is in my view significant.1767 All that it is significant of is the Danish tax position and other technical matters. The Danish Ambassador in London has let it be known that from his personal knowledge of many of these people it can be taken that the group is entirely reputable. No weight appears to have been attached to that statement. It is not for the seller of a product to start laying down the constituton of the buyer—the seller has to organise himself to meet the buyer's position. I was brought up to believe that the customer is always right. Unless we take that attitude our exports will suffer.
Another point which illustrates how out of touch E.C.G.D. is with modern conditions, is that an American company which, assuming the project goes through will be operating the American package tour end of the business—Transportation Consultants International—was willing to take up to one-third of the £6 million capital, the desired substantial sum. But E.C.G.D. said that it was "no go", because the company did not have sufficient assets. It is a service company, and service companies do not have great assets, that is not the relevant thing to look at. Any financier or accountant knows that. What has to be looked at is the future earning capacity, not the assets. By its nature, a service company has hardly any assets.
I find this unsatisfactory and perturbing. If the E.C.G.D. is working in a world as out of date as has been illustrated, we shall have to prepare to shelter under cromlechs which were built for our ancestors' burials 4,000 years ago, because that seems about as far into the modern world as E.C.G.D. has got. Until this experience, I thought that E.C.G.D. was a good department doing a good job. That was second-hand information. My only personal experience, in the recent decade, of the E.C.G.D.—this has involved dealing with very senior people—has not enabled me to maintain that opinion. The position is very serious.
Also, E.C.G.D. and Ministers hide behind the Advisory Council of the E.C.G.D., but do not tell us the brief given to the members of that council. I wonder whether the members were told that what they were dealing with was not a ship in the normal sense of the word, 1768 but a floating package tour hotel. Had that been so, the position might have been different.
But the main case is that on 4th November and 6th March written summaries which were said to be as good as contracts were sent to bankers in the City of London and subsequent conditions were then required which were already incapable of fulfilment. That is not good enough.
A previous E.C.G.D. case has come to my notice as a result of my interest in this one. Some time ago, the E.C.G.D. thought that a Pastor Krogager, another Dane, could not run a travel business because he was a pastor. He could. He bought 14 aircraft, and paid for them, but because of E.C.G.D.'s attitude they were not British: they were French Caravelles. He has now bought another 14 and the business has continued to go to France.
The E.C.G.D. does not understand the travel service business or the Danish mentality. The slow and tortuous behaviour which I have described is not good enough. The President of the Board of Trade is responsible, not the Advisory Council. I beg him to look into the matter and bring his influence urgently to bear.
§ 8.38 p.m.
§ Mr. John Fraser (Norwood)
I am very glad that we have had this debate, which has been informative and constructive, because it has been my experience since I have been in the House, during most of which time the country has been in some economic difficulty, that far too many people inside and outside the House tend to look for alibis and temporary devices for solving Britain's difficulties instead of concentrating on the central problem of exporting.
I am glad that this debate has focused attention on the important aspects of this country's paying its way in the world. Those who think about the long term know that a fiscal or idealogical measure will not solve the basic problem of selling goods abroad.
I welcome the Report, but I will not say a great deal about it. It is thorough and comprehensive and shows how good the promotion services are. There are areas of criticism, but they are marginal. 1769 On the whole, industry and exporters are served very well by Government agencies. I hope that the Government will not take too strict a view of public expenditure and decline to do useful things because they involve additional public money.
A letter from the Board of Trade on page 358, replying to the Sub-Committee on proposals by the British National Export Council that certain bodies should be grant-aided for their expenditure on export promotion, stated:The answer to this is that, at the present time, we should find it specially difficult to accept proposals for broadening the scope of, and lessening the control over, the expenditure of public money, even for export promotionI hope that that sort of attitude towards public expenditure will not prevent the Government from doing something useful where there is long-term advantage to exports. I hope that they will not be inhibited from spending money on a national exhibition centre. I listened attentively to what my right hon. Friend said about the possibility of an exhibition centre at Northolt and the frustrations he has experienced. If it is not possible to go ahead there, I hope that he will not close his mind to a development, through partnership between central and local government, of an exhibition centre at Crystal Palace.
Following the opening of the Victoria Line, and with the other train services, there are excellent communications between that area and the centre of London. There is also the plan to take a motorway near Crystal Palace, which will provide good communications with the rest of the country. There are also train connections with Gatwick. I hope that such a development, as part of a central redevelopment scheme, will not be left out of mind.
I was impressed by the speech of the hon. Member for Canterbury (Mr. Crouch), who devoted so much time to marketing and selling. The Report emphasises follow-up and marketing by individual firms. I think that we spend too much time in general exhortation and advertising and too little on selling the idea of exporting to individual firms.
We must not perpetuate the image that the Government can do everything. In exporting, the Government can only provide the framework of services. Ultimately, it is people and industries that 1770 must do the job within that framework. The idea of a follow-up to industries and individual salesmanship by individual firms is very valuable.
One of the most telling sentences in the Report is on page 359, with reference to the practices of some other countries. It says, for example:Germany provides very little in the way of financial assistance to exporters…That is rather revealing when one thinks of the success which German exporters have had. Why is there such a difference between the performance of Germany with so little financial help, and this country's which provides so much?
I must say frankly that there is still not enough financial incentive here for people who want to export. When considering the problems of packaging, of complying with foreign regulations—such as safety regulations for cars or regulations about artificial substances in sweets—along with the difficulties of documentation, and of getting goods through ports and obtaining credit, as well as the risks abroad, it is sometimes surprising that many figrms go to the trouble of exporting. A financial incentive is needed for exporters.
I thought it a great pity that at the time of devaluation tax rebates for exporters were withdrawn. In Germany industrialists receive tax incentives to encourage them to export, there is the advantage of the value-added tax, which I personally do not support, and there is a system which involves the lifting of tax on goods before they go over the borders of the country.
We in this country must do something to make up for all the advantages possessed by other countries. The Government should seriously consider giving additional tax incentives to industries which are prepared to export goods so as to compensate for the extra difficulties in which they are involved in having to sell abroad. Those incentives should be provided not just for a company in rebate on its corporation tax, but should be passed on to the worker concerned in the export of goods.
Exporting is a partnership between the management and the workers. Instead of an exhortation or general directive to people in the mass to try to do better, 1771 the worker on the shop floor who plays a very full part in ensuring that delivery dates are kept and that goods are kept up to standard should be given an incentive rather than just the shareholders and other people.
When we compare the incentives given to people in this country with those given to some of our foreign competitors—and one must bear in mind that we do not operate import controls—at the end of the day all the valuable services, which I do not denigrate in the slightest since they are excellent and the follow-up in salesmanship, which I and other hon. Members have recommended, should be combined with financial incentives. I trust that the Government will not put this matter out of their mind.
I hope that the Government will ensure that credit and investment facilities are channelled to exporters. I do not know what follow-up there has been with the banks. I wonder whether the individual bank manager is even capable of distinguishing between an importer and an exporter in providing a line of credit. It is a difficult job for a bank manager to undertake.
I hope that the Government will provide, as do other European countries, sources of credit specifically reserved for exporters not to finance a particular sale, but to build up their factories, particularly in the congested South-East. They should provide clear ways for exporters—clear ways in the physical sense of better roads to the docks, in the sense that documentation is made easy, that the exporter may be given the extra packing and storage facilities that he needs and is able to obtain his industrial development certificates and planning permission relatively quickly, and so that there is a sense of priority for exporters.
Clearways in exports, as well as clearways through towns, will enable Britain to make a full and successful contribution in exporting throughout the world.
§ 8.48 p.m.
§ Mr. David Howell (Guildford)
I should like to apologise for not having been present to hear all the earlier speeches in this debate, but I had to attend a meeting at the Board of Trade concerning aircraft noise in my constituency.
1772 I did, however, have the opportunity of hearing the wide-ranging survey with which the hon. Member for The Hartlepools (Mr. Leadbitter) began the debate, and I add my congratulations to him for his work as Chairman of the Sub-Committee and to the rest of the members of the Committee for providing this Report. The Report gives an opportunity to cast an eye over this important area of Government activity.
If the eye that I cast is a rather critical one, it is not because I do not appreciate the immense amount of work put into the export services and export promotion. Nor is it that I do not appreciate the work that went into this Report. It is simply because this is, after all, a debate and not a tribal indaba. Still less is it an admiration society for the Board of Trade. Therefore, I do not apologise for making my marking of the Report a little more jarring than some hon. Members have.
There is an almost inevitable view in comments about export promotion services of government that there should be more of them. People say in every gathering that we want more training for commerical officers, more commercial posts, more services, and more of this and that. It is a view which prevails in current policy and has done for some time. It has led to a considerable growth in the export bureaucracy of our Administration and to the provision of a wide range of services, some of which are excellent but others of which are not so excellent.
In considering this Report and the answers to it from the Board of Trade, it is right to begin by recognising that those who call for a larger and extended rôle for the Government's export services are creating for themselves a serious and basic dilemma. I was not a member of the Sub-Committee, but I see in its Report one or two hints of an awareness of that dilemma.
In paragraph 9, the Committee says:The suggestion that the export services should be commercially managed is not, in Your Committee's view, without merit.It goes on:If the Government was starting from scratch in this field they might be well advised to consider setting up a public corporation rather than using a Government department.1773 That seems to have in it a faint hint that possibly something more radical in the nature of change is needed than anything proposed in the Report.
Paragraph 11 says:Your Committee have considered whether it is on balance, an advantage or a disadvantage to have export promotion work handled by a Department which exercises a wide range of regulatory functions.Here again there is a faint hint of unease that perhaps we may be allocating responsibilities and functions in a way which is basically contradictory.
And, of course, on the surface, there is indeed a contradiction and a dilemma. The great Departments of State are filled with people who are highly trained in regulatory and advisory work, yet the business of export promotion and the targetting of advice for particular export promotions is a highly managerial, competitive and business-like undertaking requiring many of the qualities which, for better or worse, are not the most common and not usually found in the Departments of State.
It is on to the Board of Trade that this kind of dilemma is shoved. We all know that it is a Department which has clung for many years to a belief in the principles of regulated free trade and the doctrines associated with it. Despite moving its building and changing its personnel, that belief still seems to impregnate the wallpaper and carpets of the Department.
For a Department like that, the problems of reconciling the traditions of Departmental bureaucracy, and the traditional emphasis on non-selectivity and on a free and regulated flow of trade round a world which no longer exists with the new requirements obviously raises particular difficulties. How have we in recent years gone about facing those difficulties? I go back to the speech of the hon. Member for Norwood (Mr. John Fraser) who made reference to a line in this Report, on which I already had a note for my speech, a noteworthy coincidence. The hon. Gentleman referred to page 359 where, in a list of services provided by other countries, it has been noted by the Diplomatic Service Administration Office that GermanyProvides very little in the way of official assistance to exporters…".1774 From personal experience, that does not quite tally with the way that some West German embassies work. But as an analysis of the official assistance and involvment of Departments in export, it is no doubt correct.
That is one answer. We know how West Germany has answered the dilemma about which I am talking. That country has a fantastic export record, as the hon. Member for Norwood reminded us. They have answered the problem by keeping their export services and promotional research facilities out of the control of central Government Departments.
We have chosen, or there has been chosen for us by the course of events, a very different kind of procedure. We have gone more for the "Let there be more Government activity in export" philosophy. As a result, there has inevitably grown up over the years a vast range of committees, boards and activities. One of the most recent is the Overseas Marketing Corporation, of which I shall say more in a moment.
It is at least worth asking, although the Estimates Committee may have felt that it was beyond the range of its immediate report, whether our direction of policy, so different from the German direction and so indifferent to the basic dilemma about which I spoke earlier, is the right one. It is worth recognising that if we continue to pursue a policy of pouring a large range of resources into these services within the control of Departments and of Government, certain results which can already be spotted will grow in importance.
The first and obvious result is that we shall have to ask more of our highly able officials and civil servants, trained as such, to act not as officials and civil servants but as business men. Is that fair, is that right, is that sensible? We will see a world in which more of our embassy staffs round the world, who have already thrown themselves with enthusiasm into the business of assimilating, translating and distributing commercial knowledge, will find pressure on them to behave more like business men. We will see consul-generals scurrying round more as salesmen. This may be the right philosophy. Certainly recent reports seem to think this, and nearly everyone who has spoken in the 1775 debate has welcomed the commercialisation of our diplomatic service.
As the debate draws to a close, I put a question-mark over that and ask whether there is a danger that we could go too far in the view that these services must be carried out by central Government, by the civil servants, by the diplomatic service, and that they must, therefore, fulfil functions which businessmen apparently do not feel inclined to fulfil.
This kind of philosophy means an enormous preoccupation—a point that we have all noted—with visible trade—with the products that officials can recognise and the firms and sources from which they come. The very nature of invisible earnings inevitably means that the Government, while welcoming the trends in these spheres, are not very much involved in them because they are not things on which Government officials can easily get their hands. It seems, in short, that we are building up for ourselves a world in which the additional margin of export performance which we seek is something which people lean more and more on the Government miraculously to produce. It means that we are building up a world in which everyone expects the Government to "do something" about exports, and I suspect that this is the parent philosophy from which another child springs—the belief that the Government can devalue the currency by 14.3 per cent. and thus miraculously transform life for our export salesmen.
Whatever the right hon. Gentleman may say about the story of devaluation since November 1967, it certainly has not turned out the way people argued at the time. It has not transformed life for our export salesmen. Even the most devoted apologists of devaluation policy find it hard to argue that, and I see in the most recent Economic Review of the National Institute of Economic and Social Research some interesting analyses and arguments confirming what many of us who have had doubts about the whole philosophy would have thought and argued from the first—that these are not problems which Governments can automatically solve.
The alternative proposition which is that the Government should do very nearly nothing, is in our context equally 1776 absurd. There are obviously major regulatory functions in the tariff and fixed fields for the Government to perform. The Government are major buyers in the modern world. This is the difference between the world as it exists, and the world as the Board of Trade used to see it, even if it does not see it quite that way now. Public authorities buying habits are vastly influenced by other Governments. I thought that the hon. Member for The Hartlepools was right to give so much emphasis to the fact that we are living in a world in which diplomatic pressure, to put it at its crudest, is one of the important adjuncts to the export process. The hon. Gentleman was right to sound a warning that we may be adhering so zealously to the creeds, practices, and regulations of international trade that we are endangering our position vis-à-vis other countries which may not be "playing cricket' quite so strenuously and devotedly.
The Government have a major export promotion rôle. Whether it is as detailed and expansive as the one for which some hon. Members have called this afternoon I am not sure, but that civil servants as civil servants and not as businessmen have a vitally important rôle to play seems to be absolutely axiomatic.
If we look at the whole problem from the slightly different emphasis that I have given, if we draw breath and stop calling for more Government services and endless action, we begin to see rather a different emphasis arising in the need for policy in the future.
First—and this was the point made by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)—the course which follows from rather less Government preoccupation in this matter is that we move away from trying to get the Government to do more, and towards encouraging business to do more. That is an obvious point, but it is worth repeating. In other words, we must move towards tax stimulus, towards the kind of tax structure which gives rebates to exporters. Here I agree with the hon. Member for Norwood. I favour the introduction of a value-added tax, although there will be many difficulties, and I welcome the news that a report is coming from the Government. I hope it will not say that the thing is enormously administratively difficult, because if it does it 1777 will be wrong. I believe that there are ways in which this could be introduced at very low administrative cost. I hope that we shall not be dogged by that gremlin of "administrative difficulty" which has sunk so many other good ideas.
There is that kind of incentive. There is the even more direct financial incentive to salesmen, to hard selling, to people to score big earnings by selling directly in world markets. This seems to me to be so obvious as not to brook argument, yet the situation persists in which personal income incentives are low. Therefore, higher paid salesmen is an obvious policy goal.
There is a third way in which tax incentives come into this story, this time at the level of the weekly wage earner—the £30, £40 and £50 wage earners. I had an interesting experience the other day when I visited an aerodrome where one of our most exciting export products, the Harrier, is undergoing its development programme. I learned that, as it was a Saturday morning, although about 45 men should have been working on the programme, there were only three in the shop and that the reason was that their tax position was such that it did not pay them to come in on a Saturday. So the development of one of our most exciting potential exports is being slowed down, apparently by lack of tax incentives. That is obviously the first difference of emphasis which flows from considering the Government's export promotion services in the different light earlier suggested.
The second issue is one which we have all mentioned—the "gentlemanliness" problem. With respect to the President of the Board of Trade, he missed the point on this which other hon. Members were making. They were not saying, and I certainly would not claim, that our behaviour over E.F.T.A., and import deposits and so on has been perfect. Of course it has not. It has caused a major row, and I was one of the many who criticised the way in which we introduced import deposits and the 10 per cent. surcharge. The question which we were discussing was whether it is right for a nation like ours, a huge consumer and customer, and one with great diplomatic skills—providing they are not submerged by excessive demands for commercialism in the diplomatic service—uses those dip- 1778 lomatic skills and its customer weight to ensure that certain major orders, where foreign Governments are the major customer or influence the final decision, are fought for in a sufficiently ruthless and tough way.
The sort of thing that I have in mind is a case in which the British and the Americans might be competing for desalination or other heavy equipment in Italy, and the Italian Government is the customer. One wonders what kind of comparison the language which the Americans and the British use would make. I suspect—and I am generalising from a particular experience which I do not want to specify—that the Americans would make it clear that, unless the order went to their firm, there might be questions raised of certain health provisions on Italian exports of say, tomatoes and so on being applied more rigorously the next year. I suspect that the excessive gentlemanliness of the British of which we have spoken might prevent us making any such improper suggestion, with the result that the Americans would get the deal.
So there is a case for urging, not that we smash up more treaties or rush through panic measures for raising import surcharges or putting on import deposits, but that we go about major projects in a way which makes full use of our diplomatic weight and skill—not that we cheat, but that we are at least as skilful and ruthless as others in securing the major orders.
The third thing which flows from the difference of emphasis which I am trying to give this issue is that the Government should at least halt and think again before plunging into more committees, that they should at least go through the exercise suggested by the hon. Member for Monmouth (Mr. Anderson) of evaluating the rôle and status of B.N.E.C. and perhaps other agencies also. I have in mind the Overseas Marketing Corporation, which has been going about a year, and about which the noble Lord, Lord Brown, the Minister of State, Board of Trade, was quoted as saying yesterday that he never thought that it was good idea anyway. Here is an organisation which has been set up, which has guarantees of substantial sums of public money and which has obviously involved much energy and time but which, as far as I know, has yet produced any orders for anybody. Perhaps I am 1779 considering the matter unfairly, but is it not possible that this kind of growth in the structure of export services results from a general, blind, good will belief that the Government must somehow do more?
I have an indirect interest in this matter in that I help to advise a firm which in turn advises on export opportunities, particularly in Europe. It is not merely because of that interest or the experience gained from providing that advice that I ask whether organisations like the Overseas Marketing Corporation are fulfilling the function for which they were set up and whether a basically sound argument led to their being set up in the first place.
I understand that the O.M.C. was intended to help small companies to find opportunities in Eastern Europe. In view of the remarks of the hon. Member for Monmouth—about business men, officials and others who seem to know each other and live in the same sort of world—is there not a danger that, because this organisation comes from that ilk, small companies will find it difficult to extract opportunities from it or make use of it? Given that the O.M.C. has so far produced zero orders yet has £400,000 of public money at its disposal, this question should be answered because it is an important subject and the money involved is not chicken feed.
The fourth different kind of policy which emerges from considering export services in a slightly less dewy-eyed way is mentioned in paragraph 9 of the Estimates Committee's Report and touched on in its recommendations; the idea that the export services of Government should be amalgamated into one recognisable body, that it should operate in an ethos of enterprise on a profit basis, that it should be a recognisable, separate organisation hived off from the main Departmental body and that it should, therefore, operate in an atmosphere not contaminated by the traditions of the Board of Trade.
The President said that his mind was not closed and that he might, in due course, think of conducting an inquiry on the structure of Government export services. I do not know why the right hon. Gentleman need be so cagey and 1780 always preface any suggestion for any sort of institutional change with the suggestion that there must be yet another inquiry. It has become a hallmark of the present Administration that inquiries should be held on virtually everything. The Government will no doubt finally sink under this weight of inquiries, along with all the boards, committees and other organisations that they have set up.
I do not see, in this instance, why another inquiry is required to amalgamate the export services of Government, to hive them off and to give them a bit more zip in a private enterprise sense so that, for providing services of value, they can make a charge and possibly set up a kind of organisation which could offer private equity as well. This may be heresy to true-born Socialists, but if an organisation of this kind is to work with gumption, this is the way it should operate.
The touching belief that more committees and more activities by the excellent and hard-worked officials of the Board of Trade will somehow produce more exports is illusory, just like the belief in November, 1967, that devaluation would miraculously produce a better deal for export salesmen and a vast upsurge in exports. That, too, have proved illusory, as the growing amount of documentation shows.
The real transformation will come only when the Government overhaul their commercial policy, when the whole tax structure is tilted in the direction of profitable exporting, when we are ready to us our diplomatic skill—if it has not been destroyed by then—in pushing major projects ruthlessly and ensuring that we sell in competition with others and hive off the export services of government. If the Government will perform their rôle of governing in this field and act in the way they can and are trained to act, vast help can be given to exporters to get on with the business of exporting profitably. But if Government personnel are forced against their training and instinct to pretend to be businessmen and better than businessmen, we are in for many difficulties and disappointments.
§ 9.16 p.m.
§ Mr. Leslie Huckfield (Nuneaton)
I do not propose to pursue the hon. Member 1781 for Guildford (Mr. David Howell) in his canter round the whole of his party's policy in a vain endeavour to find a solution to some of the problems we have been discussing. Neither can I say that I have many important and intimate friends as the hon. Member for Hove (Mr. Maddan) who can buy 14 Caravelles. I cannot claim that I have performed the magnificent feats in exporting that the hon. Member for Folkestone and Hythe (Mr. Costain) has, although I admit that in 1961 I helped to erect a shed in Alberta, Canada.
I congratulate, as I am sure all my hon. Friends do, my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) on his chairmanship of a Sub-Committee which has produced a very thought-provoking Report. I wish that many of the speeches made from either side of the House in this debate had kept to that Report because in it many valuable suggestions have been advanced. There are many excellent ideas in the Report which, if followed, could make a significant contribution to the promotion of our export services.
Like my hon. Friend the Member for Norwood (Mr. John Fraser), I well remember the time when we studied with a combination of fear and fanaticism the monthly reports from the Board of Trade about balance of payments figures. It seems long overdue that we should get down to a study of what we are actually doing in various Government Departments to help to provide a disincentive to importers or more incentives to exporters. I am, therefore, glad that we have at last been given an opportunity to have a look at what I and many hon. Friends regard as the real meat of what ought to be the export drive.
I have been concerned in my constituency in trying to organise a trade mission. I have come into contact with several of the staff of the Board of Trade both in this country and abroad. I have been very much encouraged by many of those I have met. I have been very much encouraged, as I am sure hon. Members on both sides of the House have been, by what obviously is an increase in their commercial expertise.
I cannot help feeling, however, that although tonight we have made many references to the praiseworthy improve- 1782 ment in the commercial outlook of our Board of Trade officers overseas, we have been prone to overlook that although their outlook may have improved we have tended to increase the demands made upon them. We now have a situation where because their outlook has improved more is expected of them and in certain places of which I know and I am sure that the President of the Board of Trade knows they are now becoming seriously overworked.
When I was in Sweden, last month, both in Stockholm and in Gothenburg I found that there was a rather similar complaint. Because more and more people are getting to know of the services that we can provide, our officers, although they are doing a good job, find themselves hard-pressed. I encountered a rather similar situation in the United States last year, when, having visited the Board of Trade officials and our consuls-general in Los Angeles, San Francisco, Boston and New York, again there was a similar story because increased expectations were being placed on our officers. They are really hard put to it to accomplish successfully some of the increasing work which is now coming their way.
One of the things which contributes to the increase in the amount of work which our officers are now asked to do is the very success of the trade mission scheme. That scheme, which is jointly operated by the hydra-headed monster the combination of the Board of Trade and the B.N.E.C., is indeed performing an invaluable service in providing a preliminary introduction to the market for many firms which have not exported before. It is a scheme whereby people do not break into a new country before they can do so at a reasonable cost, because the Government pay something towards their expenses.
I do not say that all the trips which have been made under this scheme have been bona fide or successful, but it can be said by anybody who has taken the trouble to study the operation of the trade mission scheme that it has, at least, been successful in getting people who would not normally have been able to do so to break the barrier into exports. I therefore feel that we should extend coverage of this scheme to a slightly wider base.
1783 At present, missions have to be sponsored by chambers of commerce, trade associations and, as we are told in the recommendations and in the Report, by the British export houses. I suggest that we could broaden the base even more. It is acceptable if one comes from a part of the country like Birmingham, where the chamber of commerce is expert and active in organising missions, but not all chambers of commerce are as active and as expert and send out as many missions as does the Birmingham Chamber of Commerce. I certainly know of less active chambers. I therefore hope that it will be passed on to my right hon. Friend the President of the Board of Trade that the application of the scheme should be broadened and a wider selection of groups encouraged.
I am not saying that we can go quite to the same extent that various groups of people who want to travel more cheaply on commercial airlines have been able to do, but something in this direction is needed to obtain an even wider application of the scheme, which in its initial stages has been tremendously successful. I hope that people in my constituency, with the scheme which I have been trying to get off the ground, can benefit from a wider application and a wider selection of bases and sponsoring organisations for these trade missions.
Having said that, I cannot help feeling that we are not making the best use of some of the staff that we already have in our overseas commercial departments. It is widely acknowledged, although it has not been mentioned widely this evening, that our embassies and consular staff always have to work closely in co-operation with the various British chambers of commerce. In America it is the British-American Chamber of Commerce and in Sweden, the British-Swedish Chamber of Commerce.
As I was going round the United States last year, and again this year, it was put to me that we might be able to improve the coverage, finding contacts and agents and sorting out firms and introductions if we could place more emphasis on the work we do in co-operation with the various British chambers of commerce.
I suggest to my right hon. Friend that we examine the possibility of using even more local people from those countries 1784 where we have our commercial departments to help us in these endeavours. We often face a very expensive task in finding accommodation, office space and contacts for British citizens who are going out and in some cases performing the job very successfully. Could not we obtain an even more widely based coverage by using people born in the countries in which we are setting up departments, using their local knowledge and offices and facilities? I am sure that by doing this, based on the successful experience we have had with the various British chambers of commerce, we could help our hard-pressed commercial staffs.
Here we have two very successful bases from which we can have an even wider introduction to export markets for people in this country to whom exporting seems to present something of a barrier. We have the trade mission scheme. Let us extend it and make it more widely available. We also have the close contacts between our commercial people and the British chambers of commerce. Let us extend them and make them more widely available by using more locally-born and based people.
One of the other things we could do to introduce even more people to what is often the very new and strange field of exporting is to have the Board of Trade or the B.N.E.C. make a more significant contribution by positively vetting—I hate to use that phrase in this context, but I think that it is the one most applicable—some of the many courses in exporting being put on up and down the country.
It seems to be highly fashionable for a local authority running a technical college or college of further education, and for private enterprise, to put on a course dealing with exports. All one has to do is to bring along someone who has been abroad and knows something about the subject and very often one can charge firms quite large sums for bringing in their sales and marketing people, sometimes tying them up for days on end for something that has not yet been independently evaluated.
There is a rôle for the Board of Trade, perhaps in combination with the B.N.E.C. or even the Department of Education and Science, to do some independent vetting of many of the courses now being put on and involving increasing sums of money and increasing numbers of people, often 1785 without independent observers being in a position to see that some value is obtained from all this. There is a great deal of knowledge of exporting to be disseminated, and a great need for this to be done. But I should like to see more evaluation of the knowledge that is already being imparted.
It has been said several times this evening, not least by the hon. Member for Guildford, that we are now perhaps approaching the parting of the ways or the point of no return on the question of whether export advice should be provided mainly on a public enterprise basis through a public corporation or mainly through private enterprise. There have been several references to export consultants. Here is a great opportunity for someone who is young, wants to travel and has a few contacts abroad. There have also been references to the British chambers of commerce, the British National Export Council and the Board of Trade.
I add to the appeals made from both sides of the House for a unification of the various export activities. I disagree with one hon. Member opposite who said that the more independent agencies we could have the more view points we could obtain. We must have a central co-ordinating body which can at least tell newcomers where to go. Very often they are confronted with a whole string of independent organisations, with no means of evaluating the rival claims which they often assiduously make. Let us have more co-ordination at the centre. To do that we must make sure that we keep in contact with industry and with private enterprise. It is private industry that will have to do the exporting.
I was interested in the suggestion that there should be more exchanges between the Board of Trade, the Civil Service and private industry. Recommendation 2 states:The Commercial Relations and Exports Divisions of the Board of Trade should renew their efforts to effect changes of staff with industry and should make regular visits to major exporters.I am told, although I was not then a member of the Estimates Committee, that the Board of Trade showed great enthusiasm and waxed extremely eloquently about this. The Board of Trade said, "It is exactly the kind of thing we have always been in favour of, and we are now encouraging it for all we are 1786 worth." It is rather surprising, therefore, that the President of the Board of Trade, after having said that it is the policy of the Board to promote exchanges of staff with industry, should say that in recent yearsthree young men from industry had worked in the Board, of whom two spent their time with the Commercial Relations and Exports Divisions, and that another man on loan from industry will shortly join the C.R.E.".That is four men—yet the Board of Trade is supposed to be very interested and thinks that it is a good idea.
If the Board of Trade is serious in getting an active exchange of information and personnel between the Civil Service and private industry, it must be much more active than just employing three men on an exchange basis. We must extend the scope, make exchanges on a more regular basis and for varying terms of contract.
Constituency Members will have made excellent pleas tonight for the national exhibition centre to be sited in their constituencies. I could do the same. I represent a constituency which is sited in the middle of the country, accessible to the Midlands and the East Midlands, and to London by motorway and electric train. It might be unfair of me, after all the constituency plugs which have been given, to say that my constituency has a rival claim, but, wherever the national exhibition centre is concentrated, let us decide and get down to it quickly. We cannot afford to shilly-shally. We cannot afford to put this off, as we have done with public transport access to Heathrow and with jumbo jets.
Let us decide now where the national exhibition centre is to be. If it is to be in the Midlands I hope that it will be in my constituency. If it is to be in London or the South-East I would not like to decide between the rival claims that have been advanced this evening. But let us not have the arguments that have arisen over the siting of the third London Airport. If the siting of the centre takes as long as that, I have not much hope of seeing it even in my lifetime and, compared with some hon. Members who have been here, that is a long time, I hope.
This is a more urgent problem than some problems which we have been discussing. We have been talking about the next step and what gestures must be 1787 made. Many of the suggestions that have been made will take an extremely long time to implement. The announcement of the site of this exhibition centre, and of the inauguration date and the letting of the contracts would be a fine gesture and should be undertaken soon.
Once again, I commend my hon. Friend for the excellent Report. If my right hon. Friend will take a little notice of what I and my hon. Friends have said, I hope that he will derive a good deal of benefit from it.
§ 9.35 p.m.
§ Mr. Tom Boardman (Leicester, South-West)
I will confine my remarks to the philosophy laid out in paragraph 9 of the Report, to which reference has already been made. Before doing so I cannot let pass the denial of complacency by the right hon. Gentleman, and say how impossible it is to reconcile that with what was said by the hon. Member for Nuneaton (Mr. Leslie Huckfield). I, too, had noted the paragraph in which the President of the Board of Trade, with complacency, had replied as to the achievements in getting three people transferred from industry. That was the pattern of some of the answers appearing in the President of the Board of Trade's replies.
There is a weakness in the structure and a need to revise it to deal with export promotion. Some emphasis is laid on the need for business to promote further use of the Telex. Many hon. Members have received, as I have, letters from exporters who find that they cannot use the Telex because it is overcrowded. The Postmaster-General tells them that it will be a long time before there will be the equipment to provide them with the service they need. This makes a nonsense of the President of the Board of Trade's statement that the more widespread use of Telex, particularly by British firms, would be welcomed.
I regret that there is no recommendation made, and therefore no comment on, the question of the lack of continuity in overseas posts. I have travelled fairly considerably overseas in connection with exports and looking at export services, in another capacity. I have found that the complaint is still that there is a lack of continuity in the postings, although it is less now than 1788 it was a year or two ago. A man is transferred after a few years, just when he is becoming of real value. That is not refuted in the Report.
The only comment made suggests that it is right that an official should be moved before he gets stale. I contrast this with what I believe would be the commercial approach. It is also said in the Report that 35 locally-engaged officers attend training each year. For the biggest selling operation in the country this is an insignificant number.
I find difficulty in accepting that a short course of training can turn career diplomats into the commercial salesmen we need. Their training and background produces different qualities from those needed by the export marketing men required in the overseas posts. There must be horses for courses. I received a letter today from a largish exporting firm containing the response it met in an important city. I will pass it on to the right hon. Gentleman later. The writer complains of the way in which he was received. Because it was the Queen's Birthday when he arrived no one was able to attend to an important matter of business and the standard of service was extremely disappointing. In fairness he contrasted this with the excellent way in which he was treated at the Tokyo Embassy.
I turn to the theme of the philosophy referred to in paragraph 9. I believe that the Government's rôle in exporting is to sell Britain and that of the exporters is to sell goods. Between the two is the "No Man's Land" filled with a variety of Government, quasi-Government, and commercial bodies. We have the rôles of the various services of the Board of Trade and the British National Export Council.
I am sorry that some hon. Members have been unfairly derogatory of that council, and I believe that hon. Members should pay tribute to the work of its voluntary members and its staff. Of course we should consider its future rôle. There are also the various chambers of commerce, of varying degrees of ability, at home and overseas and those firms whose job it is to export—the traditional merchant houses, confirming houses and so on, who have for generations been in this trade to make a profit and have done so very well for Britain's exports.
1789 I believe that, over recent years, we have allowed the Government's rôle to trespass into this no man's land to the detriment of our export effort. It should be confined to selling Britain, providing the political support for that effort, seeing that overseas aid is used in a way most helpful to British exporters, and to providing information on national projects. But Ministries lack the commercial training, the continuity and the profit motive to make a good job of being export marketeers.
I ask, if the Board of Trade drew back from those activities over which it has been expanding its influence, what should take its place? I regret that, having posed the question in paragraph 9, the Committee did not go a little further. It said that, if starting from scratch, it would have preferred a public corporation, but that that might cause more problems than it would solve. Earlier today, the right hon. Gentleman told me that an inquiry into that aspect of export services should be considered at some future date. I do not believe that it will wait: it should be done now.
We must have, if not an inquiry—inquiries lead to further inquiries—a policy. We should get this middle ground, between the rôle of Government and that of the exporter filled first by those firms with the profit motive, the export houses and so on. They should have the further incentives to expand their interest in helping British exporters.
Secondly, so far as it is necessary to have a further co-ordinated effort to carry out the rôle now being performed in so many ways by the Board of Trade, this should be done by a publicly-owned commercial corporation, which could provide market research, deal with overseas exhibitions and fairs and work with all existing export agenies. It should be commercially staffed and profit-making: it should charge fees. I agree that people appreciate services more if they pay for them, since they then believe that they will get value for money and will use it wisely and well.
Such a corporation should not be subsidised, but should be profit-making, perhaps having a pump-priming loan to start with. I do not necessarily suggest the pattern of the Overseas Marketing Corporation, which has had its problems. 1790 No more than my right hon. Friend am I trying to produce a blueprint of what should take its place. But the export effort in future should be placed firmly on the shoulders of those who export and the Government's rôle should be that of a diplomatic selling of Britain and helping in the ways I have outlined. The gap between the two should be filled, preferably by the expansion of banking and export houses. Any part not filled should be undertaken by a public and commercial corporation.
The President of the Board of Trade should look again at the way other countries fill this rôle—Italy, Germany, the United States, France and Japan. I have made some examination of their methods and what stands out in all of them is that the main commercial bodies are controlled by business men and not by Government, and that the element of subsidy from these bodies to exporters appears to be very small. The success of German exports does not appear to relate to the subsidy exporters receive from central Government bodies, Germany has strong chambers of Trade which have played a major part in promoting exports.
I welcome much of the Report but I regret the complacency which appears in parts of it and in the right hon. Gentleman's remarks. Again, I ask him to look at the introduction of a commercial corporation to take over the rôle which the Government are trying to fill but which they are not trained or equipped to do.
§ 9.48 p.m.
§ Mr. A. G. F. Hall-Davis (Morecambe and Lonsdale)
I am grateful to hon. Members who have kept their speeches short and have given me an opportunity to make a brief contribution. Nothing concentrates one's thoughts so sharply and causes superfluous matter to be discarded so much as having to make a speech in perhaps half the time one originally hoped to have.
I listened with interest to my hon. Friends the Members for Guildford (Mr. David Howell) and Leicester, South-West (Mr. Tom Boardman) when they ranged over some of the fundamental matters arising from the Report. This is probably not a time for revolution but for redeployment and redirection of the efforts 1791 of the Government Departments concerned. We should not lightly forget that it is only five years since, with general approval, we asked the Diplomatic Service to reorganise itself and redirect its thinking and develop skills and techniques to an extent which it had not been its responsibility to develop before.
If, in the private sector, one makes a fundamental change of policy and a new request of one's staff, one does not lightly over-turn the course on which one has embarked, which might have considerable personal effect on just the people one has been encouraging to develop their talents in a certain direction.
We must decide what the Government services are trying to do. Are they trying to encourage more people to export, or is their first aim to secure more exports? It may be felt that this is a false contrapositioning and that the two are not exclusive. They are not exclusive, but in deciding the nature of promotional services it is important to know whether the principal aim is to find more people to export, probably for the first time, or whether to strengthen the efforts of those who are already engaged in exporting. In the present somewhat perilous state of the economy the emphasis should be not necessarily on more exporters, but, in the next two or three years, on more exports.
I attach great importance to a correct assessment of manpower requirements in overseas posts and to the consideration that when the assessment has been made its requirements should be met. Evidence was given to the Sub-Committee that the Diplomatic Service was still below the strength recommended in the Plowden Report. I looked up the Plowden Report of 1962–63 and paragraph 87 says:One of the greatest needs is for a sufficient margin of manpower to cover the time which officers necessarily spend away from their desks. Time spent in travel, training, home leave and sick leave represents a severe drain on manpower resources in any overseas service.Those who have not tried to handle the magic square of placing a limited number of staff in a multi-locational organisation cannot realise that the margin between efficiency and near chaos may be something like 2½ per cent. of total strength. If when the time comes 1792 for a man to go for a training period there is a suitable replacement, then it is a simple operation. If retirement or promotion approaches, one can send a man sufficiently far in advance to take over well before the staff change is made so that nobody is conscious of what is going on. But if one gets into the situation of having to make an ad hoc, forced emergency appointment or the system gets out of balance, then there is a chain reaction all the way down the line involving perhaps four or five rushed appointments. Then the fall in inefficiency is very much greater than the mere deficiency in numbers.
§ Mr. Hall-Davis
I see that the President of the Board of Trade agrees with that remark.
I was concerned that there was an indication in the evidence from the Department that the build-up to the Plowden reserve figure of 10 per cent. was under present circumstances dependent on economies being made elsewhere. Reference was surprisingly made to the suppression of overseas posts. I have never accused the Government of excessive economy, but at present it would be a false economy to economise on this particular aspect of Government service.
One witness who gave evidence to the Sub-Committee used the word "float" in relation to the 10 per cent. In this connection, I cannot think of a more destructive expression than the word "float". It conjures up pictures of surplus staff hanging round waiting for something to do. The expression "the Plowden reserve" would be much more likely to win approval in higher places for the additional expenditure involved.
I think that I have time to deal with two of the points raised in evidence to the Sub-Committee. The first of them is closely related to the point that I have just made, and it is the complaint about over-frequent changes in posts and the fact that people do not remain long enough in one place.
Two possible answers occur to me. The first is to leave people longer in their posts. It may be that now that they are spending a greater proportion of their service careers on commercially-orientated activities, the need to move 1793 them round quite so much is not as great. This might be given serious consideration, certainly as it applies to some locations.
The second suggestion which I would make is that possibly the natural evolution will be that, as people spend a greater proportion of their total career spans on commercial activities, as we have heard is happening, they will develop a greater expertise in commercial matters and be quicker at picking up the "feel" of a country when they go there, providing always that they are given the minimum overlap period which I discussed just now.
This is a comparatively new development. The evidence that we have had from people with first-hand experience is that it is evolving in an encouraging fashion. However, I do not see why it should not be possible quite deliberately for a greater element of the whole career span to be ear-marked for specific commercial activity.
My other point concerns the secondment of people between Government service and industry. My own view is that it will not prove to be possible. The people who are wanted for this work are those who are among the contenders in their own career paths. They are looking for the key promotions in their careers. It is asking a great deal of them to expect them to go for two or three years into Government service. They will be looking over their shoulders constantly to see what is happening in their firms.
I can only put forward one possible suggestion, and perhaps it is a little farfetched. It is perhaps that the more sophisticated services which have been referred to in the evidence might be undertaken by people appointed on a
§ consultancy basis to a geographical area for four or five years as a definite phase of a career which is orientated on the private sector. When a man had worked in a consultancy capacity in one location for such a period, he could then go back to his firm, produce the appropriate page of the Board of Trade Journal showing the export statistics of the country concerned, and say, "I was there for five years. There are the figures of the commodity in which I was working. Surely I am worth the export manager's position."
§ Finally, may I join in the plea for a national exhibition centre? The party opposite has a good record in that our exhibitions have been fairly successful. The Festival of Britain did a great deal for the spirit of Britain. The British Pavilion at Expo was an outstanding success. Perhaps the delay has been worthwhile if we use sufficient imagination when we finally come to do the job.
§ Question put and agreed to.
That this House takes note of the Sixth Report from the Estimates Committee in the last Session of Parliament relating to the Promotion of Exports and of the Departmental Observations thereon (Command Paper No. 3854).