HC Deb 17 May 1971 vol 817 cc906-10
The Secretary of State for Trade and Industry (Mr. John Davies)

With permission, Mr. Speaker, I wish to make a statement about my recent reference to the unilateral abatement of tariffs.

It was suggested by a speaker at a party conference that the Government should consider the abatement of the existing tariffs which protect the motor industry as a means of dealing with the excessive wage settlements recently reached in that industry. I confirmed that I had that under consideration as one of a range of possible measures open to the Government. I also made it perfectly clear that there was no question of a decision having been taken. We on this side of the House have long said that we would be ready to consider reductions of tariffs, where appropriate, in order of heighten competition.

Mr. Benn

Is the right hon. Gentleman aware that the House will be glad to have some conclusion brought to the confusion over the last few days, which led to variations in share prices on the Stock Exchange, to which he himself referred? May I ask him two questions? First, what estimates have the Government made of the effect of unilateral removal of tariffs on the level of imports, the balance of payments, the level of unemployment, manufacturing investment in the engineering and motor industries and on confidence in the industry, which is our greatest exporter and has suffered from all Governments over the last ten years by being used to some extent as a regulator of the economy?

Second, does he still stand firm to the statement which he made to The Times, reported on Saturday, in which he said: I would obviously have consultations with the car industry if I came to conclusions on the matter."? Is he saying that there would be no consultations with the industry until he himself had reached a conclusion? I remind the right hon. Gentleman that he is responsible to the House for his policy and should report to the House on these matters.

Mr. Davies

In the first place, in my view, there was absolutely no confusion. In the second place, such variations in share prices as apparently took place were minimal. The effect of the removal of tariffs on a variety of indicators of the kind which the right hon. Gentleman has mentioned is, of course, part of the study operation. I said that we were undertaking a study: we are undertaking a study and we will continue. As for consultations with the motor industry, those would take place at a time when the Government have reached some kind of conclusion. I would regard it as being entirely unsatisfactory to go into such discussions without any clear mind at all.

Mr. Longden

Will my right hon. Friend not be deterred by these wholly subjective, partisan and generally ignorant criticisms from continuing to administer salutary shocks to inefficient managements who, if language means anything, are primarily responsible for these inflationary wage settlements?

Mr. Davies

Yes, I can give that undertaking. Apart from the very many interests, which I have firmly at heart, as much as anyone does, of the motor industry, there has been this really great concern about the movement in wages recently.

Mr. Atkinson

Would my right hon. Friend agree that a fair interpretation of his comments over the weekend would be that some additional competition was necessary in the car industry? Therefore, is he not suggesting that there should be an increase in the number of cars imported? Would he therefore agree that the logic of all that is that he is now saying to the country that it would be patriotic for car buyers now to buy foreign cars?

Mr. Davies

What an extraordinarily complicated bit of logic that was. I am carrying out a study to see what it is wise to do in all the circumstances.

Mr. Rost

Does my right hon. Friend agree that what most patriotic people in this country are asking is not why the Minister has discussed reducing tariffs at this stage but why this question was not discussed some months ago at the time when highly inflationary wage negotiations were in progress which could therefore have influenced these wage negotiations in the national interests?

Mr. Davies

These matters have, of course, been under study for a considerable time. The problems involved in taking any such action are very great, and I have not sought to minimise them, but if the circumstances justified them I would equally not hesitate to take them.

Mr. Edelman

Is the right hon. Gentleman aware that his ruminations on the abolition of tax will have been warmly welcomed by the American-controlled companies which would gladly import into Britain greater quantities of cars, to the detriment of employment and of the level of wages in Dagenham, Linwood, Liverpool and Coventry? In these circumstances, would he realise that his reactionary, doctrinaire policies threaten to restore the depression in the motor industry which existed after the abolition of the McKenna duties?

Mr. Davies

No, I think that that is entirely incorrect from beginning to end. The American motor industry undoubtedly has a primary interest in the successful use of its own investments in this country above all things.

Mr. William Clark

Is my right hon. Friend aware that many people, including many hon. Members on this side, would agree, as a general principle, that where an industry with tariff protection uses this hidden price subsidy to pay inflated wage claims without an increase in productivity, this damages the economy and consequently should be deplored?

Mr. Davies

This is a fundamental factor in the consideration which I am giving.

Mr. David Steel

Is the right hon. Gentleman aware that in normal times we on this bench could support him and welcome his conversion, or his attempt to convert the Tory Party, to the principles of freer trade? But is he aware that off-the-cuff major pronouncements of this kind at Scottish Tory Party conferences are apt to be construed as examples of instant Government?

Mr. Davies

It was certainly not an initial pronouncement of a policy. This matter has been a stated element of Conservative policy for a very long time.

Mr. Michael Foot

Since the right hon. Gentleman says that the line of consideration which he indicated in his speech the other day was so wise, will he tell us which other industries he is now considering for using tariff policy to affect wage claims in those industries?

Mr. Davies

I am considering it over a very wide field of industries. I have no intention of stating a schedule of industries, but clearly those which are behind a considerable tariff wall are naturally the ones most concerned.

Mr. Foot

Since the right hon. Gentleman claimed at the weekend in one of his comments upon it that he was using this as a deterrent, surely he should tell us which industries he is considering?

Mr. Davies

When I have an industry to deter I will certainly let the hon. Gentleman know.

Sir D. Walker-Smith

Will my right hon. Friend clear up a point which has been nuzzling me a little? Does the fact that the Government are engaged on this individual and national study of tariffs mean that they have decided, after all, not to go into the Common Market—[Laughter.]—since if they have, all our tariff arrangements will be automatically regulated by the Community and its common external tariff policy?

Mr. Davies

This has nothing whatever to do with the question of our entry into the Community. [Interruption.] We must make our policies as things stand at present.

Mr. Harold Wilson

Will the right hon. Gentleman give the House an undertaking that the only circumstances in which he will move in this House, which is the right place to do it, for a reduction in the tariffs of the British motor car industry is as part of an agreement with the other countries concerned, who have their own motor car industries, both Europe and the United States—[Interruption.]—that there will be a similar reduction in those countries against British motor cars?

Is he aware that this has been the policy of successive Governments, at the Kennedy Round and earlier? Or is he saying, on the other hand, that he is prepared to give away this bargaining card as well to other countries with nothing in return?

Mr. Davies

The plain fact is that the Government have complete autonomy in this matter and can act as they feel inclined.

Hon. Members

Shame.

Other Hon. Members

Resign.

Mr. Harold Wilson

The question—

An Hon. Member

Wait to be called.

Mr. Wilson

I was too overcome by the right hon. Gentleman's answer to wait for you to call me, Mr. Speaker.

The question I asked the right hon. Gentleman was for an undertaking. I did not ask whether the Government were free to act in a dictatorial way and then announce their decision outside the House. Whatever the Government's powers may or may not be, will the right hon. Gentleman now give that undertaking?

Mr. Davies

No, I will not. [Interruption.]

Several Hon. Members

rose

Mr. Speaker

Order. We must get on.