HL Deb 29 February 1944 vol 130 cc1032-45

LORD BARNBY rose to call the attention of His Majesty's Government to the current policy with regard to export; and to move for Papers. The noble Lord said: My Lords, when I put this Motion on the Paper I naturally could not foresee what would be the line taken in the debate initiated by the noble Lord, Lord Addison, on the 15th of this month. In the course of that debate a considerable amount of time was given to the subject of exports. Lord Addison undoubtedly did a great service in initiating that debate, which brought forth a very informative reply from the Minister of Reconstruction, Lord Woolton. This is a non-Party question which, in the interests of the country, requires the wisest contributions from all parts of the House. A most timely and thought-provoking speech from Lord Latham added greatly to the value of the debate. Since then we have had a reminder from the Leader of the House that there is a danger of too much concentration on the future and an inclination to forget the sombre tasks of the present. There will be universal agreement that if we are to implement the many new schemes of social service and full employment for all, we shall have to do a large export trade to pay for the necessary imports of raw materials and food. It is in that spirit that I raise this question to-day. My aim is to advance the belief that there is need for an increased priority to be given to a minimum volume of exports.

It is necessarily all a matter of degree, but before I go over a few of the essential principles governing exports, I would like to underline two phases of the previous debate, particularly the denunciation of the deflationary and contractionist policy of the 1930s. Lord Woolton in no reserved language emphasized his own recognition of the misfortunes that had come from that policy. Well, that is past now; the immediate thing is that Lord Woolton in his responsible position says he is convinced that an expansionist policy is right. I quote: I have come to the conclusion that an expansionist policy is the right and proper policy for this country to pursue. He did a great service in being so categorical. I am going to underline that by quoting an extract from a leading article in the Evening Standard subsequent to the noble Lord's speech: The statement may not sound so exceptional now. In the past year, indeed, it has become almost a commonplace. Everyone, from Parliamentary Private Secretaries at by-elections, to bank chairmen giving their reports, has affected to subscribe to the same doctrine, and yet it is revolutionary. In the period between the two wars almost every- one, including Parliamentary Private Secretaries and bank chairmen, not to mention a whole host of statesmen who shall be nameless but whose names are well known, acted on precisely the opposite doctrine. It is really mysterious that during that period in a matter fundamentally affecting the lives and employment of the country so wrong a view should have been so widely held.

A fundamental error governed the whole monetary policy. It arbitrarily changed the value of the currency, and that, in its turn, affected the lives and employment of millions in this country. That result has been attributed to the old-school orthodox Olympians. I ask, has the purge in belief been adequate? We see persons in responsible positions in many directions whose opinion was wrong, as that article has pointed out. Opinion was wrong in the Treasury, in the banks and among political leaders. Many who were responsible in those times still hold office. They were the blind leaders of the blind and we had the spectacle of unemployment causing misery to families of millions in this country, to say nothing of the destruction of capital. It was not less than the misfortunes of war.

There has been much lip service to the idea of an improved world—much talk of food, work, houses, education, social services and full employment. Full employment necessarily means more imports of raw materials and they have to be paid for by exports. That must be in capital goods as well as consumer goods, and that means not an expansionist policy in the United Kingdom only but a world-wide expansionist policy, or at least in the sterling area. Britain's customers must have purchasing power and we must export capital goods as well as consumer goods. No one is going to buy capital goods in a contractionist era. Lord Woolton, I am glad to say, emphasized that he believes in multilateral trade as the chariot to which we shall hitch our future. Let us hope he is correct. Certainly the new agricultural policy means more home production and that means a lessened pull on the exchanges; but if it is to bring more purchasing power for the agricultural population at home then it is probable that higher prices must prevail and there must be continued subsidies. At the present moment they are a big drain upon the Exchequer.

May I ask the indulgence of the House for a moment while I give a few figures? In 1919, when our exports increased so tremendously, they were 52 per cent. above 1913, but only in value, because at the same time they were 44 per cent. less in volume than in 1913; and in 1920 that trend was still further emphasized. Again exports before this war provided only about 43½ per cent. of the home economy needed for raw materials. Since then we have lost foreign investments and invisible exports are less. That again emphasizes the necessity for more exports. Only about 9 per cent. of Britain's pre-war imports were finished products. All this seems to support the view of Lord Woolton that we must contemplate regulated imports as well as directed exports. That inescapably means drastic exchange control and Governmental regulation on a considerable scale for a long time. In that way alone can priority of import march with priority of export. In the course of the debate to which I have already referred Lord Latham particularly underlined the view that revised international monetary practices were essential. I am glad he did so because there are many who think that, instead of being lured into the dangers of ad hoc schemes of price and quality regulation for individual commodities, it would be much better to rely upon an overriding international monetary practice which would avoid much of the intricate machinery which other methods would call for.

With that review of axiomatic principles I return to the aim of my Motion. I believe more export is possible now. If export is fundamental, why not regard it as being entitled to higher priority? Why not permit more of it now? The belief exists that the Board of Trade are in this matter subservient to Committees in Washington and that this is a matter of delicacy which should not be discussed lest the United States might be offended. I hold that to be a wrong attitude. This is not the moment for timidity. There are no grounds for feeling that we should hesitate to emphasize to the United States of America that unless there is a prosper-our sterling area there is not likely to be prosperous world trade for the United States. This is election year in the United States and it calls for delicacy in what is said here, but I do not think it is out of place to quote something that was said by Mr. Sumner Welles when Assistant Secretary of State: The high tariff policy of the United States reached out to virtually every corner of the earth and brought poverty and despair to innumerable communities. I claim that an expansionist world economy is essential and without prosperity in the sterling area the world plan fails. In export, supplies to the Empire must have priority. But we must remember that normally there were regular exports from this country to the United States.

While temporarily, owing to the operation of Lease-Lend in reverse, the drain on the dollar exchange may be much less severe than it was, it does not alter the fact presumably that there is a drain. In this perhaps I shall receive correction from my noble friend who is to reply. He may say that the situation has so changed with regard to dollars that we need not take that into consideration. If that be so, how right was the noble Earl, Lord Cork, in appealing for increased remittances to women and children in the United States. I know my noble friend will remind me that this subject is fundamentally governed by considerations of man-power and woman-power.

There is a danger in generalizing about steel. There is a difference between raw materials which are on a sterling basis and those which involve exchange problems. There are some industries that are damped down now far below capacity, some industries from which war-time requirements are decreasing, and there is a belief that in places pockets of residual labour exist which could be better and more profitably employed. The principle of equal sacrifice between comparable industries in the United States and in the United Kingdom has been established. I urge that there should be some export even at the expense of some home supplies. I wonder how many of your Lordships have had occasion to go into some of the big multiple stores—Marks and Spencers and Woolworths—and have seen the vast variety of merchandise of all kinds, much of it of recent production, and have asked whether that is vital to the war effort.

In recommending a course of action it is often best to give a specific illustration. I will take one big export industry—wool textile—because it is of exceptional in- terest to the taxpayer. The taxpayer has an enormous amount invested—I do not know how much, but it must be £100,000,000 to £150,000,000—in raw material for that industry. That industry contributed very largely to our export trade in normal times, but at the moment it is one of the industries which are damped down and is not working at more than fifty per cent. of its potential. It is in the very depressing position of having to reduce its output. There is an industry the product of which carried the réclame of British goods to the furthest ends of the world, and in the United States particularly that product was much sought after and admired. In view of the tender feelings of Scotland wherever Scottish interests are concerned I should have expected several noble Lords from Scotland to voice the virtue of Harris tweed and Scottish homespun. My plea is that if export trade is to be permitted the exports should be only of the highest quality. A belief exists that of the exports going out of the country at present many are of a quality and virtue appreciably less than might be the case without any further strain on labour supplies. We shall have to rely for our export trade in the future on merchandise of quality and character rather 'than on mass production which weans in many cases a relatively low labour content. We want a high labour content and a high exchange earning virtue.

Here I would draw my noble friend's attention to a concrete suggestion, that if we arc to promote export trade after the war there is need for a standard of virtue that is statutorily controlled by the industries concerned. I cannot better emphasize that than by quoting an eminent scientist, who in a recent address said: Quality control means keeping the variation of a certain characteristic or characteristics of a manufactured product within standardized limits which are specified. It may be said that there are three sorts of specification: (i) an imposed standard specification, (ii) an agreed or compromise specification, (iii) certified standards based on quality. I hope my noble friend will recommend that thought to my right honourable friend the President of the Board of Trade. There may be criticism that such involves Government interference. In reply to that I would ask, is a Scrub Bull Act, under which the Government insist that there shall be a high quality of stock, unreasonable Government interference? Or I may turn to New Zealand for another example. The New Zealand Government insist that apple exports from that country shall be subject to a rigid minimum standard of quality.

The next point to which I would like to refer is research. My noble friend Lord Woolton has already emphasized to the country the importance attaching to research, and we are indebted to my noble friend Viscount Samuel for his repeated emphasis on that. As Chairman of the Parliamentary and Scientific Committee he is doing great service, and if he were present at this moment I would appeal to him to use the influence of his Committee to impress on the Government that research in industry should be by statutory provision. His Committee can impress upon the Cabinet a recommendation which I am sure my noble friend Lord Woolton will make that in order to ensure proper expenditure on research then should be statutory levies on industries That would involve passing an enabling Bill so that in regard to any industry, subject to appropriate indication of desire, an Order in Council could be made to ensure that the necessary funds would be forthcoming. That needs doing now, because individuals of high scientific attainments in the employ of different Government Departments are naturally thinking of post-war employment. They cannot be expected to give their services to associations unless they see an assurance of continuing revenue.

On the subject of taxation, I would mention the depreciation and obsolescence allowances which machinery requires. There is not much time before the Chancellor of the Exchequer introduces his Budget, and this subject justifies repetition. I cannot do better than quote from a letter which appeared in The Times on February 24, which puts the matter in very clear language, over the signature of some eminent industrialists: With taxation at a high rate, slow depreciation of plant, coupled with inadequate or no allowance for amortization of experimental and development expenditure, operates as a brake on productive efficiency, and a threat to full employment. It penalizes risk-taking, without which our twin problem of foreign exchange and full employment will not be solved. An early statement by the Treasury that they are reviewing the future of these allowances would help post-war plan- ning. Action which encouraged the constant improvement of plant standards would play its part in maintaining steady post-war employment.

The Federation of British Industries has recently published a report on International Trade Policy. It is a painstaking and careful production, which has received the endorsement of the Grand Council of that big organization, which represents an overwhelming part of the industry of this country. I hope that the recommendations there made with such care and conviction will receive consideration in the proper quarter. I should like to quote one recommendation with regard to the part which the United Kingdom should play in Imperial trade: A permanent body must be created in the United Kingdom by the Government to co-ordinate the views of the various Government Departments concerned in order that the Government can speak with one voice on Empire matters. That is a constructive suggestion, and I hope that it will be considered in conjunction with what Lord Woolton reminded your Lordships of on February 15—namely, that we now have a sort of Economic General Staff. I think he called it a central service for statistical information. I have made certain constructive suggestions which I hope will facilitate that full employment to which Lord Woolton has told us we are committed. I repeat my earlier appeal for a higher priority now for certain exports, and I beg to move for Papers.


My Lords, my noble friend who has just spoken has taken your Lordships through the economic policy of this country in former years, the question of taxation, the need for future research, and the need for an expansionist policy in our export trade. I hope he will forgive me if my remarks are directed towards the Motion which stands upon the Paper, and which calls the attention of His Majesty's Government to the current policy with regard to exports. I ask your Lordships to bear with me while I endeavour to deal with some of the points which my noble friend has made on that subject in moving his Motion.

The principles which govern our current export policy were debated in another place in July of last year, and I do not think there is a great deal that I can usefully add, at the present moment, to that discussion. To-day, as then, our primary object is to win the war in the shortest possible time, and therefore everything must be subordinated to that aim. Nevertheless I think that it is useful in any discussion upon exports, either current or future, to examine the practice which we have followed in this country in the past, and followed, I venture to suggest, not without some degree of success. For generations our export policy was not difficult to appreciate, although it was more difficult to achieve. Generally, our object was to sell as much of our manufactured products as possible abroad, so that we could purchase our essential requirements from overseas. If anything occurred to hinder or limit this operation, repercussions were immediately perceptible both here and elsewhere, with results which are well known to my noble friend and to other noble Lords.

Our export trade has always been dependent upon four things: raw materials, machinery, shipping and manpower. If the working of any one of them was interrupted, the others could obviously not function successfully. I hardly think that my noble friend would quarrel with that very general description of our policy in past years. To-day, however, we find, ourselves in a very different position. Our resources in man-power, in raw materials and in shipping are all strictly limited, and our man-power has been diverted from peace production to war production. This has resulted in both our internal home markets and our export trade being affected. The production of peace-time necessaries for civilian consumption has already been cut to the very barest level, and that cut can be justified only on grounds of our war-time needs. Correspondingly, in the field of capital goods, mentioned by my noble friend, and especially of those capital goods which require steel and other products so important to the war effort, the same process has in fact taken place.

We have applied at home, as I think your Lordships will agree, the principle of "make do" without impairing our efficiency or our ability. We have rationed and limited the volume of consumer goods, and we have refrained from launching new capital enterprises. In point of fact we have quite deliberately curtailed civilian consumption of every kind, so that each and all of us may give our maximum contribution to war production and to war needs. I think it must follow-that we cannot afford to use our resources, all of which are now limited, to produce unessential goods for export, any more than we can produce similar goods for our own civilians at home. Many sacrifices are being borne in this country to-day and I believe that we can only be expected to sustain by exports overseas standards of civilian consumption and civilian industries at a level which can be justified by war-time needs. The only exports which the Government can allow, therefore, are those which directly, rather than indirectly, will contribute to winning the war, essential goods without which the military effort of the country concerned could not be maintained or its civilian morale upheld. To my mind a policy founded on any other supposition would realty be stark madness.

Let me turn for one moment to give the House a brief description of how one of our most essential export trades is now organized. My noble friend in the course of his speech referred to it as well. The textile trades are, in point of fact, a good example, for in pre-war days they accounted for one-quarter of the whole of our wide range of exports. In 1940 we first introduced a limitation of supplies, which was followed in 1941 by clothes rationing. That in itself was an effective measure of drastic economy in civilian consumption, and at the same time it ensured a fair share for all concerned. Although this particular trade has had to suffer ever-increasing withdrawals of labour for more essential purposes, it has at the same time to provide for the necessary needs at home and also for the requirements of the Armed Forces. Inevitably the goods which would be available for export have had to be reduced, and such as are available have been used more and more to meet the needs of our Empire and our Allies who are dependent upon us for such essential requirements. For the time being our textile exports to old, important, and traditional customers in the United States and Latin America have been cut off almost completely if and where they have involved demands upon our productive resources which, through reduced capacity, we have been unable to meet. I have (been told that on occasion pockets of labour are found to exist, and when these pockets cannot readily or immediately be absorbed for war purposes the output from them is allowed to go in exports. My noble friend will be aware that what applies to this industry applies in this respect to very nearly every other industry as well.

The whole of our current policy is based on man-power which, as everybody knows, is in short supply. The primary needs we must meet are the home market, the demands of the Services, and the requirements of those countries which are dependent on us. That must always limit the quantity which we can spare for export purposes. The Government are fully aware of the sacrifices which have been made and which have borne very heavily upon us. It has meant the loss of contact with old customers, the loss of traditional markets, and these old customers have had to seek for unaccustomed sources of supply or to develop local industry. It must be clear to everyone that the exigencies of war have compelled us to regulate and restrict exports to an increasing extent. It is not that we consider them unnecessary or that former exports were of a luxurious nature. Nothing could be further from the truth. They have had to be restricted so that we could meet our home demands which are indispensable for war purposes. We have adopted, as I have pointed out, an exactly similar policy at home where civilian consumption, in all respects, has been reduced to the very edge of efficiency and ability. In short, all our production must be employed to the optimum use for war purposes, and that has been the one dominant factor in our policy.

My noble friend, in the course of his speech, expressed apprehension that in our current export policy the Government are paying insufficient attention to postwar considerations. He seemed to suggest that we were content to stand by while our great Ally, the United States of America, by virtue of her enormous resources, filled the gap we have been compelled to leave through the war. We intend, the moment that our resources permit, to raise progressively the rigours of the control which is now maintained, but we and the United States are, at the present moment, engaged on a joint adventure, and our energies are jointly concentrated on the important task in hand. Any Government which set out to divert supplies from this object and to manœuvre for a post-war position would fail in their duty. We sympathize with those whose export business has had to be reduced or stopped, and who find that the volume of exports that can be permitted is insufficient to enable them to maintain their old connexions. Unfortunately, it is not always possible in wartime to explain fully the reasons for decisions which may seem to them very harsh. On sometimes very imperfect knowledge, people may get the impression that we arc negligently allowing the United States, for example, to steal a march on us. I ask them to remember that critics are not lacking in the United States who are making exactly the same complaint about us. All these allegations and counter-allegations often arise from an impossibility of judging rightly and correctly the facts of a particular case without full knowledge of all the circumstances, which cannot always be made available to everyone. We should be well advised, before lending ear to any voice of suspicion and mistrust, to remember that the good faith of both Governments, the Government of the United States and His Majesty's Government, is pledged under the special arrangements which have been made in the economic field for the effective prosecution of the war, that there should be no self-seeking or manœuvring to further the post-war interests of either country.

There is nothing useful that I can say at the present moment about the future. It is not really necessary for me to dwell at length on the need for exports from this country. A flourishing export trade built on a firm foundation is, of course, absolutely vital to the economic life of our people. If the standard of living is to be maintained and improved, it must revolve to an ever-increasing extent around our export capacity. Therefore any action which the Government may take must tend to ensure that the volume of our exports is raised and kept at the highest possible level. None of us wishes to see again those heart-rending scenes only too common before the war in the depressed areas—areas which were dependent to a very large extent on export trade. The Government are discussing the reconstruction problems of industry with all parties concerned, and in the course of those discussions every industry has been invited to place before us its views on the future export trade in their particular class of commodity. My right honourable friend the President of the Board of Trade is the very first person to appreciate—and in his view His Majesty's Government concur—that it is not only necessary to regain our export trade up to the limit of the pre-war level, but in the new circumstances which will confront this country at the conclusion of the war, when our oversea resources will be seriously depleted, our export trade must be considerably enhanced.

I often wonder whether it is sufficiently realized what a difficult position we shall all in fact face at the conclusion of hostilities; and, although the Government can of course play their part in making the expansion of export trade possible, it is in the end only industry itself which can perform the job. By and large, as my noble friend has said, export trade is really our breath of life, and most of us would sleep unsoundly if we thought that His Majesty's Government were not considering this problem. But I think I can assure my noble friend that my own sleep is not in any way disturbed, for I know that the future of the export trade is constantly and actively receiving the urgent consideration of His Majesty's Government. I have briefly endeavoured to give my noble friend an outline of our current export policy. I hope with that he will be satisfied, and forgive me if I do not reply to the other points he raised, which are not really germane to the discussion.


My Lords, it is customary for the mover of a Motion, following the reply by the Government spokesman, to thank him for the way in which he has replied to the debate, and I am sure that in the case of my noble friend Lord Munster, with his invariable courtesy, no member of the House has ever any occasion to use any but words of appreciation. To-day my noble friend rather took me to task for ranging wide of the terms of my Motion with regard to the current policy on exports. It was with regard to those exports that I felt that current policy called for the consideration of certain constructive suggestions which I put forward. With those my noble friend did not deal. I would remind him that he himself re- ferred to the textile industry and said that what appeared to be true of the textile industry was true of other industries also. The reverse is true, because the textile industries in the main are working appreciably below potential capacity, and in the case of the wool textile industry, which I gave as a constructive illustration, it is never competitive with the United States in any market. Apart from that, a debate which took place last July in another place does not necessarily represent the up-to-date position, because I understand that the dollar position has changed very much since then.

I would, however, like to thank my noble friend for the patience of his reply. I admire the skilful way in which he made use of the very good matter that was at hand, to oppose my appeal for larger exports. He gave a soothing reassurance; but in regard to the five particular suggestions flat I made, I regret that he could not see his way to refer to them. I hope he will bring them to the notice of the President of the Board of Trade, and I hope that I may take his nod as assent; otherwise I should feel justified in asking for more information later. For the rest, I appreciate the fulness of his reply and I beg leave to withdraw.

Motion for Papers, by leave, withdrawn.