INCENTIVES FOR EXPORT (Hansard, 28 November 1961)

§ LORD BARNBY
My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

§ THE MINISTER WITHOUT PORTFOLIO (LORD MILLS)
My Lords, I believe in the importance of verbal exhortation as a means of influencing the thinking and action of employers and employees. Speeches by Ministers and others have been useful in bringing home to the country at large and to individual firms the urgent need to expand our exports, and also the measures which the Government have taken to assist manufacturers and merchants to do this. The Government have done much more than exhort. We have improved the existing arrangements and provided new facilities for our exporters.
The Government are glad to examine any proposals designed to promote the expansion of our exports, but they are not prepared to embark on a policy of direct monetary subsidies which would be contrary to the internationally agreed rules and which could only lead to a subsidy race detrimental to the orderly expansion of world trade. The Government have already helped exporters by introducing tax changes, by raising Government expenditure on trade promotion including overseas trade fairs and by improving our export credit insurance and export finance arrangements.
Useful as these are, the most important service the Government can continue to provide to assist exporters is to ensure a healthy home economy under which the competitive position of United Kingdom industry is not undermined by inflation and the accompanying excess demand in the home market.

§ LORD SHACKLETON
My Lords, does the noble Lord consider that the present state of our balance of payments is the direct result of the exhortation of Her Majesty's Ministers? Could he tell 1038 the House in what respect the home economy is so healthy that it helps exports'? And would he tell us what specific new facilities (he mentioned export credit guarantees, and we have a new Bill which is merely "the mixture as before") the Government are in fact providing?

§ LORD MILLS
My Lords, the position would be much worse, in my view if it had not been for the steps taken by the Government to induce firms to venture into the export markets. I am not sure there is a sufficient appreciation of what all this means to us. I have heard many people say, "We are so busy at home. Why should we undertake the risks which go with the export market?" only because they do not have a proper appreciation of what our need is. We must export if we are going to continue to enjoy the standards which we have set for ourselves.
The noble Lord asks me: what have the Government done? They have done many things. The premiums charged by the Export Credits Guarantee Department have been sharply reduced; a new financial guarantee system has been introduced to assist the offer of long credit in cases of exceptional importance; arrangements have been made to allow United Kingdom firms, with the backing of the Export Credits Guarantee Department, to match the credit terms supported by foreign official credit insurers; the Bank of England has introduced a re-discount scheme to facilitate the supply of medium-term export credit; and there is a new form of export credit guarantee to encourage small firms to try out export markets. There has been a change in the repayment of expenses of businessmen travelling away from home—this was the very vexatious system of trying to assess the savings at home by a man travelling abroad; and that has been done away with. The variable duty on bills of exchange has been abolished, and there is now only a two penny stamp duty; and arrangements for draw-back facilities have been improved. I could go on for a long time—

SEVERAL NOBLE LORDS
Hear, hear!

§ LORD MILLS
—telling you what the Government have done, but perhaps it would save your Lordships' time if I wrote to the noble Lord and gave him 1039 the long list of aids which the Government have brought about.

§ VISCOUNT ALEXANDER OF HILLSBOROUGH
My Lords, in view of that particular speech by the noble Lord, would it not be true to say, after ten years, that all the methods so far tried by the Government have proved themselves to be obsolescent? They are hesitating now about a real plan, but why do they not give up their obsolescent methods—or give themselves up?

§ LORD MILLS
My Lords, in reply to the noble Viscount, is that a fair observation? The Government have progressively done many things, and now the Government, in their wisdom, are trying to see whether we can enter the Economic Community. That, too, is in support of our export trade. I do not know what else the noble Viscount would expect me to say, but I could say a lot to him, too.

VISCOUNT ELIBANK
My Lords, would not one of the most effective actions that the Government could take be to abolish, except in relation to strictly military goods, the embargo on exports to China?

SEVERAL NOBLE LORDS
Hear, hear!

VISCOUNT ELIBANK
It is bound to be done sooner or later. Why not do it now?

§ LORD MILLS
My Lords, I suggest that is another question. I should be very happy to debate that at any time.

§ LORD SHACKLETON
My Lords, although I do not wish to prolong this discussion, perhaps the noble Lord will allow me to write to him to tell him some of the things that might be done to further the export trade.

§ LORD BARNBY
My Lords, before asking a supplementary to my original Question, with the indulgence of the House, may I thank the noble Lord for the timely statement which he has seen fit to make? Arising out of his reply, in relation to the facilities which are being given, may I ask him whether he is quite satisfied that such things as the German turnover tax, the facilities for discounts at cheap rates by Japan and other facilities by Eire are such that they do not conflict with the 1040 responsibilities of those who are members of the G.A.T.T.? Secondly, in view of the reply which he has just given, may I ask the noble Lord whether he can define the line of demarcation between the responsibility of the manager of a public company to conserve the finances of his company and the inclination which he personally may have to increase exports at financial sacrifice to the company?

§ LORD MILLS
My Lords, to deal with the noble Lord's supplementaries, I am aware of the situation in Western Germany, where turnover tax is levied on every service, on every material and on every sale in Germany. I am not sure whether we should like or welcome any move to have such a turnover tax here. But the German Government do remit the turnover tax on exports, and remit everything the German industrialist has had to bear. But that is no different from the situation here, where we have purchase tax and do the same thing. We are satisfied that, by and large, the German exporter does not receive a rebate in excess of the turnover tax.
In regard to Japan, there are various incentives to export, but Britain is not in G.A.T.T. relations with Japan, and we are not therefore able to challenge Japan's practices on this basis. Perhaps the noble Lord will remember that Sir Norman Kipping, in his recent Report on Japan, took the opportunity to draw the attention of the Japanese to the fact that British industry regarded subsidised competition in export markets as totally unacceptable. I think this was a most useful reinforcement of the British Government's view that artificial incentives are not the best way to improve British export performance.
With regard to the Irish Republic, they do offer a number of export incentives. The Irish Republic was a member of O.E.E.C., in which this practice was banned. Nevertheless, no country ever thought it worth while to challenge the Irish practices, because no country ever thought they were seriously damaged by them. The scale of Irish exports is very small in relation to world trade, and I think in the absence—

§ LORD MORRISON OF LAMBETH
My Lords, would the noble Lord excuse me? I should like to ask the Leader of the House whether there is any Motion 1041 before the House, and whether he will cease to raise his eyebrows in the future if any noble Lord on this side is as long in asking a question as the present noble Lord is in answering? Is this an answer to the question, or is it in the nature of an exhortation?

§ THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM)
My Lords, I must say that this was a very detailed supplementary question, and it is rather more easy to ask a question in a few words than it is to answer it. I think my noble friend has been extremely conscientious in his attempt to please the House. However, I would draw attention to the fact that we have taken forty-five minutes to answer four Questions.

§ LORD MILLS
My Lords, I stand admonished. The noble Lord said to me the other evening that he wished I would not be so conscientious, and I promised him that in future I would only answer his questions. But I will just answer the last question. I have sufficient faith in my fellow countrymen to believe that, however difficult are the problems of export, they will apply their minds to them. There are selfish people who would rather trade at home and would neglect exports, but I do not believe that that is the thinking of all.

LORD SALTOUN
My Lords, arising out of that question, may I ask the noble Lord whether the duty of a managing director is not to his shareholders first? He cannot neglect that, even for the sake of the country.

§ VISCOUNT HAILSHAM
My Lords, I think the duties of a managing director go somewhat outside the scope of the original Question.