EXPORTS AND GOVERNMENT POLICY

HL Deb 11 February 1965 vol 263 cc301-85

4.48 p.m.

Debate resumed.

LORD WILLIAMSON

My Lords, I think we should all welcome this discussion in your Lordships' House on the vital question of Britain's external trade, and particularly exports. We have had this afternoon two very temperate speeches, if I may say so, and we should be grateful to my noble friend Lord Champion for his detailed and informative exposition of the Government's methods and proposals for dealing with the situation. So far as the noble Earl is concerned, I always enjoy his speeches and I thought when he sat down that it could be summed up like this: that if the Government would rescind all the measures that they have taken and adopt all the measures which the Party of the noble Earl recommends, then everything would be all right.

My Lords, I believe that all our standards—our security of employment, standard of living, pensions, health scheme, defence—depend on our being able to sell to the rest of the world a sufficient proportion of our production and our manufactures. And I further believe that no Government, of any political complexion, will be able to maintain the very high standards that we have reached, and the higher standards to which we aspire, unless we have a much better export trade and a much greater production. I believe that our failure in this field will mean without doubt our inability to solve ever-pressing national problems.

There are those who believe that other nations in Europe whose standard of living, until a few years ago, was much behind our own have now caught up, and that in the not far distant future, unless there is a dramatic change, some of these nations will exceed our standards. In fact it is being said that, possibly in a few years hence, from these islands we shall be looking across the Channel with envy at the standards they have reached on the other side.

Our export problem is not something which has just happened. It might be better for us if it had been, because we might have been able to get a much more expeditious solution. Unfortunately, it is a problem which has been building up since the end of the war, and certainly over the past fifteen years; and there comes a time when, inevitably, elementary economics comes into play. This has happened on several occasions, in the crises that we have been having every few years, and in the crisis that we are in now. For fifteen years world trade has been increasing, and for fifteen years our percentage share of that trade has been decreasing.

I was amazed at what I thought was the complacency of the noble Earl, Lord Dundee, when he said that he disagreed with the assessment of the economic situation. It is this complacency, which has been shown over the past fifteen years, that has pitchforked the nation into the present sorry situation; and evidence about that is coming from everywhere. I happen to be privileged to be a member of the National Production Advisory Council on Industry, together with many of my friends who are here sitting on the other side—the noble Lords, Lord Mills, Lord McCorquodale of Newton, and others—and at those meetings I met many Conservative Ministers.

I have preserved the Treasury Bulletin with which we were provided to help us in our discussions. Among the tables in the Treasury Bulletin was one concerned with the shares in world trade in manufactures, and in every Bulletin we received our share was shown to be going down. I have the figures here. Our share of world trade in 1937, with a 15 million population gainfully employed, was 22 per cent. In 1950, just before such other nations as Western Germany had got into their stride, our share was 27 per cent. But then it started to fall, and it has continued to fall, until now, I understand, it is 14-9—Let us say 15—per cent. This, against Western Germany who started in 1950 at 8 per cent., and has now pushed up her export trade to 20 per cent. of the total.

Constantly at these meetings I pointed out this trend, and I asked if remedial measures could be taken. But the only measure that was taken was that the table was removed from the Bulletin. Then we had to press for the table to be put in again. It took about eighteen months of pressure; I made myself a nuisance about it at every meeting. But the table which was put in, and which appears to-day, is meaningless to anybody who sees the Treasury Bulletin. But, at any rate, if we get the Government publications we can find these figures. I give them to the House because of what, I repeat, I thought to be the complacency of the noble Earl opposite.

This is a bad performance in any language and on any grounds. The noble Earl will forgive me for referring to his speech on April 10, 1963, which I fully enjoyed. Then he said that we happened to be more dependent than anybody else on exports. I agree. I do not think that anybody who knows anything about the problem would disagree with that view: that we are more dependent than anybody else on exports. But in the face of the evidence, and the record of the Conservative Government in this connection, one would not be led to think that it was so important. The "valiant years" of 1940 were followed by the wastage years of the 1950s—twelve years in which exports were falling, and no action whatsoever was taken to deal with it. That was complacency.

We were told "Oh yes, but our volume of exports is increasing." Of course it was, because world trade was increasing by 7 per cent. in some years, and at an average of 4 per cent. during the whole of that time. I say that world trade was substantially and progressively increasing, and of course it is to be expected that exporting nations will strive to get a share of it. We in this island, being without any raw materials, must manufacture and export to get our food and our raw materials.

I have extracted from your Lordships' Library the O.E.C.D. Observer, No. 13, for December, 1964, which shows that, of the increase in the volume of total exports from 1953 to 1963, of the eighteen nations who had a share in it in world trade, we are next to the bottom. Belgium has 8-5 per cent.; Germany 11-70 per cent. Greece, Iceland, Italy, Japan, Luxembourg, and others, are above us. The lowest in the list is the United States of America. But the United States is not unduly bothered about exports. While we sell probably about 20,000 motor cars, the United States is selling 150,000 in her own home market, and anything she is exporting is surplus production so far as she is concerned. There we are. With regard to this increase in world trade, we stood at the bottom of the list.

I have come across a rather large volume from Sweden. Your Lordships can see the size of it, but I have extracted one page. Sweden is in a good position in the world export trade. But the Swedish Government, speaking to Swedish employers, said "Export or die". This page states that As competition in the arena of world trade grows more fierce with each Annual Report, Swedish industry braces for the struggle ahead. The first sentence of the article says: Swedish exports doubled in the past 10 years—in volume as well as in value. They grew twice as fast as the gross national product. Sweden is a vast country, many times the area of these Islands, with raw materials such as minerals, timber, and so on. Yet Sweden is aware of the fact that she must export or die, and she is making a success of exporting. I see no reason why we should not be making a better show ourselves.

What is more incredible, but nevertheless true, is that in recent years our imports of finished manufactured goods have exceeded our exports of the same products. We are a manufacturing nation. I have the figures here, and will not weary your Lordships with them, but they are taken from the Economic Report for 1963. They show that we are importing more finished manufactured goods than we are exporting. How can we get the balance of trade in our favour in these circumstances?

Many firms are making a valuable contribution and doing all they possibly can to boost our exports. But there are many firms, efficient firms and prosperous firms, which find it easier to trade in the prosperous home market. They see no reason whatever why they should take on the more difficult export business. I believe that these firms are the "niggers in the woodpile", and at some time some Government will have to take action against them. If, as my noble friend Lord Champion said, exhortation is no use, then what will have to be done? I would suggest—and this would be a very serious step to take—that it should be by limiting, or if necessary stopping, their claims on imported raw materials.

The noble Earl, Lord Dundee, will forgive me if I refer to his speech in April, 1963, when he said [OFFICIAL REPORT, Vol. 248, col. 1004, April 10]: … we cannot sell our exports because of costs which are going up … He went on to say [col. 1005] in connection with the crisis and the restrictive measures of 1961: Unless we can manage to keep the increase of incomes a little behind, and not a little in front, of the increase in production, I do not see how it is possible to avoid the same thing happening again"— meaning the recurring crises and the credit squeeze. I do not quarrel with what the noble Earl said on that occasion. I fully agree that incomes cannot continue to rise without regard to increases in overall production. I also agree that price is one element in the exports; but it is not the only element. Certainly design, prompt delivery and other factors are equally important. Nevertheless price is an important factor.

Why did not the Conservative Party pursue a more equitable wages policy with the unions, as indeed has now been done by this Government? The Conservative Government pursued an incomes policy, but it was a policy related to wages and salaries only. Command Paper 1626, of February, 1962, clearly indicates that this was a question of restraining and limiting wages and salaries, with no suggestion as to how rents, profits or dividends were going to be dealt with. In answer to the noble Earl's question, I think that is the reason why the unions would not co-operate with the National Incomes Commission. They were suspicious also about the action taken in 1961 against the lower-paid Government workers and against the hospital workers, and so on.

So we should welcome the remarkable achievement of the present Government. In a little over three months they have secured the goodwill of the employers' national organisations and the T.U.C. to co-operate. Unanimous agreement on the Statement of Intent was a great step forward. The announcement to-day of unanimous agreement to serve on the National Board to be set up for reviewing prices and incomes is a massive step forward. I know we all hope that it will be successful in its deliberations and consultations. To accomplish this in so short a time is an achievement beyond the wildest dreams of the most optimistic.

There are many speakers, and I must not take too long. The noble Earl suggested that the Government could do the best thing by rescinding some measures and adopting others. We shall know in time whether or not the measures which are now being adopted by this Government are successful or not. If these measures fail, then a very serious situation will arise for this country which, in my view, will warrant an all-Party committee, besides employers and T.U.C.—the political representatives getting together to see if they can find a solution to the nation's problems.

5.6 p.m.

LORD ERROLL OF HALE

My Lords, I hope that your Lordships will not take objection to my making my maiden speech on the very day following my introduction to this House, but this debate is one in which I particularly wish to take part. My natural sense of diffidence on such an occasion has been assuaged by the very generous remarks made by the noble Lord, Lord Champion, in the course of his speech introducing this Motion. Naturally, on an occasion of this sort, and in order to avoid controversy, I shall confine myself to the terms of the Motion and will leave others to develop the arguments in favour of the Amendment. However, I shall take advantage in the course of my speech of the request by the mover that suggestions should be made. And while I hope that these will be constructive, one or two of them may appear to be critical of the Government's proposals. I would assure your Lordships, however, that I do not intend to embark on controversy this afternoon.

I was particularly interested in the remarks of the noble Lord, Lord Williamson, when he referred to the National Production Advisory Council for Industry. I well remember his contributions when I myself was a member of that Council. I was interested to hear him reading out our, apparently, deplorable performance in that particular league table. But, of course, as he himself well knows, there are other economic league tables in which Britain comes out near the top and not at the bottom. Although it may have been rather naughty of us to remove the table from the Treasury bulletins, the new Administration have done something much more drastic. They have wiped out altogether the National Advisory Council for Industry, so that the noble Lord is no longer able to be a member of it at all.

I prefer to look at the record of the last five years of the last Parliament in another way, in terms of what we actually exported. In the fourth quarter of 1959 Britain exported £903 million-worth of goods, and in the fourth quarter of 1964, five years later, our exports for the quarter had risen to £1,110 million, an increase of over £200 million in value over the five-year period. This steady rise did not happen by accident. It was the result of a sustained export promotion drive during the whole of the last Parliament. I was at the Board of Trade myself for four out of those five years, two years as Minister of State and two years as President. I should like to assure your Lordships that we considered many schemes and proposals, some of which were rejected and some of which were successful. Among those adopted were successive reductions in E.C.G.D. rates. The average premium came down from 9s. 7d. per £100 in 1958-59 to 6s. 4d. per £100 in 1963-64.

We introduced the system of financial guarantees for large contracts. We also introduced fixed-interest finance for certain contracts, to which my noble friend Lord Dundee referred in his own interesting speech. We introduced the "small exporter" scheme; the Export Council for Europe was introduced, and we brought about a steady expansion of the "business visitors" scheme. There was a tenfold increase in spending on overseas fairs and British Weeks abroad, and there was greatly augmented publicity for Board of Trade services. The proposals which we are being invited to welcome to-day are a continuation and extension of what was initiated by the last Government, together with certain proposals which in fact we rejected for what we thought to be very good reasons. In repeating some of these reasons to-day, I hope that I shall not be thought to be controversial, as I shall try to suggest alternative methods of achieving the same ends.

I should like to begin, first, with the import surcharge. Your Lordships may wonder what the import surcharge can have to do with exports as such, but it does have now, and will have in future, I believe, a marked effect on our ability to export and on the reception created for our exports. Already I hear of a number of Continental firms who are considering switching their purchases from Britain to other countries, because of the adverse effects of the import surcharge on the exports of them and their friends to this country. Then again, other nations who have been faced with balance-of-payments difficulties have often, to put it colloquially, broken the international trading rules. In the past, we have always been able to bring the strongest of pressure to bear, and often with success, on the grounds that we have not broken international trading rules, and that they should not do so either.

Of many cases that I recollect in my own personal experience, the one that I think illustrates the point as neatly as anything was the decision of the Italian Government to restrict the subsidy to Italian farmers to those farmers who used Italian-made tractors and not British tractors. We pointed out to them they would be in breach of GATT, and that this was not in the best interests of international trade. The result was that they removed this discrimination, and so British tractor exports were able to flow once more to Italy. But now, I am sorry to say, we have made a much bigger breach of the rules than any other member of GATT, and I believe that something like nine commercial treaties have been broken. Having set such a bad example ourselves, we must expect other countries to rush to impose surcharges on our exports without notice at any time in the future, and it will be much more difficult for us to make any legitimate complaint.

I wish that there could have been some consultations with our EFTA partners (with whom in the last Government we had the closest and most friendly relationships) and possibly also with the principal GATT trading partners, in an effort to reach some agreement in advance. Personally, I should have preferred to see quantitative restriction on a selected range of imports. This is permitted by GATT, and we should not have been in breach of our international obligations. Anticipatory buying, which was taking place before the introduction of the surcharges a month or two ago, could have been taken into account in the quantitative system when fixing quotas. Moreover, with such a system the Government know far more precisely by how much the import bill will be reduced and when the reductions will take place.

I should like now to say a word about the export rebate. I was particularly interested to read about this scheme in the Government's White Paper published at the end of October, because in 1960 there was some agitation for cash incentives for exports. As Minister of State it fell to me to rough out a scheme which was very similar to the one that is now being introduced. I roughed it out for consideration by my colleagues in the Government, and it was rejected at the time for reasons which I believe to hold good to-day. First of all, there was then, as there is now, no widespread demand for such a scheme in industry. Secondly, there is the very high cost, estimated by the Government at some £80 million of taxpayers' money, for what will be a relatively modest inducement. Thirdly, the rebate is being paid out in respect of existing exports, a major proportion of which require no such incentive and which will continue in any event.

Then there is another development of which I have already seen some positive signs; and that is, that foreign buyers will expect reductions in our export prices, and will press our exporters to share with them some of the rebate which our exporters will get—indeed, I am told that they are already making such demands. If, overall, only a quarter of the rebate has to be surrendered in this way to our overseas customers, Britain will in fact have to export an extra £20 million of goods this year in order to keep export earnings at exactly the same level as they would otherwise have been.

The next objection to the export rebate scheme can be summarised in one word—boredom. After the first two or three years, everybody will be bored with having to fill in all the forms in order to get the money back. I say that because I do not see that there can be any easy way of dispensing with the scheme, because it represents (and this is another objection to it) a modest, once-for-all, one-way devaluation on current account. It cannot be repeated, but it will presumably have to be maintained, because at no time could we contemplate our exports becoming more expensive again. So for ever more firms must go on filling in the forms to receive a usually fixed amount of money back at the end of the year. Sums which will be written into their accounts will come to be taken for granted after the initial novelty has worn off.

In an effort to be constructive, I should like to make the following proposal as an alternative. I believe that if one is to have a rebate scheme, a much better way would be to relate the cash refunds to increases in a firm's exports above a suitable base period. I suggest that, say, 10 per cent. of the total rebatable sum for any particular firm should be refunded for each 1 per cent. increase in exports. This would provide a sizeable incentive to firms to increase their exports and not just to keep them at the same level; because, clearly, No 1ncrease, no refund. I estimate that such a scheme would cost about £25 million per annum, and that it would save something like £55 million a year of the taxpayers' money. I shall in a few moments have some suggestions for spending some of that £55 million in other ways which I think would be more useful.

If I may turn to some of the proposals announced by the President of the Board of Trade in his Press statement on January 27, I should like to make some comments on some of his intentions. The publicising of Government services to exporters is something that I certainly welcome. I think that a fresh drive is needed every two or three years. I am doubtful about the merits of general Press advertising, because I believe that that can be expensive and the effect is often deadening. I think that personal contact between officials and firms, and between Ministers and firms, is probably the best method of all. But certainly I am glad that fresh publicity is to be given to the wide range of services.

A great deal in the Press statement is made of export councils and export committees. We know how effective a good export council can be—for example, the Export Council for Europe which was set up by my predecessor at the Board of Trade, Mr. Maudling. But it does not follow that, because one or, perhaps, two export councils are a success, we should attempt to cover the whole globe with a mosaic of such councils. Since October, no fewer than seven new committees or councils have been set up. I certainly accept that, at the right time, and with the right men on it, a council can do excellent work; but they are by no means a universal panacea or a substitute for the hard job of going out abroad and selling your own firm's goods. And it must not be forgotten how much of the businessmen's time they can absorb—time which would otherwise be spent in exporting their own firm's products.

Also, we are, perhaps inevitably, at the present time stressing the word "export" in such councils and committees, but my experience in travelling abroad on export promotion work is that many countries, particularly those with balance-of-payments difficulties, would like some help with selling their goods to us if they are to be able to buy more from us. I would prefer the regional export councils to be called mutual trade councils, and be given a remit to help imports into Britain where this would generate good will for our exporters. After all, one country's exports are another country's imports; and, as the world's greatest importing nation, I feel sure we could afford, with our expertise and knowledge, to help some of the smaller and younger nations to develop their exports to us without doing any great harm to our economy, and bringing a very substantial dividend of good will in return.

My Lords, I was glad to see that there is to be increased spending on trade missions, and that both inward and outward trade missions are to be supported. As regards the inward missions, I should be glad to learn whether these are to supplement or to replace the existing and very successful business visitors' scheme, which has been running for a number of years. Several years ago about £30,000 a year was being spent on bringing an increasing number of potential buyers to Britain, at public expense, in order to see what we had to offer. This scheme had very good results, and I hope that it is not being wound up in favour of the new scheme. Of course, many of the business visitors to Britain—indeed, the vast majority of them—come here at their own expense, and they are coming here in ever-increasing numbers in order to see trade fairs put on in London and elsewhere. There is a great need now for a new exhibition centre in London. I think that the Crystal Palace project is probably the most suitable. Now that more money is available for export promotion and associated services, I hope that Her Majesty's Government will soon be able to announce a definite start on this important and valuable project.

I give a welcome, too, to the increased amount of money which is being made available for British trade fairs and British Weeks abroad. During the life of the last Parliament, expenditure under this heading increased tenfold, from quite a small sum to something like £1 million per annum—and I think we got very good value for money. But I should like to suggest that there is a limit to the number of overseas promotions which British industry can man up in any one year, and I think it is possible that that limit may well have been reached already. I therefore suggest that, if there is more money to be spent under this heading, it is better that there should be, so to speak, a bigger Government spend on each fair rather than on maintaining the existing rate of grant for a larger number of ventures.

I was interested to read in the Press statement about the permanent exhibition centre which is to be set up in New York. This, of course, has been tried before, but I think it will be an interesting experiment. But the real problem of these permanent exhibition centres can be summed up in one word—namely, dust.

Who is going to keep the exhibits dusted? Unless the exhibition is permanently manned up by people qualified and able expertly to demonstrate the complicated equipment, it inevitably acquires a rather tattered and woebegone look and gets rather dusty; and there is nobody to explain to potential purchasers the merits of articles on display. I would suggest that the Government might study the lessons which are to be learnt from the British centre which was set up in Mexico several years ago, but which was subsequently closed down. It was an ambitious experiment. A number of stands had been put up in a former late-night dance hall of rather dubious virtue which had the advantage that all the taxi drivers knew exactly how to get to it. But, there again, the trouble was that, unless it could be manned up all the time, it acquired a rather woebegone look, and it was finally closed down.

Also, I think the experiment of collective market research is worth trying again, although your Lordships should remember that it has been tried before m the form of the British Export Trade Research Organisation, which had to be wound up for lack of support and interest. As to the meetings with industry which are to take place, and which were mentioned in the Press announcement, I am sure it is right to repeat this exercise which was so successfully carried out in 1960 and 1962. I still think it is probably best to continue with meetings of individual firms and Ministers and officials, rather than with group exercises. Although time-consuming, they can be more rewarding.

I myself believe that the biggest field for increased exporting is that of components and assemblies. I remember, for example, that there is a firm in the North of England which is making car springs and sending them to Detroit for incorporation in American-built motor cars. There is also a large firm in Peterborough manufacturing diesel engines which are sent across the Atlantic for incorporation in American trucks and vehicles. This is a field in which I think there is scope for a great deal of expansion in our exports, not only to America but also to many other countries; and, by sending components and assemblies abroad we do not as a rule arouse so much hostility and adverse comment from domestic manufacturers of completed products.

I am sure it is right to support the export efforts, and to introduce them to small firms. I welcome here, also, the renewed attention which is being given to the small firms. I am sorry to say that I have not much hope for the "piggyback" scheme. That, also, was tried before. Some years ago a number of big firms offered to help little firms, but they met with little or no response, because of the unreasonable suspicions and reluctance of the small firms themselves. I should like, without going into detail (for I do not wish to take up too much time on this occasion), to welcome the extension of facilities in E.C.G.D., and to suggest that perhaps the time has come for another "across the board" percentage reduction in rates, similar to that which I introduced in April, 1963.

On the scheme for awards for export achievements, I should like to make some comments because the possibility of such a scheme was very thoroughly examined in 1961, and it was turned down then for a number of good reasons. I think that, as the scheme is now to be launched, perhaps the best way for me to make my comments is to say that I think the Awards Committee which is about to be set up may well find it difficult to avoid some of the pitfalls of such a scheme. For example, it will be very difficult to secure fairness as between one firm and another. Then, there is the great problem of how to start off; because there really ought to be a big initial issue of awards to the very many firms, both large and small, which are currently achieving great export successes year in and year out. Why should the awards go only to the "new boys"? Awards certainly ought to go to firms such as the great vehicle firms, or the engineering firm in Leicester which is currently exporting over 90 per cent. of its output. All those firms should get awards, and it would be quite unfair if they were left out and were not given their accolade.

Then there is the problem of the difficulty of obtaining the information on which to decide whether a firm should be given an award or not. Are firms to write in and apply for a form to fill in, or send details of their achievements? Because it is somewhat alien to the British mentality to write in and ask for an award. Then, again, when the information is received, what check is there to be on the accuracy of the information? What is to happen when there is a subsequent falling-off in performance? Will the Committee have the odious task of removing the award or honour from the firms concerned?—an act which would, of course, be damaging to their image abroad. Perhaps I may make the suggestion that the awards system should be on an annual basis. If it is to be a trophy or a cup, there might be one for each industrial region awarded annually and surrendered at the end of twelve months in readiness for the next award.

We must remember that the object of the whole exercise is not just exports but improving Britain's earnings of foreign exchange. I should have liked to see in the announcements of the last few days and before Christmas more attention being given to the further development of Britain's tourist industry, one of our largest dollar earners. With some additional funds available, a lot more could be done to improve hotels, to provide facilities in beauty spots, to make historical monuments more readily accessible and to give support for travel agents which bring overseas visitors to Britain. I should also like to see more support for Britain's consulting engineers who already earn substantial sums for Britain abroad. They could, with assistance, prepare schemes for foreign Governments and enterprises abroad which would probably pave the way for our exports later, as other industrialised countries which already do this have found.

My Lords, I appreciate very much the patience with which you have listened to my remarks. In conclusion, I should like to take this opportunity of paying a tribute to the service of British officials, both at home and abroad, who year in, year out, are engaged in the export drive. I have met many of them serving abroad in different parts of the world; they are enthusiastic, able and efficient, and I hope most sincerely that British exporters will make full use of them in the months ahead.

5.32 p.m.

LORD FRANCIS-WILLIAMS

My Lords, I have the duty and the very great pleasure of congratulating the noble Lord, Lord Erroll of Hale, on a maiden speech packed with the information and knowledge of which he has so great a command in this field. I know that we shall look forward to hearing him often on future occasions when, though he speaks from the other side of the House, it will be a pleasure to know that the mantle of non-controversy which hangs over those making maiden speeches need no longer to be worn. I find myself in the somewhat curious position to-day of being a sort of sandwich between two maidens. I have the noble Lord, Lord Erroll of Hale, on the one side and the noble Lord, Lord Byers, on the other. While they are to some extent restricted, by the tradition of your Lordships' House in regard to maiden speeches, to unaccustomed neutrality, I hope they will forgive me, as the "sandwich" between them, if I throw in a little mustard of my own and if I say that I look forward to the time when they get rid of the inhibitions, so very temporary, of maidenhood.

As I listened to the noble Earl, Lord Dundee, I could not help wondering, during the greater part of his speech and throughout the earlier part of it, why he had put down his Amendment at all; and I could not help thinking that he himself was wondering the same thing. Certainly it seemed to me, if I may say so, that the bonnet of "Bonny Dundee" did not go twirling quite so high in the air as it often does on occasions of this kind. He struck me as a man who had been advised that it was his duty to show his anxiety to wound, but that his own good sense made him a little ashamed to strike.

If that does, indeed, represent his feelings, then I can only say that on this occasion his shame does him honour. Because it does not lie, I think, in members of the Party opposite, after allowing the export trade of this country to decline and the import/export imbalance to increase to the degree indicated by my noble friend Lord Williamson, and shown in figures that have often been put before the public, to criticise this Government for the action that they take to improve the balance-of-payments situation, whether that action has to be unpopular action, in the way of reducing imports, or more popular action, such as the endeavour to increase exports.

The noble Earl, Lord Dundee, approved on the whole of most of the positive measures that the Government are taking. He seemed to regard them as satisfactory and desirable in attempting to solve a payments crisis which, he declared, the Government "claimed to have discovered". Claimed to have discovered, my Lords! If noble Lords opposite need more evidence than that which has accumulated, week after week, with every kind of statistics on the trade figures that have come out, before they believe our claim can be substantiated, I can only feel that they would not really be convinced when the last tip of the ship went down below the waves.

Then the noble Earl made a claim: he said that the economy was strong all the time, that all was well. It reminded me of a mutual friend who once went to see that great lady, Dame Edith Sitwell, shortly before her death. In the course of trying to make conversation—always a difficult thing in such a situation—the friend said to her: "How are you feeling?" And Dame Edith replied, in that precise way which so characterised her: "I am extremely well—except, of course, that I am dying." That was a very courageous statement from a great lady lying in a fatal illness. But it is a deplorable statement when made, in like circumstances, by those who find themselves at the head of a Government with a situation worsening day by day and who try to bolster themselves up by proclaming that all is really well.

These were not Micawbers waiting for something to turn up: they were only waiting and hoping that export trade would not go down too far before they had a chance to try to raise a fresh credit on the electoral bank. They ran so long in order to try to buy that credit (fortunately, they did not succeed) that they left a situation which with each new examination, each new turning-over of figures, each new inquiry in departments of industry when this Government came in, was shown to be worse than any member of the public, or even any informed Member of Parliament, could have expected.

What have the Government done wrong, according to the noble Earl, Lord Dundee? They have stopped arms to South Africa, although they did so, not only in the furtherance of what they believed, and what I believe and many people in this country believe, to be great moral obligations, but also in support of a majority decision taken by the Security Council of the United Nations, of which this nation is a member, and which we must make every endeavour to support; and they did so also as a member of the greatest multiracial Commonwealth in the world's history, knowing that our decisions, in circumstances of this kind, have, and must have, a great effect upon the attitudes and feelings of the members of that Commonwealth. Now we are told that this comes No. 1 among the failures of the Government in the eyes of the noble Earl, Lord Dundee.

I do not blame him for not being able to find more cogent arguments. I do not blame him because his defences are not so superb as he would wish. When one is trying to defend thirteen years in which, as the figures quoted by my noble friend Lord Williamson have shown, the writing on the wall about the British export trade was growing clearer and the international balance-of-payments problem for this country was growing larger and larger, thirteen years in which the Government of which one was a member sat back and did nothing, and whistled in the hope that, sooner or later, somehow things would get better, it is not easy to expect that one's defences will be as strong as one would like.

In a debate on a Motion whose mover felt that it would provide a platform for new ideas which would really be helpful and give a maximum lead to the export drive, all that the noble Earl did was to produce once again those tattered, blown-on arguments we have heard so often said before. He taunted the Labour Government with having, despite their Election promises, put on taxes. The Labour Party had claimed that they regarded the improved social benefits as essential, not only, I would remind your Lordships, on grounds of social morality and personal ethics, but also because it is only in the framework of a society which is felt by all its members, including particularly the members of trade unions, to be a society which is moving to a more just and fair basis that one can hope to get moving an incomes policy and the export drive which we need.

Yet the noble Earl taunted the Labour Government with having broken their pledges, because, having said that it would be possible to finance these essential things out of growth, they have now raised taxes. Of course, the promise that they would be paid for out of growth was made. That promise still exists, and that promise will be honoured. But when we come to the bedside of a patient who has been weakened by long years of neglect and hunger, the first thing that is essential is a blood transfusion, before we can start to build up the economy in the way which the measures of the Government will do. It is because the measures announced to help the export trade fit into a pattern in which the incomes policy and the whole economic policy of the Government are a part, that one believes they have some validity and will achieve their purposes.

I am glad—I think everybody must be glad—that the measures announced by my right honourable friend the President of the Board of Trade, and which were enunciated when this debate was opened, have received a welcome from all sides of the House. They represent a picture of an approach to a complicated problem which affords our only hope for a steady and consistent improvement.

Because what do exporters need? They need advice and information, particularly those who are being persuaded to enter into the export trade or to increase their export trade. That is being done by this further development of the already valuable export councils and trade missions, which I think are essential, by the development of market research in overseas markets and by the further expansion and use of the valuable overseas commercial services attached to our Embassies—I agree with everything that has been said about their value. As a journalist, I have often consulted the people concerned with these services and have been agreeably surprised, and often amazed, by the width of their knowledge of trading opportunities in the countries in which they serve and the amount of information they have available for those exporters who are prepared to take advantage of their services.

Secondly, in many cases exporters need financial help. This is being done by the development of export trade finance and it is also being done by the export rebate. Thirdly, they need the development of additional machinery, particularly for those who are only now going into the export trade or seeking to develop their export markets. This, too, is being done, in a co-ordinated approach to the problem, which includes a great many of the things which appear small but which together combine to make a substantial advance in the machinery for helping the export trade. But over and above that—and here I go beyond, I hope, what the Government alone can do—we need a much greater sense of what I might describe as the status of the exporter, a much greater belief in the importance of what those who are seeking to open up new markets or extend old markets are doing.

I believe that in this the Press, radio and television can play a great part, and I hope they will do so. It is only fair to say that the Daily Express, not a paper with which I always agree, has done a good deal in trying to stimulate belief in the importance of this subject; and I think the Daily Mirror has also done quite a lot in that direction. But I should like to see all the great national papers of this country setting up export correspondents—roving export correspondents, carrying the status of their leading foreign correspondents, who would travel the world, reporting back not only on export possibilities but also, with the aid of our trade missions and our commercial counsellors, the triumphs that have been achieved and can be achieved in the future by our exporters in such markets.

I believe that if we could get in this country a sense that the battle for exports is in its way as important as the battles of the last war, and if we regard—and newspapers should make it their business to help us to regard—the despatches from the export front as as interesting, exciting and important as any despatches from any battlefield, then indeed we might altogether develop such a mood of activity and energy in the field of exports that would place us permanently beyond this long, long struggle to put our balance of trade right.

5.52 p.m.

LORD BYERS

My Lords, I could very easily and with great delight follow the noble Lord, Lord Francis-Williams, straight through, because there is so much that he has just said with which I agree. But I think my first task should be to thank the noble Lord, Lord Champion, for the very generous references to myself which he made in his speech and to welcome the invitation which he gave me to set about both sides of the Chamber with equal vigour. I am, however, mindful of the fact that your Lordships offer a natural indulgence to those making a maiden speech, although I must say that neutrality does not come easily to me, as so many of my old colleagues from another place also feel, and if in this debate to-day I stray into the realms of controversy, quite by accident, of course, I shall not seek the protection which a maiden speaker would have from the cut and thrust of debate which so many of us enjoy.

I understand that it is unfashionable nowadays to refer to the fact that one was at one time a pupil of the Leader of the House—so I will not do so. But it is with great pleasure that I recall that, of the five people at whose feet I sat at the university, three of them, the noble Lords, Lord Salter and Lord Murray of New-haven, and the noble Earl the Leader of the House, have found their way into your Lordships' Chamber. This does not mean that they are in any way responsible for the political views which I enunciate.

I welcome this opportunity which the Government have given us to debate this vital national problem of British exports. I am particularly pleased to see the perspective in which the noble Lord, Lord Champion, put this matter, by dealing first of all with the broad sweep of the national economy before going on to the organisation of the promotion of exports; and that is what I wish to do this evening. I believe, as the noble Lord, Lord Champion, said, that exports will become easier to achieve as we are able to promote greater efficiency in the United Kingdom economy as a whole, and as we are able to achieve higher productivity, and, of course, lower costs. I welcome particularly the Statement on incomes policy which was made to-day, and I hope that in time we shall be able to congratulate the Government on positive achievements in this field. If they get them, they will deserve a great deal of gratitude.

As we are able to get a greater efficiency and greater productivity into our economy, we shall be able to obtain the full benefits of producing increased incremental quantities of goods at marginal costs. Here I believe that the Ministry of Technology has a field wide open to it in trying to get over that there is a great deal of profitable business to be done if you can be efficient to the point where you can get the benefits of the incremental quantities, which cost you very little to produce. It is against this background of achievement in getting the economy going, and holding it, that the Government's export drive will be broadly judged.

I want to say one thing on Mr. Maudling's 15 per cent. import surcharge, which was adopted by Her Majesty's Government, because I take a different view from that which has been expressed this afternoon. I think it is true that, although it does not apply to raw materials, it must have some effect on components which are imported and are then used as part of our export programme when they have been assembled into the final product. But I do not think that this is the major factor. I think that the thing which is really wrong with the import surcharge, and the reason why we should get rid of it as soon as possible, is that it gives a protection to the slothful British private entrepreneur which enables him to put off the day when he has to reorganise his own business. I believe that what is required is not notice to the foreigner that we are going to do this—although that would be a proper thing to do—but notice to British industry that they ought to put their house in order, and that they are not going to have this additional protection for much longer.

Secondly, I think there must be action as soon as possible to implement the findings of both the Monopolies Commission and the Restrictive Practices Court. I was interested to hear that this was to be one of the first matters to be dealt with by the Conservatives if they had won the Election, because I think there are something like sixteen findings of the Monopolies Commission that in the last three or four years have not been implemented. I do not say this critically, of course; but I think there is a certain measure of leeway here that the Government ought to take up as soon as possible. If we can get these findings implemented, and more teeth into the Monopolies Commission and the Restrictive Practices Court, we shall get the efficiency which this country requires if it is to get ahead in the export race.

Particularly I think that the biggest contribution which could be made to industrial efficiency by increasing competition and increased exports would be a successful approach to join the Common Market and to get much closer to Europe. I believe that this is vital. A new initiative is absolutely essential in the near future. A great deal of work can be done in the industrial field to bring us closer to France and the Common Market countries. If we could only get into that tremendous market and its demand it might make all the difference to our future. That is as far as I wish to go in the short time I intend to take on the question of the national economy. I agree with the noble Lord, Lord Champion, that this is the starting point to get things more efficient and to get them going.

In the narrower field, that of organisation of the promotion of exports, I can speak with some personal experience, both of trying to export on behalf of a small company and also of having operated in the wider field of international business on a much larger scale. I think that both experiences are most valuable. I want to say without any doubt that exporting is not fun. It is remarkably hard work. It is a formidable challenge, and it takes a lot of guts to accept that challenge. And from time to time it is a very lonely business indeed. The sooner we realise that the people who go out to get exports are doing something really important, the better for all of us. The idea that it can be a form of enjoyment is something which I have never experienced at all. Any help that the Government can give to private enterprise in this field must be welcome.

I welcome the proposed greater publicity that we are to have. I agree with the noble Lord, Lord Francis-Williams, who said that the Daily Express had done a very good job in this field. I wish they would stick to their export promotions and "lay off" the Liberal Party. But, so far as they go, they are doing very well indeed. The idea of trade mis- sions will be a great help, and should be supported. Private enterprise should recognise that these trade missions must be supported, just as trade fairs must be supported, and that there must not be a feeling that it is something extra-curricula for British industry. This is a co-operative business between the Government and private enterprise, and, of course, collective market research, although it has already been tried, is worth trying again.

I hope that what the Government are suggesting is really only a beginning. I think we must move on to something much more dramatic and more all-embracing if we are to make the export drive a reality. I do not say any of this in a critical sense at all. Many of our commercial services in our Embassies overseas do an absolutely first-class job. I have had firsthand experience of how helpful they can be. They have improved tremendously over the past few years, but I still doubt whether they are adequate for the full exploitation of a major overseas market, despite the dedication of the people who are there.

I suggest that, in some of the more important of these markets, we ought to consider appointing to some of our key Embassies people who are, or have been, international sales directors of private enterprise, with a wide experience and broad background, to try to strengthen the existing organisation there. We could second such people, invite them to take up a job for a few years, and encourage them to build up a team of market research experts resident at the Embassies (not just sent out for one collective scheme or another but actually working there building up an intelligence system); people who know what is happening in British export industry at home, and who are prepared to find out new opportunities; people who are prepared to stand up to British exporters and tell them quite frankly where their own services and goods are deficient, where their deliveries are poor, what they have to do in order to get into the market and stay there. I know that this is a tall order, and it may well be that it could be tried out only on an experimental basis. But I believe that there is here a wonderful opportunity for getting into the Embassies, to help the tremendously good work which many of them are doing, some of the drive that has marked some of our better exporting industries and firms.

If that concept is accepted, I think the corollary to it might be to try to strengthen the services in the United Kingdom. Again, I do not denigrate these in any way at all, and I believe that a great deal of extremely good work has been done in the regional offices of the Board of Trade, the Export Councils, and so on. If one examines the United Kingdom setup, far too much reliance appears to be placed on a lot of business men giving one and a half hours a month to this problem, and not enough to strengthening the professional staff of the Export Councils, and possibly, also, the regional offices of the Board of Trade. We want these business men: they are very experienced people; they command confidence. But I very much doubt whether we are going to get all the results we want if we tend to treat the export business in this country as largely a part-time basis for some business men giving advice, and with insufficient professional staff in the councils that have been set up.

In this connection, I wonder whether the noble Lord who is to reply could tell us what the executive staff of the British National Export Council is? I have the feeling that it is not very large, and I should have thought that here one had an opportunity of getting more professionalism into the job. I want to ask one question on this point. Must we continue to be frightened of helping firms on an individual basis? If it is going to be in the national interest to help an individual firm, I should have thought that, with the reputation for incorruptibility which our Civil Service has, we ought to take a chance on it. Furthermore, I do not see any reason why we should not make reasonable charges to the private enterprise firms for services which are offered to them. I have the feeling that there is a certain amount of fear on the part of the civil servant about giving specially favourable treatment, perhaps, to one firm as against another.

The main question should be: are we going to get export results in the national interest? I do not suggest that Government supplant private enterprise, but in my view there is a necessity for the higher degree of co-operation which the Government are seeking to get. There is a case for much more full-time professional services, and I think we should use people from private enterprise and second them for a time to the services which have to be performed.

I believe that there is a vast range of private enterprise which would find things easier in the export field if they themselves would upgrade the quality and the status of their own sales representatives abroad. This is something that private enterprise can do. They do not have to rely upon the Government. The best of British private enterprise has international sales directors travelling the world making decisions being supported by their boards at home, and using real imagination. I heard of one the other day who was trying to sell heavy trucks. What did he do? He sent one out to one of these mines and left it there. He said, "Go on using it for three weeks, and you will discover it is first-class." That is the sort of imagination needed, and it can be done only by the people who carry the status and the backing of the board at home to make these imaginative decisions and get on with the job.

We have to recognise, also, that the sales effort must be more closely backed by real technical skill and know-how. Our salesmen in the export field must be more technically minded. Our technicians in the future are going to be some of our best salesmen in the export drive. I hope, therefore, that private enterprise will get on with this job of boosting the exports of this country upon which we have to rely for our standard of living.

My Lords, we are only on the threshold of licking this problem; but I believe that it can be licked, and I want to say this to the Government. If, by any chance, I and my noble friends should to-night find ourselves in the Lobby in support of the Amendment, it will be with some reluctance; but it will also (and I hope that in saying this I shall not be thought to be controversial or churlish) be understood that in taking that course, if we should do so, we shall not in any way have been swayed by the majority of arguments put forward by the official Opposition in the admirable speech, other than the arguments, of the noble Earl, Lord Dundee. May I also say that anything we in the Liberal Party can do to help the export drive we will do willingly.

6.9 p.m.

LORD MANCROFT

My Lords, I am sure your Lordships would wish to join with me in congratulating warmly the second of our three maiden speakers this afternoon. I particularly should like to congratulate the noble Lord, Lord Byers, on his spirited contribution to our debate, for personal reasons—for it is for 32 years that we have been friends, since we were both together at what I think I must describe, in the light of our debate on education yesterday, as a comprehensive institute of higher technology, in other words, Christchurch, Oxford, where were educated 13 Prime Ministers, 51 Members of your Lordships' House, the noble Lord, Lord Byers, and myself.

At the time the noble Lord was the guiding light of the Oxford University Liberal Club while at the same time I occupied what I thought a more worth-while function in the Oxford University Conservative Association. The noble Lord, probably unknown to your Lordships, was also a distinguished hurdler and I can congratulate him to-day, and I know your Lordships will agree with me, in having overcome the hurdle of his maiden speech as skilfully as he did in a different sphere at Oxford.

He has put his views to us with knowledge, clarity and sincerity and it has not been quite so difficult to understand which side of the fence he was coming down upon as it sometimes is from the speeches of noble Lords on the Liberal Benches in front of me. The noble Lord's idea of impartiality, which he rightly preserved in a maiden speech, was to swipe both sides as hard as he could—and I suppose that is a good version of impartiality. We shall look forward to hearing from the noble Lord again and I can promise your Lordships, having known him for 32 years, that we shall. I can only wait to listen to a speech from the noble Lord, Lord Byers, when he no longer has to be impartial.

My Lords, I myself leave in a few days' time for a trip to Canada where I hope to drum up a little export trade for my own firm, and I was therefore looking forward keenly to this debate, hoping to pick up a few hints on how I could improve my own trade. But I have to confess to the noble Lord, Lord Snow, who is not in his place at the moment, that it is possible that I may have to do a little business over luncheon. The noble Lord, Lord Snow, has been complaining about British businessmen who think they can do a deal over a luncheon lasting two hours, where there is a great deal of browsing and sluicing at somebody else's expense, and the businessmen, having achieved nothing, go back to their desks and remain slumped there in a soporific stupor until their secretaries awake them for tea. All I can say is that the noble Lord, Lord Snow, must have some odd friends. I propose to do as much business as I possibly can over luncheon, over tea, over dinner and, knowing the Canadians, who in other respects are a highly civilised people, I shall probably have to do it over breakfast as well. I do not mind so long as I can bring back the business.

There is a quotation in one of the novels of Arnold Bennett, which your Lordships will be greatly relieved to hear I have not been able to find, in which he disproves of the British habit of self-depreciation, of understatement and self-denigration, which, he says, is amusing to ourselves but does us immense harm abroad. He particularises the man who invites you down to his "little place" for the week-end, and you find that he has 24 under-gardeners; or suggests that he does indeed like "messing about in boats", and you find that he has sailed the Atlantic single-handed. We understand this; we understand it when examining our own faults in a fair light; we are doing so to our own satisfaction and advantage. But the foreigner does not see it that way, and I suggest that we have done enough self-criticism about our exports, our marketing and sales techniques and the time has come to realise the damage which this is doing to us in the eyes of our customers overseas.

I am not suggesting for one moment, of course, that there is not room for improvement, but there has been a great deal more improvement than most of us realise. Of course, there are still cases of late deliveries. If one understands what goes on in the London Docks, which to an exporter like myself appear to be organised by a committee under the joint chairmanship of the Mad Hatter and Mr. Bud Flanagan, one is not surprised that there are late deliveries; and our customers complain. But an immense number of our goods do get through to our customers at the right time, date and place. But we do not talk about this, and only let our critics know about the goods that do not get there on time; and our potential customers are getting the idea that British goods are always late. There is nothing further from the truth. Our deliveries are as good as, if not better than, those of most other countries of the world.

So it is with after-sales service. So much have we criticised our after-sales service that we are giving the impression to our overseas customers that if you sell a car or a washing machine overseas it will fall apart in five minutes and nobody will come to put it together again. Nothing could be further from the truth; our after-sales service is better than that of most countries, although it undoubtedly has room for improvement.

The point I am making is that bad news is good news and good news is no news. Do let us remember this and what is being thought about us in our overseas markets. If your Lordships doubt me for one moment do, I beg of you, as I have to do: read the overseas technical and trade Press and see how this sort of thing is picked up and emphasised and exaggerated out of all recognition. How many jokes have we heard about the English sales manager or sales director who cannot speak a foreign language? All right, I am a rotten linguist myself! An interpreter can be obtained easily. But few of us take the trouble to learn how to use an interpreter. The commercial attaché at any Embassy will teach you that in five minutes, and find you an interpreter whom you can brief about your own particular business, so that the interpreter has a rough idea of what you are speaking about and what your trade is before he has to interpret.

How many jokes have we heard about the sales brochures and literature that are sent out by the British wrongly printed, in the wrong language, in the wrong currency? It is just not true. Our standard in this respect is better than that of any other country in the world. We take an immense amount of trouble to get our stuff put in the right language and in the right currency system. Of course, we make mistakes now and again. We make fewer than anybody else. Do not let us go on giving the impression that we send out all our brochures in the wrong language, in the wrong currency, to the wrong people. I welcome the remarks of the noble Lord, Lord Champion, in this respect and also on this question of using the Embassies, and I think the noble Lord, Lord Byers, made this point, too. They can provide an immensely good service. So does the Board of Trade; but not enough of us know what those services are and how they can be used.

I would differ from the noble Lord, Lord Byers, on one point. I think he suggested sending sales directors of experience into the Embassy jobs. I would suggest that his aim, which is a right one, could be achieved the other way round, by sending more commercial attaches to do a course of instruction and attachment with big British firms, who would be prepared to show them a bit more of the detailed day-to-day work with exactly the same object which the noble Lord wishes to obtain.

Another point which I should like to make is the importance when you come back from overseas of reporting back to the Board of Trade on what you have found in a particular market and of ways in which you think the Board of Trade can improve their services to commerce and industry. I had the honour of representing the Board of Trade for seven years in your Lordships' House, and I speak from experience of their ability and willingness to meet businessmen on a practical and businesslike footing.

The last cliché to which I wish to draw attention, which in my opinion is bandied about quite wrongly, is that we are bad salesmen. We are very good salesmen. Go and ask some of our rival salesmen in markets overseas and they will tell you straight away that they do not like the skill of British salesmen abroad. We were once bad salemen. We thought that goods would sell themselves. They no longer do and we know it. I had the honour for three years to be President of the Institute of Marketing and Sales Management, and I was impressed with the energy and vigour with which people in all departments of the sales market were preparing themselves to do battle overseas. So I say, for heaven's sake let us stop under-selling our expertise, our marketing skill, our salesmanship and, worst of all, under-selling our goods and services. We have very little to be ashamed of. We certainly have room for improvement. We shall not improve our status in the export market by running ourselves down in the eyes of the marketing world.

Noble Lords opposite are in a delicate position, too. They must be careful. I understand that exports are our life-blood. I think everybody understands that. I think noble Lords opposite do. The noble Lord, Lord Francis-Williams, gave us on this side of the House a good pasting for our attitude towards exports. If he has any blows going spare, perhaps he would have one for the Chairman of his own Party, Mr. Shinwell, if he is still on speaking terms with him, who once remarked, if I remember correctly, that increased exports are demanded. Never was there a greater fallacy. I am afraid I cannot from memory complete the quotation, and not having a copy of the Daily Express with me and not being near the Despatch Box I am not prepared to have a lobbing match with noble Lords opposite. I do not want to make too much of this point, but 75 per cent. of the export trade of this country with the world at large, our life-blood, is in the hands of private enterprise.

Noble Lords opposite are not all that fond of private enterprise. They have said so once or twice. I remember Sir Stafford Cripps in this very House when it was occupied by another place saying, "I do not believe in private enterprise, and nothing on earth will ever make me believe in private enterprise". Well, we are going to try hard in the short time they occupy those seats to make noble Lords opposite, if they do not believe in it, at least understand its difficulties and realise that in the hands of private enterprise rests largely our export trade upon which our life depends. People export not, as Lord Byers said, for fun but largely for profit—p-r-0-f-i-t—a dirty word! We want at the end of a very hard day's work to put a little money in our pocket and to keep it there, not to have it removed by prohibitive and vindictive taxation. Noble Lords opposite will forgive my speaking frankly on this, but they have been quite firm with us and it is as well they should know that we too have our thoughts about them.

I think it is an elementary maxim of law in most countries that man intends the natural consequences of his actions. I can therefore assume that noble Lords opposite intended some, if not all, of the natural consequences of the recent actions they have taken, I am sure with the best will in the world, to help our export trade. Take the 15 per cent. surcharge. This has done us much harm abroad. I should have thought a child in arms—always presuming that a child in arms would recognise a 15 per cent. surcharge when it saw one—would know what was likely to happen. The British business man's word, hitherto regarded as sacred, has become desecrated; our contracts have been broken. Our customers say, "Why in Heaven's name did you not take us into your confidence and explain it first?" My experience is very much the same as Lord Erroll of Hale's. We are losing customers; Swedish and Dutch buyers with whom my firm previously did business have stopped trading with us out of protest. We are also having the greatest difficulty with the French. Did not noble Lords opposite realise that would be the inevitable consequence? What about bank rate? Did they not realise how much export business we should lose by that rise, by customers trading on a four-month basis not being prepared to pay the interest rates on bills of exchange and either raising the credit elsewhere, which means we are losing that financial business, or else completing transactions in other countries?

With regard to this export incentive scheme one sees what the Government are trying to get at, but there is going to be endless argument, I suggest, over who is to be the beneficiary. Is it the supplier or the man who effects the overseas sale? I agree with the many noble Lords who have drawn attention to the fact that publicity for the rebate scheme is encouraging foreign buyers to ask for a discount or contribution to their advertising schedules. The noble Lord opposite has quite rightly asked for constructive suggestions. May I ask him to look at the drawback procedure and see whether anything can be done to accelerate that? I know quite a few cases where delays have been very long; the claim has been agreed but the delay in settling has been unreasonable.

The noble Lord, Lord Erroll of Hale, referred to the travel industry, and in particular to the travel agents who he suggested should be treated with considerably more kindness by the Government. I should of course agree that travel agents should be treated with kindness by the Government, even if I were not a travel agent myself. The noble Earl, Lord Dundee, referred to Spain. Again I assume that the Government intended the natural consequences of their actions. What did they imagine would happen as a result of their ridiculous attitude towards Spain? Surely this artificial row over Gibraltar inevitably followed the Government's attitude, and surely there will inevitably be a very large doubt about the travel trade to Spain. We are told the Spaniards will not cut off their nose to spite their face, but they are a proud people and they may be prepared, to the detriment of the British travel trade, to forgo, for a principle, the enormous benefit to their own travel trade. Tourism is a very volatile trade. We saw another case only a short time ago when it was rumoured that the Americans were intending to put a 100 dollar export tax on all tourists. This was only a rumour, but the immediate and detrimental effect has been marked. So I support the noble Lord, Lord Erroll of Hale, in his comments upon the volatility of the travel trade.

I have tried to draw attention to a few ways in which the Government have not foreseen correctly the inevitable consequences of their actions. I will not waste any more time by repeating points already made, particularly by my noble friend Lord Dundee, whose speech I support. I agree with noble Lords opposite in their right to demand concrete suggestions from all sides of the House, and I have done my best to supply one or two. Our man in Canada said to me this morning in a letter, "What on earth is your Government up to? We are very uncertain here". Sir Winston Churchill used to lay down as a maxim, when he was travelling abroad, that he would never make any criticism of his own Government; but he always made up for that when he got back. I shall hope to follow that admirable example, and, even if I do not make up for it when I get back, I will show that my heart is in the right place before I go by supporting my noble friend Lord Dundee in the Lobby, if he sees fit to take us there this evening.

6.27 p.m.

VISCOUNT ADDISON

My Lords, may I first add my congratulations to the two noble Lords who have made their maiden speeches? They both bring great experience to your Lordships' House, and we are the richer by their presence. We have heard two excellent speeches, and I very much hope that we shall hear both noble Lords often in the future. For the Record, I think I should say at once that I am in receipt of one modest director's fee from a small merchant trading company in the City. But this does not form part of my normal business activity; nor does it greatly affect my financial situation, even when added to the now generous allowance that I am entitled to claim on appearance in your Lordships' House.

The level of reserves of gold and foreign currency in the Bank of England can, I think, be regarded as a rough-and-ready barometer of the terms of trade, and whatever may be said in support of Lord Champion's Motion, there was very little in Lord Dundee's speech to attract my support to the Amendment. It seemed to me that the record of the outgoing Government showed that there was last October, at the end of the period of thirteen years, rather less gold and foreign currency reserves in the Bank of England than when they started in 1951—and that, of course, was after a number of foreign investments, such as Trinidad Leaseholds, oil concessions, the British Ford Motor Company, had been converted into foreign currency. As far back as I can remember, about 1910, there has always been a deficit on visible import-export accounts in this country. But exports are not necessarily things, that is to say goods; they may be services, or "invisibles", as we have been taught to call them. And in the past these have been relied upon to bring the trading account into balance and leave a profit to swell our reserves.

Whatever may be said about Britain as a manufacturing and exporting country, it is in the field of these services that we have held a position of advantage over other countries. The reason for this is the reputation of our merchants, shippers, bankers, insurance men and the like.

When a producer of, shall we say, coffee in South America wishes to dispose of his product he is willing to deal against a London bill though he may be unwilling to trust his neighbour. A producer of jute in India will deal readily with a London merchant, though perhaps he will not do business with any other merchant in the world. I have heard it said that some of the great fortunes of the British insurance companies were laid down at the time when they were willing almost to bankrupt themselves in paying out claims from the San Francisco earthquake when many American and other foreign companies were unable to meet their obligations, and did not do so.

In your Lordships' House last week I listened to the winding-up speech by my noble friend Lord Snow in our debate on technology. Owing to the imminence of the Royal Commission, the noble Lord had only a short time in which to speak, but I thought he spoke with the great wisdom which we all know he commands. He warned us against what he described as "ideological preconceptions", and he said that "of course we wanted to make profits", and "increase our reserves". And indeed there is no room for prejudice.

However much some of our friends overseas may dislike to hear me say it, London is still the centre of the largest single area of world trade, the sterling area; and provided that nothing is done to disturb confidence, its potential need not decrease, but must be made to increase with the gathering of our reserves and resources. We have been called a nation of shopkeepers. Call us merchants, and I should have no complaint to make. It is a field of activity in which we are supremely good and in which we are universally trusted. I want to stress the immense earning capacity of these services, and to ask the Government to do everything in their power to assist in reinforcing it. We on this side of the House, at any rate (and perhaps I might mention this to the noble Lord, Lord Mancroft) should remember that the fountain of capital at the back of all these activities is the Bank of England, a nationalised institution which will participate in the rewards of enterprise.

For my part, I think that the Government have made a fair start on the export front in difficult circumstances; and in spite of what noble Lords opposite may think, or what Mr. Enoch Powell may say, industry as a whole has a good deal of time for the Government. In my own knowledge, after the Election there was great good will for the Government in the City, and although some things may have been said and done which have not helped to consolidate this good will, the Government will not ask to be judged otherwise than upon results. In fact, I think that is what I heard from my noble friend Lord Champion in his opening speech—that they wished to be judged on results. In my view, this is the way that any Government should be judged.

I have no doubt that some of the steps they have already taken, and others, will help to bring about recovery and a new prosperity. I sincerely hope—here I agree with other noble Lords who have spoken—that the import surcharges may soon be dropped and the 7 per cent. bank rate lowered, because the former can act only as a form of protection for inefficient industry, and both must be regarded as temporary stopgaps. These measures, if perpetuated, must increase costs, the one by raising the price of imports—even if they are non- esential imports—and the other by raising the price of new industrial capital.

I do not think that devaluation of sterling is in any way a solution of our problem, by reason of our dependence upon imported raw materials and some food. In the end, devaluation would cost us more than we could hope to gain by any temporary relief. In my view, sterling, even now, is probably pegged too low in terms of foreign exchanges, and I think this will come to light over the months and years ahead if a forceful and imaginative policy is pursued by the Government. I strongly support my noble friend's Motion, and I hope that your Lordships will reject the Amendment.

6.35 p.m.

LORD GRIMSTON OF WESTBURY

My Lord, although I have spoken many times previously in this Chamber, albeit in another place, this is the first time that I have ventured to address your Lordships in this place, and I ask for your kind indulgence. Your Lordships will appreciate that in speaking to-day in this debate, which embraces both the Motion and the Amendment, it is not easy to remain entirely non-controversial, as one should do in a maiden speech. Having, however, over the years, acquired very great respect indeed for Parliamentary usages, tradition and customs, I will do my best to conform, but if I should err in some slight degree, I hope your Lordships will be indulgent, bearing in mind the Latin tag de minimis non curat lex, which others tell me means that the law is prepared sometimes to overlook minor offences.

I turn first to the Motion, because I think that noble Lords on all sides of the House will agree that the steps to be taken for export encouragement are most welcome. I personally have long had the feeling that some financial incentive for exports should be possible; but hitherto it has always been said that it was not, for various reasons. During the debate to-day various different opinions have been expressed with regard to this. However, I adhere to my view that it should be possible, and I would say to your Lordships that it is often interesting to observe how the impossible becomes possible when circumstances really exert pressure. Many of us will remember that before the war a P.A.Y.E. system was held to be administratively impossible. I see the noble Lord opposite agrees with me. He and I probably heard it said in another place. But the pressure of the war made that possible. The system is now accepted everywhere, despite the fact that generally the Treasury makes employers do most of the work and does not pay for it.

As I say, I greatly welcome the attempt to introduce an export rebate. I should like to give your Lordships an instance which came to my knowledge a short time ago, affecting a small firm—it is the small firms that we desire to help with the export trade. A small firm wishing to do something for exports obtained an order from America for a comparatively small amount of cloth. On delivery they were informed that the cloth was not up to specification. They knew perfectly well that it was, and were suspicious that there was a "try-on" in order to get something knocked off the price. In the event they had to instruct their agent to go into the matter, thereby incurring much extra expense, involving his services, transatlantic telephone calls, and so on: so much so that when the cloth was eventually accepted as being up to standard most, if not all, of their profit had gone. Rather naturally, they came to the conclusion that, with the best will in the world, the game was not worth the candle unless some tax concession to meet this sort of thing could be made available.

This is only one case of many of a similar sort which may happen. I therefore very much hope that the proposed scheme for export rebates will work to the assistance of small firms. If it does not, I suggest to the Government that another look should be taken at the proposals which were made by the noble Lord, Lord Erroll of Hale, in his maiden speech to the House to-day.

I turn now to the Amendment which raises the question of the loss of exports through Government action, either direct or indirect. Any Government must for strategic reasons from time to time place an embargo on certain exports, but to lose exports through embargoes or otherwise for political reasons raises, as I am sure your Lordships will agree, quite different and quite considerable issues, on which I should like to make one or two observations.

For this purpose I refer to what has happened in the case of South Africa. In that regard we have the Simonstown defence agreement, and there can be no strategic reason for the placing by the Government of an embargo on the export of military equipment to South Africa, which, I understand, will mean the loss of some £150 million of export orders over the next three years. The reason can only be to register dislike of the apartheid policy of the present South African Government. We are not debating that issue now, but I think I can say almost certainly that the apartheid policy finds disfavour, to put it at its lowest, on all sides of this House. But an export sanction with the object of bringing pressure to bear on another Government to alter its domestic policy is surely contrary to the purposes and principles of the United Nations Charter; although I must observe that in recent years the Charter has been honoured in the breach as much as in the observance, even by the Organisation itself.

In the use of economic sanctions it seems to me one gets into the position of damaging one's own vital interests and at the same time merely stiffening the attitude of the Government one is seeking to influence, and indeed thereby getting the worst of all worlds. From various news items which have appeared from time to time your Lordships will have seen that the undoubted prosperity in South Africa at present is spreading to all races, even, I am told, to the extent of the job reservation system beginning to break down through sheer economic necessity. I believe that Her Majesty's Government do not favour economic sanctions against South Africa, but an embargo on the export of all arms cannot but be a step in that direction and is surely detrimental to export prospects, if only because it may create an antipathetic climate in relation to British exports, which will be a gift to other nations anxious to compete with us there.

It was only recently said to me in a letter from Johannesburg that Americans, French, Germans and Japanese keep arriving in droves, all smiling and anxious to do business. It can be seen that if we persist in this policy there are plenty of other people there who will pick up what we have lost. A commercially hostile attitude to South Africa can only damage our interests, without having the slightest effect on the Government there in relation to their domestic policy. I believe that their domestic policy is far more likely to be eroded by the spread of prosperity in that country to all races.

There are other instances where we have lost the prospect of exports for similar reasons. They have been referred to in this debate and I do not propose to say any more about them, but I have used the South African case in my argument, as I believe that it well illustrates the unwisdom, to put it at its lowest, of introducing politics into the pattern of trade. That is the point I wish to submit to your Lordships, and I hope I have done it in not too controversial a manner.

Finally, I would venture to state our problem in the simplest terms, and for that purpose I paraphrase a famous jingle, which I am sure your Lordships will remember very well, once coined by an Ambassador of ours to the Dutch. I would paraphrase it in this way: In matters of commerce The fault now is such That we're selling too little While buying too much. My Lords, in his lucid opening speech the noble Lord, Lord Champion, said that the time had come to pull out all the stops. I am not without hope that perhaps he will exercise some influence on his colleagues to stop some of them from pushing some of them in.

6.47 p.m.

LORD ROYLE

My Lords, from the great height of four months' experience in your Lordships' House, it is my privilege and duty to congratulate Lord Grimston of Westbury on his maiden speech. Things seem to have gone into reverse, for in another place he held the exalted position of Deputy Chairman of Ways and Means, and I was one of his "boys" on the temporary chairman's panel; I bowed to his superior knowledge and experience. So it is a delightful feeling for me this evening to be in the position of congratulating him on his first speech in your Lordships' House. I do so with the utmost possible pleasure, and I know that, whilst his voice was rather stilled for some time in another place, he will make up for those years, I hope, by addressing this House more often than in recent years he was able to address another place.

I have listened, I think, to every word of this debate so far to-day. I should like first to deal with Lord Grimston's point with regard to exports of arms to other countries which do not think like us and about which we are deeply concerned. In this regard I am in complete agreement with the view expressed by my noble friend Lord Francis-Williams with regard to South Africa and in regard to Spain. I do not want to develop it at this point and at this hour, but I would only say to noble Lords opposite that it does not seem to me to have been a very good idea to think of exporting arms to a country which is blockading the frontier to Gibraltar. For 200 years the Spanish Government have been claiming that Gibraltar was theirs, and we have resisted that claim. If we had provided them with arms, I wonder whether they would have used those arms to increase that blockade.

As to the speech made by the noble Earl, Lord Dundee, it seems to me to be rather mean and petty for the Opposition to put down the Amendment to this Motion which appears on the Order Paper. The noble Earl told us a delightful story about spelling, and said that the master was at a better advantage when he was able to see, through the student's writing, that the student could not spell. When the noble Earl went on from there to talk about the state of our economy during 1964, and how everything in the garden was lovely, I came to the conclusion that he could not read. What has he been missing during those particular twelve months, about the Conservative Government's lack of activity after their vacillating policy on exports?

As in most other things over the past thirteen years, they have what I can only describe as the audacity to put down this Amendment to my noble friend's Motion to-day. They have been devoid of ideas and incentives, and all their criticism rather raises the bile of an enthusiastic Government supporter, when he sees the real efforts that are now being made to redress the situation which the Government found when they came into power after those thirteen years. The Tory Government over these years repeated the need for exports, I would say, like a Buddhist lama spinning a prayer wheel. Magical words like "automation", "integration", "national rate of growth" have not got us anywhere, because the previous Government were not prepared to take action on their words. I submit, my Lords, that the present Government are alive to the necessity for action as well as for words, and the incentives which have been so recently announced, and which have been enunciated by my noble friend Lord Champion this afternoon, are an indication of the intentions of the Government.

One point of a detailed character in those incentives, which attracts my attention particularly, is the reduction from £100,000 to £50,000 as a minimum for the exports guarantee, with a fixed interest rate of 5½ per cent. I believe that this will be a tremendous fillip for smaller firms, apart from large firms, when they are dealing with the smaller package deals. Recognition is necessary that our national rate of exporting is conditioned by hundreds of thousands of separate transactions, each requiring different considerations even within the same industry, aye, and even within the same company. Goods are often sold on a personal friendship basis, and on a basis of quality and service; many, oftentimes, with price a secondary factor.

Let us face it, my Lords. In the final analysis, a Government can only make the climate right and provide encouragements and incentives. In this regard I wonder whether my noble friend the Parliamentary Secretary can help me, when he comes to reply, on the languages question. The noble Lord, Lord Mancroft, dealt with this matter and seemed to indicate that it was his view that we were pretty well served in this direction. I have my doubts—

LORD MANCROFT

My Lords, may I interrupt the noble Lord? I am afraid that he misunderstood me. I did not say that we were well served. What I was suggesting was that, if we had not got the linguistic ability which we all ought to have, we ought to make use of the interpreter services rather than fumbling with our own schoolboy French. That is the point I was trying to make.

LORD ROYLE

I am much obliged to the noble Lord and I accept the correction. I wanted to go on to say how my mind is working here, because I believe that in export matters we have in these days to become a nation of ability in languages, as we never have been in the past. I believe that courses might be introduced at company level, because no native agent can possibly take the place of a firm's own representative, who has intimate knowledge of the product, speaking to people in their own tongue. I wonder whether my noble friend Lord Rhodes can indicate whether the export branch of the Board of Trade is able to offer help with such courses, and whether, as an alternative, they can offer translation help, particularly where sales material is involved. Noble Lords will agree that it is important to use not only good grammar but the right idiom and the right currency, measures and weights in constant use abroad.

While I am addressing myself through your Lordships to my noble friend, I wonder whether he saw in The Times on February 4 a short statement on Japanese export policy. It stated that Japan had attained a 22½ per cent. increase in exports in 1964, but it went on to say that Japan was feeling that in 1965 it might not be doing quite so well, owing to the intensive drives of other industrial countries. Her exporters were being urged to concentrate on what were called the "orthodox" markets—the United States of America and Europe; in other words, main rather than marginal outlets. The article said that Japan wanted to establish bridgeheads in Europe, at the same time advocating a more subtle approach to developing countries with the ground prepared by market research. I would ask my noble friend whether the British approach is anything like this. I pass the 22½ per cent. increase, in the light of our own experience over the past few years; but can we take a hard look at Japanese methods, without copying some of the doubtful and rather unscrupulous methods in which Japan has engaged in the past?

Of course, in making the climate right, Her Majesty's Government may be faced with unpleasant decisions. I believe that we have to tackle this matter very seriously. Perhaps a company which cannot compete must be merged with some other company, or other companies. The rationalisation of the cotton industry was an example of what I have in mind. Maybe others should follow suit. At the same time, I feel that something may have to be done to treat companies as more complete entities, so that capital and labour are helped to transfer from uneconomic to economic activity.

I feel that so many things can be done to seize every opportunity to make exporting attractive. There are measures such as special allowances to overseas salesmen. Perhaps in this regard I am more with the noble Lord, Lord Mancroft, than with my noble friend Lord Snow, because I enjoy lunches and I think a very great deal can be done in business over lunches. I would not object to special allowances being made to our overseas salesmen, both here and abroad, for entertaining purposes. In a smaller way—but is it not important, my Lords?—I wonder whether firms might help by paying the travelling expenses of representatives' wives so that they might travel with them. Or is that not a welcome idea?

In a general sense, I would say that there is no short-term solution, and many years have been wasted. It all depends, in my view, on slanting priorities so that what we can spend as a nation goes first towards improving our long-term efficiency. Along with social justice, we have to get more from our capital; more from the work of management and worker. Finally on this point, I think that the "little Neddies" (for the want of a better term) can contribute a great deal to increasing efficiency in British industry. We might even think, I believe, in terms of scores of such small councils. I will not develop that point, but I have particularly in mind, out of my limited, personal knowledge, the textile machinery industry, and I use it as an example.

I have only one other point that I want to make, and I have a little uncomfortable feeling that I am taking advantage of your Lordships in this debate in making it. It is a point I want to make the other way round. I believe that there are some things we should not export, and I am seizing this chance to say so. For most of my life I was engaged in the meat industry, and that is why this thought goes through my mind. I feel that a great mistake is being made in exporting large numbers of cattle to the Continent of Europe. Apart from the humane aspects which are very important we are experiencing a very serious period of meat shortage. Last year, we exported 300,000 beef cattle—one beast for every 50 British families. I do not know that, if we had not exported them, we should have upset the Government's deficiency payments scheme very much, but it would have helped very considerably with the cost-of-living figures in this particular commodity.

I know that many of these cattle cross the Irish border from Northern Ireland to Southern Ireland, but the Republic does not need them, and I am sure that most of them find their way to the Continent of Europe. The price of beef is rising because of an increasing shortage of supply. It is no good saying, "If we did not send them the cattle they would go to South America for their meat, and we should lose the trade", because the fact is that the Argentine is already doing that, and our supplies from there have already been greatly reduced. We need to ensure a steady flow of meat into the home market with as little price fluctuation as possible, particularly during the months from February to August, which are the difficult supply months, and this cannot be achieved by sending thousands of cattle and sheep overseas—good food which we need for ourselves.

I just drop this point in, but I should be very sorry to think that it was detracting from what I said earlier on the general export position. In that respect, in respect of the cattle, I hope that my noble friend Lord Champion, who is responsible in your Lordships' House for Ministry of Agriculture matters, will pass on what I feel about it.

But, finishing up on the general point of exports, I share the optimism which has been expressed by the noble Lord, Lord Byers, this afternoon. In passing, may I join in congratulating him on his very forceful speech? It was the kind of speech we expected from him, and which we were accustomed to hear from him in another place. I always had a feeling, if he will permit me to say so, that a great deal of the confidence which we now know he has and hear from him arose, in the beginning, from the fact that he was made Chief Whip of a great Party in another place. I think their Members were seven in number; and I think his confidence arose from that exalted position. If it was that, we have benefited from it; and I myself was delighted to hear his speech this afternoon. So I share his confidence, and I share the confidence expressed by the noble Lord, Lord Mancroft. But I have the confidence a great deal more because I know of the determination of the Government which I have the honour to support.

7.6 p.m.

LORD HAWKE

My Lords, I have listened to three maiden speeches of remarkable quality to-day, and I do not remember ever having done so before. I hope we shall hear from all the speakers again. I am not going to follow the noble Lords opposite in detail, though I am glad to see the noble Lord, Lord Francis-Williams, back in his place looking fully recovered from the privations of thirteen years of Conservative rule. Since the war, we have had export drives the whole time. Sometimes they hot up and sometimes they die down a bit. At the moment, the "heat is on", because we have seen the statistical position. But we must be careful not to let our enthusiasm run away with our discretion, which is what is apt to happen when Governments start to have too big a hand in trade.

I will start off with a cautionary little tale. Nearly twenty years ago, when the noble Lords opposite were forming the Government of this country, the word went out that we must "export or die"; and at the same time everybody was told that prices must be kept low. This, my Lords, was in a sellers' market, when goods could be sold for almost any price. Now the iron and steel control were allowed to dole out to particular friends of this country small parcels of steel rails at £25 or £26 a ton. This was quite insufficient, of course, to meet their needs, so they went round the corner and bought the rest of their requirements from Belgium, at £46 to £50 a ton. That is the sort of thing we have to be careful about.

Our mistakes this time cannot be due to a sellers' market, because there is not a sellers' market. But this time we might fall into a very different trap, and that is of selling goods regardless of whether we shall be paid for them—and that is a very real danger to-day. It is perfectly possible for exporters in this country to get paid for goods through our guarantee arrangements—the banks discounting, and so on—but those goods may well be paid for by the recipient countries with loans given by this country to their own country—loans which, in the outcome, may never be repaid. So, in effect, Britain may not get paid for those goods; and it is of that that we have to beware. Incidentally, if more and more trade is done on longer and longer credits, we shall need an increasing statistical balance of trade to offset the larger proportion of payments due to come in in the future, as compared with the payments we are receiving in respect of past credits.

To carry the situation to an extreme, one could imagine a situation in which we show record figures but are, nevertheless, bankrupt because nobody is going to pay us until years ahead. And when we look round the world the prospects of payment are not very bright in many countries. South America has its usual chronic shortage of foreign exchange; in black and brown Africa the prospects of getting paid in some years' time are deteriorating, or appear to be so, to say the least. India and Pakistan are facing an impossible problem of fecundity and look likely to be deteriorating markets. In fact, it is only in North America, Europe, Australia, New Zealand, South Africa, Russia and Japan—and, I should add, the oil-rich Arab States—where there seem to be reasonable and certain prospects of our exports being paid for.

My Lords, for trade purposes the world is divided into rich and poor, into East End and West End; and as more synthetics tend to replace the natural materials grown by the poorer countries and the poor proliferate faster than the rich, the imbalance looks like getting greater. We have put our signature to various treaties of a free trade nature which add up to the fact that if one of our nationals wishes to buy foreign goods in preference to British goods we cannot stop him, even if in so doing he is bringing us to the bankruptcy court. There is only one thing we can do under these conditions: that is, to retaliate by stuffing our goods down the throats of the foreigners; and that is precisely what we are trying to do with export trade. I find that America is starting an export drive, too; and, from what noble Lords opposite have said, so also are the Japanese; and I have no doubt that the other countries in the world will be hard at it soon.

Another facet of this project, and one which is very much in the hearts of noble Lords opposite and of many on our side too, is that, unless our export drive is successful in providing us with a surplus, we cannot expect to provide help to the more backward countries of the world. You cannot export an imbalance of trade; it merely makes the imbalance worse than ever. You cannot give away out of the deficit in the present circumstances. I say "in the present circumstances" because I do not believe the problem is completely insoluble. I believe it will be perfectly possible to devise an auxiliary international currency, reserve units, which could be earned by those nations who are giving away production to the poorer nations. I will not go into it in detail. It is a long-term project and I shall leave it to the economists to do; but I am sure it can be done.

I turn to another point. It is significant, but not surprising, that the greater part of exporting is done by the larger firms, and for that reason I think we should be wary of following our usual inclination to think that everything big is bad. I know that once you get too big for the boss to know everybody, you lose the human touch; but the vast majority of firms have got far beyond that stage already, and once they have done so, they might well get to the stage where they are big enough to "talk turkey" to foreign competitors and also to run the proper sales organisations abroad, and have the proper research.

For a great many trades prices are so cut in the export field that unless there is a reasonably secure home market, at a profit, there will be no wherewithal to support the necessary organisations overseas. Witch hunts to find monopolies and price rings behind every bush, so beloved by the Liberal Party—I see that they are not here—can damage our export prospects; and it is a great mistake to think that you are really benefiting the consumer in the long run by so doing. We cannot leave all our exporting to the big firms. It is bringing the smaller people into the export market which is the problem, and it is here that there is considerable scope for improvement. I read the other day a series of articles on exports that gave these methods for the smaller firms: first, selling to exporters in Britain; second, selling to importers abroad; third, appointing agents abroad; and fourth, having their own selling organisations abroad.

There is a fifth which I have seen practised and which I think could be of considerable value. It is a combination of methods three and four. It is really built round a very expensive high-class representative with technical knowledge. These people are rare and much too expensive for the small firms to be able to hire them. It means forming a group, probably covering most of a small trade and a good portion of a larger trade, and forming a joint selling organisation. The group then appoints in the markets abroad a good old-established agency firm who know that market inside and out and who can provide warehouses, office accommodation, local selling staff and everything else. The representative then has to conduct the strategic side of the sales. He talks to the big customers, investigates complaints, sees what the competitors are doing and reports it home to his principals. He generally travels around and, in fact, he often serves more than one country.

The practical difficulty on which the system breaks down is to find out a method of allocating the sales which are collected by the representative and to apportion them round the group. I will not pursue that any further; but I think that that is about the only way the small and medium sized firm can afford a proper sales organisation.

One of the difficulties which has been referred to before is that of linguists. It is all very well for my noble friend Lord Mancroft, whose speech I thought was absolutely splendid, to say that you can get en rapport with foreign buyers through an interpreter without talking their language. I do not believe it myself. The ideal is to be able to talk the language. It is time we really got down to this language question in a much bigger way. I suggest, as a start, that in what used to be regarded, when I was at university, as the rather easier courses, that is, the Arts courses, when you read for a Honours degree in Arts you should be required to acquire one or more languages, perhaps one of the great Oriental languages. I have no doubt that the time spent on that might detract to some degree from that spent on economics, history, law and the classics; but who can say that it will not give greater pleasure and greater profit in after life to be something of a linguist rather than a first-class economist or a first-class lawyer? There are many economists and lawyers about and not very many Oriental linguists.

In conclusion, I think that noble Lords opposite have completely misdiagnosed the economic situation. Our difficulties are caused solely by the colossal amount of spending power loose in this country, as a result of the increased wage packets in 1964 and the increase of capital values, which people have been tempted to cash in on, thinking that a Labour Government might get in and, after that, the deluge. The problem of imbalance relates to our prosperity here, and our choice is whether to cut down our abundance here or to export it. We all know which is the more pleasant course.

7.21 p.m.

LORD LATHAM

My Lords, notwithstanding the admirable speech of the noble Earl, Lord Dundee, I felt that he has not his heart in this Amendment. One can understand and appreciate this, for the Amendment is really empty of reality. It was a bleak task the noble Earl was given and he deserved our sympathy, for we on these Benches have a genuine and friendly regard for the noble Earl. I felt that there lurked behind his speech the disabling knowledge that the Governments of which he was a respected member and those before had done little positive and effective to counter the continuous comparative shrinkages of our exports and, therefore, our share in the expanding world trade.

Like my noble friend Lord Royle, I propose to be critical of the causes of the present situation. It cannot be denied that the steps the present Government have taken were, in some important respects, conditioned by the calamitous state of affairs when they came into office and they can be fairly and honestly judged only by reference to that fact. Thus, in considering the Motion and the Amendment, one can, one indeed is almost compelled to, range over the general economic structure and position of the country.

This Amendment is a portentous piece of coverage to hide the disastrous state of the nation's economy when the present Government took over and from which we are suffering to-day and from which we are likely to suffer a good deal in the future. So serious was the situation that, in order to save the nation from approaching calamity, steps had to be taken and things had to be done which in less threatening circumstances could and would have been avoided. The industrial and financial future of the nation was in a parlous state. Something had to be done, and done quickly. Courage was needed. And it was not wanting. It was exercised, without regard to or for electoral or, indeed, other Party considerations. The nation's needs predominated. The new Government acted, and at once, notwithstanding that they were faced with the coagulated mess and muddle of thirteen years of failure and misgovernment.

During those years, successive Tory Governments flagrantly put the needs of the nation second to the electoral interests of the Tory Party. The history of those thirteen years is littered with baleful instances. This unpatriotic conduct reached its unabashed culmination in the statement made on November 11, 1963, by the then Prime Minister when he said: From this moment on, the fact that there is a General Election ahead of us must never be out of our minds … every speech that we make in Parliament or elsewhere must have that in mind … ". The interests of the nation were to be subjugated to those of the Conservative Party. Indeed, the statement came pretty near suborning Parliament itself—all for the greater glory of the Tory Party. This was the despairing battle cry of the then newly-appointed Prime Minister, if "appointed" is the right word for the shabby procedure which attended that affair. Be that as it may, the Tory Party and the then Prime Minister complied in abundant measure, especially the Prime Minister. He postponed the Election. He gave solemn assurances to the people as to the state of our economy. He asserted that the economic outlook had seldom been stronger, which statement, fortified no doubt by his match sticks, he proceeded subsequently to reaffirm. This, at a time when our balance of payments was rattling into increasing deficit and was mounting from day to day. Forsooth, the very next day, the Board of Trade released the trade figures for January, 1964, which showed the largest trade gap ever recorded.

As Prime Minister Sir Alec Douglas-Home must have known the facts of the situation, in which case he misled the people for Party reasons—a pretty unworthy procedure. If, in the other case, he did not know the facts, he was guilty of culpable negligence in making the statement and unfitted for the office he held. At the General Election the electors took that view. The Government that he led failed to take the necessary steps to arrest the alarming growth in the deficit in the balance-of-payments account. On the contrary, he left it to the new Government to take speedy and effective steps to arrest the gathering deterioration of our overseas economic affairs. Some of these steps were distasteful to us, but in the serious circumstances which existed they were unavoidable.

It may be thought that this is an old story. It is not: for the nation is suffering acutely from the consequences of the gross inaction of former Governments. It is a shabby, shoddy story of shiftless men in fear of facing the judgment of the people and gambling with the interests of the nation for Party political considerations. And the story is relevant both to the Motion and the Amendment. for many of the grave difficulties that beset the nation flow from the postponement of the Election for Party political motives.

The Amendment regrets our policies and actions as regards exports. No such charge could be made against the Tory Government. For thirteen years, they had no policy and took no positive action to effectively expand our exports. They were well content to leave things as they were, and, indeed, to leave them to get worse, in ease, sloth and complacency. I recall the gracious Speech of 1961, which was also a crisis year, when the nation's economy was already suffering from grave and enveloping sickness. Yet the only reference in the gracious Speech to the chronic deterioration of our affairs was the soporific words that the Government would pursue "the vigorous promotion of exports". And the only positive measure of promotion specified in the gracious Speech was to the effect that the limits of the provision for the Export Credits Guarantee Department would be raised. What a remedy for the wasting disease which beset us then! What valiant vigour! And what chicken feed! It is not without significance that it has been left to the Labour Party, within a few weeks of taking office, among other positive measures, and as part of a really vigorous promotion of exports, greatly to widen the field of financial facilities available to exporters at lower rates of interest.

What else did the Tory Governments do to promote exports, vigorously or otherwise? Let me be fair, even to the blameworthy. There is quite a chronicle of achievement, some items of which I will specify. Our share of world trade dropped from 25.5 per cent. in 1950 to 14.6 per cent. in 1963; and the share fell every year under Tory Governments. That, of course, was some achievement! In the second quarter of the year 1964, our exports of manufactured goods rose 6½ per cent. above 1963, compared with the average improvement of 14 per cent. by the main manufacturing countries. Again, this is achievement. Whether these achievements are policies and/or actions I leave it to noble Lords opposite to say. They undoubtedly show vigour; but in the wrong way, and with the wrong result.

Let me give two further examples of Tory promotion with vigour. West Germany increased her exports to Britain in 1964 by nearly 28 per cent., and we increased ours to her by only 2.8 per cent. That is yet more achievement. According to Board of Trade estimates, the overall deficit on balance of payments is likely to be £800 million for 1964. Imports are up by £700 million, or 15 per cent.; exports are up by £173 million, or only 4V per cent. There we have outward and visible indication of promotion and vigour in excelsis. These four items show how effective in positive achievement Tory Governments can be, especially when they are vigorous.

My Lords, the noble Earl, Lord Dundee, has produced no evidence, nor is there any evidence, to show that our actions are prejudicial to their purpose. On the other hand, the outlook is encouraging. So much for the wise proposals of the present Government to aid and expand our export trade, which is so important and vital an element of our national economy. These have been admirably explained and deployed by my noble friend Lord Champion and other noble Lords. But these proposals, projects and facilities are only a part of the whole economy and social structure of the nation which former Governments had brought to a grave state. Much of our industrial equipment is out of date, obsolete, and has fallen behind our overseas competitors to a frightening degree. Previous Governments have done nothing more than prattle about modernisation, a subject which they seem to have discovered by accident a year or so ago. It has been left to the Labour Government to do something; to get on with the job. And they, the former Tory Governments, have brought about the decline of our influence in world affairs to a degree the like of which we have not suffered for centuries.

A propos of this, I was interested to read the article appearing in a Sunday newspaper of January 31, written by a former Member of your Lordships' House, which posed the question: "Can Britain ever be great again?" The answer, of course, is, Yes; but not under Tory government, which has brought Britain to a deplorable loss of her former influence, when a leading member of successive Tory Governments, and an aspirant for the position of Prime Minister, can publicly ask such a question and postulate that Britain has lost her greatness.

My Lords, if that is so, who is responsible? Surely it is the Tory Governments of the past thirteen years. To what a sorry pass they have brought this country! Only a Government which places the nation's needs before Party or office; which is forward-looking; is imaginative in conception and in planning; and is dynamic and infused with the spirit and will of progress, can restore Britain to her rightful place of greatness and influence in world affairs. This is the noble task to which the present Government have set their purpose and their objective. Exports are but a part of this beckoning challenge, although a most important and fundamental part,

I will now descend from Britain to the Conservative Party—and despite past assumptions, the two are not synonymous. Your Lordships will no doubt have seen that a new Chairman of that Party has recently been appointed. He introduced himself over the television the other night and told viewers what his Party proposed to do if returned to power. He did not tell them what they had done in thirteen years, because that would be precious little. But now, having wasted those years, the first objective would be, he said: by ruthless action to root out inefficiency where it lurks, without fear or favour". Well, well! This is the Party which was in office for thirteen years, during which they did little or nothing; allowed inefficiency to flourish, content to recline at ease, fortified with the redolent slogans such as "Never had it so good" and "The opportunity State"—the opportunity, I suppose, to be inefficient and complacent. He then proceeded to say that defeat had given the Tories a chance to take a "hard look" at themselves. Really, my Lords, this must be a most self-revealing and hazardous exercise. But is not that what the Tory Party have been doing for years—just looking?

Listening to Mr. Du Cann, who I trust will not get a stiff neck from too much looking, I speculated as to whether he had consulted Mr. Enoch Powell, who traipses around his dreary way honestly pedalling a philosophy for the Tory Party which no one will openly buy—a philosophy of "free for all". Why Mr. Powell should do this I cannot think; for it has always been, in any case, the basis of the policy of Tory Governments, with disastrous results for our country and its people which we all know from experience.

My Lords, it cannot, I think, be denied that many of the difficulties which later arose could have been met, or indeed avoided but for the failure, for Party reasons, to take appropriate action early last year. The story of those days of default is unedifying; it is also interesting and informative. A version was given in the Financial Times of November 28 last, and it shows clearly to what lengths the Tory Party will go. Now the Financial Times is a responsible newspaper, not visibly a supporter of the Labour Party. I have seen no question of the accuracy of the story, nor any answer or explanation. What a damning indictment it was! It ought to be read by every person interested in public affairs. For those reasons, which I have briefly indicated, I will support the Motion.

7.40 p.m.

LORD FERRIER

My Lords, I propose to speak to this debate in the spirit which obviously prompted the noble Lord, Lord Champion, to put down the Motion. It is not my intention to refer to tariffs, protection, GATT, EFTA, the Common Market, or even the more important matters of export credit facilities, or even export tax rebates. These have been, and are being, thoroughly debated. I turn to the human element which to me—and, it is obvious from the speeches, to other noble Lords—is the most important of all. It is an element which I believe is too often overlooked by the pundits of both Parties.

We shall never expand our exports unless there is an incentive to the indi- vidual, whether it be in terms of amour propre or in terms of financial incentive. I put amour propre first, and perhaps one might put it another way, because it seems to me that the financial reward is as dross if it does not bring with it some sense of fulfilment. It was adventure, coupled with the search for gain, which sent out the British merchants who were followed by the flag. The cliché that trade follows the flag is far from the truth, which may be just as well, because, of course, the flag, as we know it or knew it, is being withdrawn. But our export trade must go on or we perish.

As to our standing overseas, I have said in your Lordships' House before, and I say it again, that we are at a disadvantage in view of the unquestionable victory of the Axis propaganda machine in reviling the Briton overseas. The lie was such a big one that people, even at home, began to believe it, and we want in my view more of the spirit of self-confidence which the noble Lord, Lord Mancroft, disclosed. However, we must face the world as it is, the flag being withdrawn, and one thing we must do is to praise, support and reward the men and women who do our business overseas. This is the burden of my contribution to this debate.

As matters stand, most Britons abroad are employed by big organisations. Such employees have comparatively secure conditions. But not so the few who have to fend for themselves. If there is still a Pagoda tree to shake little golden fruit falls to the ground, and the tax gatherer, here or abroad, or both, gleans most of it. It is fair to say that great advances were made by the last Government in matters such as double income tax relief, easier conditions for taxation on houses at home, leave pay, amenities, and so on. But there is more that can be done to make life easier for the man who is working overseas. For these are the men, whether they are employees or self-employed, who sell service and replace British export products. They are worth, first of all, an outspoken acceptance of their importance to the nation—an importance which is out of all proportion to their numbers. This is a point which other speakers have made in the course of the debate.

Secondly, it is doing them no service to cry down the quality and the price of British products. It is well to remember that a buoyant home market for a product is one of the best sales points overseas. I think, and my thought is based on information I have recently received, that too often producers here pay too little attention to advice from overseas about the design, the finish and the packing of their products. Be that as it may, some of the efforts which this Government superimposed on those of the previous Government are pressing in the right direction. However, with the noble Lord, Lord Erroll of Hale, whose maiden speech I much enjoyed, I believe that Councils and the like are no substitute for men going out to sell their products. Councils "can call spirits from the vasty deep," but will they come when they "do call to them"?

Now what practical steps can be taken to help the individual? I think that the Government should encourage increased contacts with chambers of commerce here. Perhaps the noble Lord, Lord Byers, would agree with me, in the light of what he said in his interesting maiden speech. Overseas trade commissioners should be urged to try to give help and assistance to all British traders, small as well as great. What I mean is this. It is all very well to make a great stir in some capital city about a trade mission, a "British Week", a trade fair or the like, but such attention should not overshadow attention to the affairs of the small manufacturer or trader or his representatives all the year round in all conditions of weather. I would here again agree with the noble Lord, Lord Erroll of Hale, in his general tribute to officials here and overseas who are connected with the export drive. But it is well to remember that they are only human, and that they work in extremely varied circumstances.

Talking of trade commissioners, of course they vary as individuals, and they vary in their locations. One enterprising exporter told me the other day that he felt that on the whole our trade commissioners were less effective than those of, say, the U.S.A. On the other hand, another told me only yesterday, speaking of another part of the world, that our trade commissioners there were absolutely first-class, and he felt that British traders do not use them enough. In other words, it cuts both ways. Both could be urged to support each other to the full. In this respect, I agree with what the noble Lord, Lord Byers, said in his speech welcoming the suggestion of Government propaganda in this regard, which was outlined by the noble Lord, Lord Champion.

While on this subject, may I say that a Government does well to organise and to assist trade missions, but I should like the noble Lord who is to reply to take particular note of what I am going to say in respect of trade missions. It should be remembered that there are small missions, small groups of exporters and traders, or would-be exporters, such as those who have been organised and are now being organised by the Scottish Council. The numbers taking part in such missions and, indeed, the effectiveness of the missions themselves, could be improved by a specific financial assistance. What I say now cross-checks with what other noble Lords have said about the need for supporting the small man and the small individual. Similarly, I say that assistance should be available to small groups. Do such qualify for assistance of this sort, and could this kind of help be developed? This was a point to which the noble Lord, Lord Champion, made reference in his speech.

There is another technical matter to which I would refer—it is perhaps ancillary but, nevertheless, relevant—and I refer to the matter of patents. Surely it is of the utmost importance not only that British patent rights should be supported in this country, but that efforts should be made to see that they are supported or defended elsewhere. It is a stab in the back for British enterprise if a patent—and one must remember that it exposes to all comers the basis of an invention—is not held inviolate, at least by the State. I am not at all happy that this point has been appreciated in its export aspect. We should, I feel, press for international recognition of the importance of patents.

My Lords, I am now going to walk on thin ice. I am going to turn to the matter of expense accounts. What a lot of nonsense has been talked about this question: and how unfairly the attack is pressed, and pressed very largely by people who have little or no business experience! There are two facts about them which are outstanding, to my mind. The first is that they are occasionally abused—there is no question about that. But it is not only in business circles that expense accounts are abused. The second fact is that when you criticise expense accounts you criticise the income tax authorities. After all, the income tax authorities are pretty sharp about this; they catch up with offenders in the end. To cry out about expense accounts is to cry out about the efficiency of the tax gatherers.

But, my Lords, expense account outlay is an absolute necessity of exporting. Directors and executives simply must have freedom to judge in this respect. Insist, if you like, that such expenditure should be based on actuals, but recognise it, as I have said, as an investment in trade. Whether it be spent abroad or at home, no matter. Let the income tax authorities pounce on ridiculous extravagance, by all means, and let boards of directors be strict about mutual entertaining at their company's expense. But make sure beyond peradventure that no order is lost because some sales executive has failed to entertain a customer.

There was only one respect in which I agreed with the noble Lord, Lord Francis-Williams, and that was with what he said about the need for raising the status of the business man in the eyes of the public and the Press. There is too great a tendency to sneer at salesmen. If I may parody Kipling: For it's salesmen this and salesmen that, And salesmen go away, But it's 'Thank you, Mr. Salesman' When the exports have to pay. In parodying like this I refer to the unbalanced attack on a particular industry which has taken place in past years and which has definitely affected our export trade.

THE EARL OF LONGFORD

My Lords, may I suggest one thing to the noble Lord with which I am sure he will agree? Would he not say that the present Prime Minister has laid an altogether welcome emphasis on salesmanship in broadcasts and other ways in a manner one cannot remember from a Prime Minister of any Party in the past?

LORD FERRIER

I thank the noble Earl. I did not know that the Prime Minister had broadcast to this effect. I am delighted to hear that he has, because this was a point, incidentally, which was made from the Government Benches only this evening and I could not support it more strongly. Salesmanship is something which we are far too little inclined either to respect or to study.

To turn to the question of entertaining, how many hours have I spent entertaining business people, thinking all the while of the work mounting up on my desk! But it has been part of the job, and it has been a job in which every minute has been worth while if it has resulted in more business on the shop floor.

The noble Lord, Lord Snow, is reported to have criticised the British business lunch, and the noble Lord, Lord Mancroft. has already referred to this point. The noble Lord, Lord Snow, compared it with the workers' tea-break. Let us be reasonable about this sort of thing. There may be, in fact there is, abuse on both sides; but my experience of working lunches is very different from that of the noble Lord, Lord Snow. But perhaps, as the noble Lord, Lord Mancroft, said, the noble Lord, Lord Snow, keeps odd company in industry.

My experience of working lunches is that they are simple meals, with little or no alcohol, and probably the same fare as is available in the works canteen next door; and it is business, business, business all the time. It is often the only time when directors and executives can exchange information and experience more or less uninhibited, and it may be the only opportunity when they can all meet some export contact. Business lunches involving entertainment for visitors or delegations are quite another matter. Nevertheless, when one comes to think of the working day, my experience is that a working director's working day is one embracing every waking hour.

Please do not let us allow prejudice or over-enthusiasm to cloud our judgment on our fellows. Let us all pull together to build up our export machine. In this respect I agree with the noble Lord, Lord Mancroft; do not let us seem to revel in underselling ourselves.

It is increasingly necessary for directors and executives to go abroad, and reference is made to this point in page 15 of Export Trends. This point has been mentioned already, particularly by the noble Lord, Lord Byers. Incidentally, are the "top people" inclined to go abroad only at the best time of the year, and possibly only to the nicest places? Let us always remember Pagett, M.P. But there is a point about business oversea which I have recently had brought to my attention: that agents might like to see more of the younger executives and not the top directors: the younger executives who have a closer contact and link with the shop floor, which goes far to overcome the point I made earlier about the necessity for guidance in respect of finish or packing in the production of goods for overseas. This also goes some way to meeting Lord Byer's seggestion that technical men might well be taught to look forward to being salesmen; and Lord Mancroft's point in reverse might well be made that it would do overseas officials and officers of the Export Council good to have a training course with industrial organisations.

There is another point in regard to visits overseas which, as I have said, are becoming more and more necessary. Earlier in my speech I referred to men and women overseas. I think it should be more generally accepted that leading executives going abroad should be encouraged, if circumstances permit, to take their wives with them. Wives greatly lighten the burden of overseas visits, making it possible for husbands to put in a more effective day's work. The wife helps with entertaining and with the engagement book. She does the packing for the hotels and the laundry. But, most important of all, by swapping yarns with the wives of overseas associates she engenders an exchange of confidence. I have known wives, indeed, help with preparing reports. But, more than anything, the man has someone to talk to when decisions have to be made, when he, as Lord Byers says, may be feeling a lonely man and right out on a limb. However, talking of overseas expeditions, I hope that the income tax people will stop charging tax on the saving in the cost of food not consumed at home by people abroad on business. That is something I have experienced.

Lastly, I turn to the question of taxation on the individual. Let us recognise that unreasonable limitations on expense accounts, swingeing income tax and surtax, taxes on wealth, capital gains tax, corporation tax, which may strike at rewards of overseas investment and so on, all contribute to restrict any incentive to adventure. With burdens of that nature superimposed on the effort which is required to-day to promote exports, exporting is not fun. It is no use being donnish or doctrinaire when you are dealing with competition in the wide, "wide" world. Do let us be sensible and recognise that exporters need incentives, moral and financial; and good luck to any Government who will give them such! I will end as I began by welcoming the spirit of Lord Champion's speech. I was quite prepared to abstain from voting for the Amendment, but after hearing the speeches of the noble Lord, Lord Francis-Williams, and the noble Lord who preceded me, I will change my mind and go into the Lobby for the Amendment, if your Lordships have reached that stage before I have to leave to catch my train to Scotland.

8.3 p.m.

THE EARL OF DUNDONALD

My Lords, time is getting on. Many things I was going to say have been covered most ably by the excellent speeches of my noble friends Lord Dundee and Lord Mancroft. I shall therefore be brief. While welcoming any measures to help the exporter and the manufacturer wishing to export, I feel that some words of Lewis Carroll apply to those of us concerned in the export business, in relation to the present Government: 'The rule is, jam tomorrow and jam yesterday—but never jam today.' 'It must come sometimes to "jam today"', Alice objected. 'No, it can't', said the Queen. 'it's jam every other day; today isn't every other day, you know. 'I don't understand you', said Alice. 'It's dreadfully confusing.' 'That's the effect of living backwards', the Queen said kindly: 'It always makes one giddy at first.' Exporters are certainly giddy at the moment, trying to sift through the incomplete statements of Ministers, and we are working backwards in that we have to piece together the jigsaw in retrospect. The export rebate scheme, which has been mentioned to-day, became clearer to us in the business as a result of an excellent article published in the Financial Times on January 20, just over two months after the initial announcement by the Chancellor of the Exchequer; and in this connection may I say how indebted we are to the Press for the clarification of certain statements of Ministers in putting them in amplified form. The Chancellor in his November Budget speech said, This scheme would enable firms to keep their prices competitive, devote more effort to marketing their goods abroad and develop larger resources to keeping their products fully adapted to the requirements of overseas customers". What was not stated was that there was to be more form filling—that is, more administrative, non-productive man hours; and what also has not been stated, so far as I know, is when and how the manufacturer or exporter collects the rebate, and in what form. Two more forms, as your Lordships who are concerned in this business well know, are now to be completed. I have not managed to get copies of them yet, but it is stated in the Financial Times, which we trust to be accurate, that they can conveniently be prepared from the file copies of export sales invoices. Is it too much to ask that firms be allowed to send in to whoever is producing the rebate copies of the actual invoices, rather than fill up these two additional forms?

We are quite used to certifying invoices with the EFTA certificate. We have been doing it for years, so I can see no reason why firms should not be trusted to supply extra copies or certified copies of the actual invoices and so save this additional form filling. I endorse what the noble Lord, Lord Errol of Hale, said in connection with the views of customers abroad now that they have wind of these rebates. Ours in certain countries have made the suggestion that they should have a discount. When we get our discount I do not know, but they have suggested that they have their discount, or split the discount with us.

To change the subject, an announcement was made only a week or two ago—it was mentioned to-day by the noble Lord, Lord Champion—concerning the interest rate of 5½ per cent. which would be available from the joint stock banks for financing exports. I listened very carefully to-day to the noble Lord, Lord Champion, to see whether I could learn more about this in relation to some problems we have. I am advised that this rebate on interest will not apply if the value of the order is under £50,000, or if the length of credit required by the customer is for a period of less than three years. In either of these circumstances the manufacturer will have to obtain funds to finance an order of this sort at the current rate of not less than 1½ per cent. over bank rate, which at the moment means 8½ per cent. or more.

A very great deal of our exports are sold on terms of payment of 90 to 120 days. In fact this is virtually the rule in dealing with steel tubes and similar products where an order, particularly for Europe, is not worth more than say £30,000; so this 5½ per cent. interest rate is going to help only a small proportion of firms concerned with extended-payment terms over three years and in excess of £50,000. If we take, for example, the manufacturer of a product which requires the importation of a special component, a key part, perhaps from the United States, he now has to pay a surcharge of 15 per cent. on the imported part, and when selling an order worth say £40,000 abroad with payment terms extended over two years the customer is expected to pay interest charges of about £1,500. I have calculated this on the usual basis of a 10 per cent. deposit bearing No 1nterest and the rest in four equal six monthly payments on the diminishing balance basis. How do the Government imagine we are going to be able to compete overseas with our products when they are loaded with these excessive interest charges and a surcharge on a component?

The real root of the problem here, of course, apart from the surcharge, is the high bank rate made necessary entirely because of the lack of confidence incurred in our currency and our economy as a result of contracts and trade agreements broken by the present Government when they came into office. We know that some members of the Government have no practical commercial experience, but I hope that we shall go through a period when, for the country's sake, they will possibly do a little bit of learning. The next EFTA meeting takes place very soon, and I hope the Minister who attends puts up a good show, because I understand that the professionals who attended the last one were not very impressed. Later there is to be the meeting of the bankers, scorned by certain Ministers, but they saved the pound. They are going to ask how we propose to pay back the £1,000 million which this country has been lent.

I believe, that, since the Government came into power, they have in fact learned one thing—namely, that the foreigner can often speak and write English, and that those concerned with investing in our economy often read English newspapers. If this lesson is now learned, perhaps in future Ministers will try to think before making ill-considered statements such as were made concerning the Concord during the first few days of this Government's office.

8.11 p.m.

VISCOUNT DILHORNE

My Lords, yesterday and to-day we have been debating the most important subjects of education and exports, and I am glad that from time to time we have been honoured by the presence of Lord Snow, who took part in the debate yesterday and whose Department, I should have thought, has a considerable part to play in the development and expansion of exports. I am not going to seek to assess which of the two subjects is, in fact, the more important. It may be that for long-term, education certainly is. But for short-term, and also possibly in the long term, it may be that exports are the more important; because on the successful achievement of our maintenance and expansion of exports depend whatever plans we may make for education, whether it is for comprehensive schools or, with Lord Snow's new-found support for Eton, for maintenance of that establishment.

The noble Lord, Lord Champion, introduced this debate. I am sure that the House is grateful to him for having given us the opportunity of discussing this most important subject. The Motion as it stands we cannot agree with, because it tells only a part, and I would suggest a small part, of the story. But when it is amended, as I hope it will be, we can, I hope, carry it nemine contradicente.

In the course of our debate to-day, we have had no fewer than three excellent maiden speeches. First, there was my old friend—old in friendship, but not so old in age—and colleague, the noble Lord, Lord Erroll of Hale, who spoke with great authority, and who made a speech which I suggest deserves the closest attention. I shall come back to it later. There is one matter with which he dealt—after all, it was some hours ago—to which I hope we shall have a positive reply from the noble Lord who is going to reply to this debate. I will come to that question in a few minutes, but it is an important question with regard to export rebates.

Then we had a speech from the noble Lord, Lord Byers. It appeared to me that he obviously found the restraint of maidenhood somewhat irksome. No doubt he will lay about him more vigorously in future. Indeed, if he accepts the invitation so courteously extended to him by the noble Lord, Lord Champion, it may well be that the noble Lord, Lord Byers, will retire with two black eyes. Then we had a maiden speech (which unfortunately I was not able to hear) from my old friend and colleague, Lord Grimston of Westbury. For many years he held an office which made it impossible for him to take part in debates in another place. That was our misfortune. I hope that it will be our good fortune to hear him, and indeed Lord Byers and Lord Erroll of Hale, on a great number of occasions.

My mind goes back to those years in Opposition, from 1945 to 1951, in another place when Lord Grimston of Westbury and I sat together on the same Bench. It was a happy period of co-operation. It may be that our attacks on Her Majesty's Government at that time were not entirely co-ordinated, but, in the light of that experience, I hope that his accession to your Lordships' House may augur considerable trouble for Her Majesty's Government.

To come back to the Motion as tabled, it really is a quite narrow Motion, somewhat provocatively worded (the word "welcomes" appears) and without any reference to the wider matters which ought to be considered on a debate on exports. All the House was asked to do was to welcome the Government's initiative. It was not put down as a wide-ranging debate on exports. I am glad that it has been such a debate; and the fact that it has been is largely due to my noble friend Lord Dundee who tabled the Amendment.

I believe that we have had a most useful and valuable, and indeed important, debate. The noble Lord, Lord Champion, made some reference to its possibly becoming a Party dog fight. He said that he feared it would be. So far as any speeches from this side of the House are concerned, either from these Benches or from the Liberal Benches, his fears have been proved wholly unfounded, as I am sure he will agree. Unfortunately, I cannot say the same for the speeches made by members of the Party opposite. Three of their noble Lordships obviously anticipated that this debate would be a Party dog fight and prepared their speeches or essays accordingly.

First, there was the noble Lord, Lord Francis-Williams. He began by describing himself, if I caught his words aright, as somewhat of a sandwich between two maidens. I do not know what happens to a sandwich in that position. I should have thought a more accurate description would be that the two maidens constituted the outside of the sandwich and the inside was a not insubstantial portion of meat which had obviously been there since the last Election, for his speech savoured entirely of Party politics. If there ever was a speech which lowered the level of the debate and might have led to a Party dog fight, I think it was that of the noble Lord, and I will refer to it again later.

Then we had the noble Lord, Lord Royle, following, so I understand, faintly, but still pursuing, the example set by the noble Lord, Lord Francis-Williams. Finally, we had a long and snarling essay, fairly well read, by the noble Lord, Lord Latham, who has not honoured us with his presence after being exhausted by that effort. Apart from those three speeches to which I have referred, there have in fact been no signs of a Party dog fight in our debate to-day.

I think the noble Lord, Lord Champion, would agree that it has been an important debate, on a high level and sound in content. I certainly want to keep it on that note. I am grateful to the noble Lord, Lord Champion—and I am sure the House is—for explaining so clearly to-day, on February 11, the proposals made public by the Government on January 27 last. Those proposals, as my noble friend has said, are generally welcomed, though I must say that the comments of my noble friend Lord Erroll of Hale in relation to the export rebate require very serious consideration. The noble Lord spoke with great authority.

I do not propose—for I do not speak with his authority on this subject—to comment on the problem which he posed; but it is incumbent upon the noble Lord, Lord Rhodes, when he comes to reply, to deal with the matter raised by my noble friend, a matter which I regard as of considerable importance. I am sure that noble Lords in all quarters of the House will agree that perhaps one of the most important things the noble Lord, Lord Rhodes, can do in relation to the Government's proposals is to give a positive answer to the problem posed by my noble friend. My noble friend made the comment that a great many of our customers would require, or demand, a share in the rebate, and that the effect might well be that we should have to sell another £20 million-worth of goods abroad really to stay where we were.

There is no dispute in any part of the House as to the vital importance of the subject which we are discussing and of the importance of exports to our country's future. The Government's proposals, as has already been said (and I fear it is the case), will be relatively marginal in their effect. I hope—I think we all hope—that those who take this view are wrong; but so far as I can see, those proposals are likely to be only relatively marginal in their effect.

My noble friend Lord Dundee, in the course of an excellent speech, reviewed in detail the whole position. I do not propose to review it in detail again, but he was followed by the noble Lord, Lord Williamson, who spent much of his time in attacking a speech made two years ago by Lord Dundee. Well, that is going back a little. He attacked also the record of the late Government. He did not seem to me to be nearly so happy when he sought to defend the decision of the T.U.C. not to co-operate with the National Incomes Commission in the lifetime of the late Government and their change of attitude now. I welcome their change of attitude. I think that if they had co-operated in the past, our prospects for the future might be brighter.

The criticisms advanced, and in particular those advanced by Lord Williamson, as to what the late Government had done in relation to exports were fully and completely answered by my noble friend Lord Erroll of Hale. He reminded us of what had been done. But when we came to hear the noble Lord, Lord Francis-Williams, it might have been as if Lord Erroll of Hale had never spoken at all. For Lord Francis-Williams (who described himself as "a sort of sandwich") delivered an address which was a real electioneering speech, a speech on which I will not spend more time, but which I would say was not wholly accurate in regard to the facts.

Lord Francis-Williams was followed by the noble Lord, Lord Byers, who I thought made a number of useful points. He stressed in particular the need for this country to move closer to Europe. Well, whether we are for or against this country's joining the Common Market, the Common Market is there; and, as the figures disclosed in the course of this debate show, our percentage of trade to Europe has diminished. Whatever view one may take about the Common Market, it is surely of the first importance to this country that our exports to Europe should be not only maintained but, if possible, increased. Quite apart from the Common Market question. surely the noble Lord is quite right in saying that whether or not we enter the Common Market we should seek (and I think I correctly quote his words) to get closer to Europe. Surely that is common sense.

In this connection the Government have taken a step which is most disastrous in its consequences—I refer to the imposition of the 15 per cent. surcharge. My noble friend Lord Mancroft, in the course of an admirable and interesting speech, posed the question whether the Government intended the natural consequences of their acts. The 15 per cent. surcharge may well increase the price of goods which we want to sell where those goods embody the components which have had to pay the surcharge, or indeed where machinery by which they are made is affected by that surcharge.

But surely the really serious thing in relation to the export trade is the antipathy of our customers and potential customers which arises from the breach of no fewer than nine treaties. It has been said before that we in this country are expected to set an example in keeping treaties—indeed, we have nearly always prided ourselves on doing so. The fact that we have caused this antipathy must, so far as I can see, seriously prejudice our export prospects. And all we are told by the noble Lord, Lord Champion, speaking on behalf of the Government at the very outset of his speech, is that we must reduce and review the charge as soon as possible. I would agree that it must be reduced, and, I hope, abolished, as soon as possible. Nobody could say that the harm which it has already done to our prospects in the export field is inconsiderable, and the longer it is kept on the more damage it will do—damage which may completely offset the effect of the initiatives which we are asked to welcome to-night.

The noble Lord, Lord Ferrier, paid tribute to the salesmen and to their skill and art. I have no doubt that it is a great skill and a great art which they possess. The noble Earl the Leader of the House interrupted my noble friend to ask him whether he was aware of the great tributes paid by the Prime Minister on the wireless and on television, to salesmen. I am not aware of those. Perhaps I do not have as much time as the Leader of the House to watch the Prime Minister on TV, on which he appears fairly often. But it is not much use paying tributes to salesmen and salesmanship, on the wireless or on television, if at the same time the Government headed by that Prime Minister put impediments in the way of salesmanship, such as the imposition of the 15 per cent. surcharge.

It is not only that, my Lords. We have had references to-day to Spain and Portugal. I was interested to note that the noble Lord, Lord Williamson, who followed my noble friend, did not seek to defend those losses of exports. They are bound to be substantial. They may, indeed, affect employment in this country. Then there is South Africa. We were not bound by any treaty to withhold arms from South Africa, to stop exports to South Africa, but what is said is, "Ah!, but there was a moral obligation there." Whether it is worse to break nine treaties or to adhere to what is thought to be a moral obligation when, in fact, it is not, is not for me to judge. But it comes ill from those who break nine treaties to seek to justify their course of conduct in losing our trade with South Africa by saying that we were under a moral obligation.

That decision has been made; it is in the past. It has had no effect on the policies of South Africa. It has brought no advantage to this country, in the Commonwealth or elsewhere. Is it too much to ask that in those circumstances Her Majesty's Government, if they are serious about exports, should review their decision, should reconsider their attitude? If they are serious about the importance that they attach to exports, surely what they will have to do is to endeavour to repair the damage they have, by their own acts, already done; to restore the friendship of the European countries who are offended by the way in which this surcharge was imposed; to restore good relations with Spain which was bitterly insulted by the Prime Minister's speech and conduct; to restore better relations so far as trade with South Africa is concerned—although we are all agreed in our dislike of the policy of apartheid. But unless the Government are prepared to reconsider these matters, it seems to me difficult to accept that they really attach the importance that should be attached to the export situation of this country.

So far I have dealt only with what I call the impact on our trade prospects of the foreign policy followed by Her Majesty's Government. But, as my noble friend Lord Dundee said, there is also their economic policy, which cannot exactly be described as having been helpful to sustaining and securing an increase in exports. The increase of taxation, the increased petrol tax, the transport system—is it not essential, if we are to have an increased share of the world's exports, that we should reduce our costs, not only of manufacture but of transport, as much as possible? Yet what has happened to the programme of modernisation on which we embarked? Dr. Beeching has gone. Are we going to get liner trains, or are they going to be opposed by the trade unions? What about the docks?

I fully agree, as indeed we all do, with what my noble friend Lord Mancroft said on that particular matter, and I should be the last to denigrate what is going on in this country and what this country has achieved. But, at the same time, if we want to improve our prospects for the future, surely we cannot rest content with the present transport system, the present system of operation of the docks. Indeed, we have sought to tackle our transport system; but what is the Party opposite doing about it? "Co-ordination of road and rail transport"—was it not from 1945 to 1951 that we heard that said? I do not remember any policy coming out, even before the 1951 Election, and now, surely, it is all going to stand still until this policy is abolished. What about the imposition of the 7 per cent. bank rate? These are all things which impede our export prospects.

Again, there is the way in which our Government have handled our aviation industry. We shall be debating that subject next week, and I do not want to go into it in any detail this evening. But, my Lords, does that not affect our prospects of selling aircraft overseas? Does that policy not affect our prospects of increasing our exports?

I have here the statement issued by the United States Department of Defence through the United States Information Services. It is dated Washington, February 9, and the first paragraph reads as follows: U.S. Defence Secretary Robert S. McNamara signed agreements with the United Kingdom and Australia Tuesday for the sale of some 1,000 million dollars worth of American military equipment to the two nations. A little lower down it gives the figures for the sale to the Australians, which amounts to 255 million dollars' worth. From that it would seem that the sales to this country are some 745 million dollars' worth. The noble Lord, Lord Shackleton, answered a question about this to-day. It is, indeed, curious that we should get more information from a release through the United States Information Services than we can obtain from Her Majesty's Government. But the figures given in this statement hardly seem to me to accord with the figures given by the noble Lord in his Answer to-day, which I shall study; I have so far had the opportunity only of hearing it.

I want to draw attention to the concluding paragraph of this release, which reads as follows: In announcing the signing of the two agreements, Secretary McNamara said that the sale of military equipment by the United States over the past three and one half years has played a major part in helping to reduce the U.S. balance of payments problem. The converse of that, surely, is that the purchase by us, under contracts entered into very recently by Her Majesty's Government, is not likely to help reduce our balance-of-payments problem. It must mean that we have to sell far more exports to remain in the same position.

My Lords, I conclude as I began. I think this has been an extremely interesting debate to listen to, and a very important debate. I am grateful to the noble Lord, Lord Champion, for giving us the opportunity of discussing this important subject. I think he was optimistic in thinking that we could acquiesce in his desire—I sympathise with him—to find some body or some person who could say something in approval of Her Majesty's Government at the present time. We think that this Motion will be made much more accurate by the carrying into it of this Amendment, and if we succeed in that, then, indeed, my Lords, the Motion as amended should be approved by the whole House.

8.40 p.m.

THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)

My Lords, may I, too, say how much I have enjoyed to-day's debate—and I think everybody who has been in the House has done the same—and the speeches that we have heard from our new colleagues? May I mention particularly the noble Lord, Lord Grimston of Westbury. Time and time again in the past I have tried to catch his eye and have not been able to do so, but this afternoon I felt as though I had got a little bit of my own back because there he was on that Bench making his maiden speech. The same might apply to the noble Lord, Lord Erroll of Hale, because many times in the past we have exchanged across the Floor of the other place, especially at the time of the cotton reorganisation programme, various little bits of information that we thought might do each other good; and I am certain that during the course of the next weeks and months we are going to do the same again here. But we welcome him. He always has a bright and cheery face, and we are glad to see him. To the noble Lord, Lord Byers, whom we thank for his contribution to-day, with so much of which many of us agreed, may I say that we hope he will do what it is his nature to do, and that is to speak often; then I am certain everybody will be pleased.

The noble Earl, Lord Dundee, who began this debate on behalf of the Opposition, really agreed with the Motion. He was delighted with it. He was as pleased as pleased could be that we had put this Motion down saying that we welcomed the export proposals; and, really, there was very little difference between what he had to say and what is in the Motion. Time and again when he has got on his feet here in the House about an economic problem he has said that there was no crisis last autumn. His words to the House to-day were, "The balance-of-payments crisis that the Government claim to have discovered last autumn. … "All I can say to the noble Earl is that every time he mentions this I shall do my best to give him the figures that I am going to give him now, and perhaps one of us, at any rate, will weary the other out in course of time. But before I go any further, may I say that it is a pity that Sir Alec Douglas-Home, the late Prime Minister, did not discover it last year?—because if he had it would have saved this country an enormous lot of trouble and a tremendous lot of heartache. But, no. All the way through last year the Government were saying there was nothing wrong with the economy; and the noble Earl, Lord Dundee, is simply following out this statement by the Prime Minister.

But listen to these figures on the trade balance—and I promise the noble Earl that every time he brings this matter up I will read them to him: 1963, first quarter, a favourable balance; second quarter, £6 million minus; third quarter, £24 million minus; fourth quarter, £42 million minus. Then 1964: first quarter, £108 million minus; second quarter, £135 million minus; third quarter, £156 million minus; fourth quarter, £124 million minus. And that was at the time when the Prime Minister of the last Government was going round the country saying that the economy had seldom been stronger. If the position was not seen, then we cannot blame the previous Government for their actions, but we can blame them for their ignorance and ineptitude.

If I may, I want to refer to one or two things, without getting too partisan, that I think they ought to know. Now Australia, New Zealand, the Common Market Six and the EFTA Seven all accept the American version of the Keynesian doctrine which we have. We all do. We like it. What does it do? It gives us the motor car, the "fridge" and the washing machine; but we tend to be a little reluctant to accept some of its rules. One of the rules is that you cannot have in this prosperity club an obviously privileged section of society. Another rule is high productivity, and that earnings are bracketed with it. And, because we believe in that, we have had tremendous success in forging the new machinery regarding incomes and prices. When the Party opposite tried their hand at it with their National Incomes Commission their failure was an absolute, resounding disaster. They were like the monkey with its hand through the bunghole of a barrel clutching a nut and trying to get it out but not being able to—and the nut the Tory Party were clutching was the nut of privilege.

My Lords, if they came to power tomorrow they would be no better equipped to do this job than they were when they left office. When I talk about the privilege that runs through our society I am serious about it, because you will have to think about it. It is no use the smug faces thinking that somehow or other they can laugh it off, because they cannot. Mark my words! what the business community has done with the Labour unions in the last three months has effected a major dissociation of business from the Tory Party. Make no mistake about it. A lot of people criticised Mr. Selwyn Lloyd when he was Chancellor of the Exchequer. I think he was the best Chancellor of the Exchequer the present Opposition produced when they were in power. Now steady on: do not start throwing things. I will tell you why. He knew the rules of the prosperity club. He was the man who saw that it was necessary to surrender some privilege, because he was the man who first brought in the capital gains tax—these are facts—and he was the first man who had to do with the setting up of "Neddy".

Now may I say this—and I will continue to say it in this House if this kind of arrogance is put over; because it just is not right to judge a Government after 100 days. There is hardly anybody in this House who has not at some time or other said, "Ah!, you cannot judge statistics on only a month's figures." If you cannot judge statistics on a month, how can you judge a Government on 100 days?

VISCOUNT DILHORNE

It was your idea not ours.

LORD RHODES

All right, it was our idea; but you did the judging. Let time tell.

VISCOUNT DILHORNE

The country will judge if it is given that opportunity.

LORD RHODES

I hope it does, and I am perfectly certain it will.

The Leader of the Opposition in another place, speaking in the country last week, said there was a ferment of ideas going on in the Tory Party. It is a pity they had no ferment when they were in office; they might have left it better. But for three years the Party opposite, including the new noble Lords, pinned their faith on our entry into the Common Market. What would happen, they cried, if we did not enter the Common Market? I must confess that I am a Common Marketeer; nevertheless, what a way they went about it! What time they spent on it! The wasted years! For three years the energy of the Ministers and Departments was spent on those abortive negotiations and the work in the Departments was neglected. Yes, it was neglected. You cannot do two things at once. You cannot have an overriding urge to do something like that and at the same time attend to all the other things going on.

I remember, time and time again, as does the noble Lord, Lord Erroll of Hale, Ministers returning from the Continent. They used to stagger into the other place just like exhausted prima donnas. We were told all the time that the economy must be exposed to these winds; we must give it a cold draught. We were often told—and remember this—that we could not survive as a nation unless we went in. We have had criticism this afternoon from noble Lords opposite for what we have done in 100 days when, if I remember aright, for three years they had no faith in the future of this Britain of ours outside the Common Market. We are not in yet. What right have they to criticise? But, my Lords, enough of that—though I have a lot more and I will use it at the slightest provocation. Good gracious! that was all provoked out of a remark of the noble Earl, Lord Dundee, and that is as far as we have got.

My Lords, let me say on this question of exports to South Africa that I have an interest. My wife and I have relatives in South Africa who, I suppose, have been settled there just as long as any Britons ever have. We get great long screeds from one of them every now and again, asking questions that I cannot reply to altogether. We feel it. But I must say this: that the Government policy on the export of arms to South Africa follows out entirely United Nations resolutions, and we are sticking to them. The latest of these was on June 18, 1964, while the Party opposite were in power. Existing contracts are being honoured including the contract for the supply of Buccaneer aircraft and spares. It seems that it was said that all these contracts were going to finish straight off; that is utter nonsense.

There was no actual contract for the supply of Bloodhounds worth some £16 million and the embargo on their supply was clearly within the terms of the United Nations resolutions. A lot of the fear and a lot of the nervousness about what is going to happen as a result of this embargo (or even in regard to the case, which I shall deal with in a minute, of import restrictions) is a figment of the imagination of a lot of people who were "doing this Government down". It has no foundation in fact except in one or two exceptional circumstances. The sort of general assumption made by the noble Lord, Lord Erroll of Hale, on the question of contracts lost had nothing to do with it. But let the noble Lord, Lord Erroll of Hale, realise this; that there is something else in a business transaction besides sentiment; it is value for money. They are getting value for money from this country and the contracts they have on will be honoured because they want them. This is what is happening.

There have been allegations that we will lose £150 million of arms orders from South Africa. It was put in a most ingenious way. If somebody had not "known his stuff" the House would have perhaps fallen for it. The £200 million is the amount we do in trade with South Africa. It seemed that if you deduct the £150 million from £200 million that would leave us with £50 million of trade. This is absolute nonsense! The sale of arms to South Africa in recent years bears no relation to this figure; and it has no justification whatever. Do not let us have any of these half-baked generalisations. The Government does not consider that trade with South Africa outside the embargo will be materially affected. From what I have heard from my contacts in South Africa, it is the case that exports to that country have been increasing—they are running at over £200 million a year. We are proud to trade with South Africa. Make no mistake about that. We have an exhibition centre in Johannesburg, the Rand. And may I say, quite sincerely, to the last Government that they showed exceptional foresight in seeing that that place was put up. I will give them that: I will give credit where it is due. But in the Rand exhibition at Easter there will not be a single empty space amongst the British manufacturers showing the flag in that place. We are "going the whole hog" with it. We are not drawing back in the slightest. I may say that there is every indication that there is going to be a very successful exhibition there.

My Lords, the Government are anxious to see normal trade relations continue with Spain, a market which offers great opportunity, because in recent years Spain has been the most rapidly growing export market.

SEVERAL NOBLE LORDS: Oh!

LORD RHODES

All right! In 1964, exports to Spain, including the Canary Islands, amounted to £75 million. But, somehow or other, it seems that noble Lords opposite cannot think about trade with a country like Spain except in terms of arms. It is about time they did. With regard to Portugal there is no embargo on the export of arms; but licences are not granted for the export of arms to Portuguese overseas territories. This, may I say, is a continuation of the policy of the last Government.

We were pleased to hear the noble Lord, Lord Williamson, on the question of productivity and production that he knows so well. I want to come now to the answer to the noble Viscount, Lord Dilhorne, and the noble) Lord, Lord Erroll of Hale, on the question of the rebate. There are comparatively few instances where firms abroad have asked for the amount of the rebate to be given as an additional discount. There is only one that I know of—in the Netherlands. The noble Lord, echoed by his senior, who wound up—

VISCOUNT DILHORNE

My Lords, I should like to correct the noble Lord. I do not claim any seniority.

LORD RHODES

Shall I say the noble Viscount who came after the new noble Lord, who was talking about the marginal benefit that this rebate is going to have for British business men. It is quite obvious that the noble Lord has not a Department behind him, because his stuff is nonsense, absolutely so. I was up in Lancashire a fortnight ago, talking to the managing director of a large concern which exports large quantities of machinery overseas, and we did a little sum. His benefit in a year was £400,000. Is that negligible?

With regard to the other suggestions the noble Lord made, the noble Lord's alternative, the fact is that to relate cash funds to increases in each firm's exports would not be compatible with GATT. The noble Lord has always been a fervent worshipper at the shrine of GATT, and I think that will settle him on that point. Remission of more than the amounts collected as tax would be an export subsidy—and that, according to the noble Lord, would be terrible: it would be inconsistent with our international obligation. It is no use the noble Lord shaking his head. He always took the advice of his civil servants, and I am taking mine.

The noble Lord was afraid that the New York Trade Centre would get a little dusty. The Government appreciate the difficulty of a centre of this sort. There is no question that unless it is very carefully followed up and watched, and really looked after, it can get a bit "tatty", but we are quite determined to do this.

LORD BYERS

My Lords, which Government is the noble Lord referring to in using the word "tatty"?

LORD RHODES

My Lords, I was not referring to any noble Lords opposite—and I had better say that I was not referring to any of my noble friends on this side. I was referring to the permanent exhibition centre in New York City. I think it was the noble Lord, Lord Erroll of Hale, who said that it was likely to get "tatty", if it was not dusted. That is precisely the case. But we are going to make a success of this one. I can assure the noble Lord that we will. We are regarding it as a practical experiment, and we hope, given the support of the British-American Chamber of Commerce, to whom we are sincerely indebted for helping with this scheme, that it will be successful.

May I say, in answer to the noble Lord's other question about sponsored visits, that financial assistance under the new rules is applicable to missions which we organise to come into the country, as well as to those which come into the country of their own volition. That is the complete answer to what the noble Lord asks.

May I thank the noble Lord, Lord Byers, for his contribution? I have read his remarks with interest on so many occasions; and he is so right about this matter of status. I do not propose to speak for long, but I want to refer shortly to this point, because of the way in which so many people in this country, particularly in the entertainment world, have lampooned our salesmen overseas. There is no question that the salesmen of this country are as good as any in the world, and I am not going to let it pass that they waste their time. They do not.

The noble Lord, Lord Erroll of Hale, said that exporting was not fun. The noble Lord did not say that it was fun when he was President of the Board of Trade, but Mr. Macmillan said it for him. I do not think that it is fun at all. On and off, I have been exporting for forty years. It has been hard going, hard graft. I remember, when I first started it, going with a little bag to a foreign capital.

A NOBLE LORD: Oh!

LORD RHODES

I will deal with you in a minute. I had some woollen samples in my bag. After a hard day's "flogging" I had my bag in my hand, and I was on a bridge—and it was not moonlight—and I had had such a shocking day that I did not know whether to throw my bag in, throw myself in, or throw both of us in. But fortunately I was able to overcome that feeling.

May I say to the noble Lord, Lord Byers, on his reference to Embassies overseas, following on the Plowden Report, that I think before we accept too many strictures in this connection we had better see how the new system is going to work, because I am perfectly certain it will need a month or two to settle down. But after that you can depend on it that this Government are going to follow it up. We all admire and enjoy the speeches of the noble Lord, Lord Mancroft. We know that he knows what he is talking about, except when he is talking about the Labour Government with his tongue in his cheek. We know that he knows what he is talking about when he speaks of commercial attaches and the way things are done abroad and the way he goes abroad getting business. I may say that I agree with him—and I do not know why it has not been done before—that Ministers should take such men into their confidence before they go overseas. Only two days ago a prominent industrialist in this country told me that he was going to make a trip to Australia. I said to him: "There are five things I want to know about Australia. Will you put them down, and let me know about them when you come back?" At the time I was previously at the Board of Trade as Parliamentary Secretary, that is what the great firm of Courtaulds used to do, and they would bring me an up-to-date appraisal of the American market.

I have great difficulty in looking at any of these problems except through the eyes of the businessman. I knew early on that too much concentration on the home market would limit my expansion as a businessman. In a high capital cost industry like mine, the wool industry, of which I am very proud—and it is an industry that is still exporting £169 million worth of goods a year, which is quite terrific—you have to get out and sell your stuff or else your runs are not long enough to cope. And you do not do it for the country's prosperity, either; you do it for what you can put into your pocket and plough back into your plant. People do not pay much attention to exhortation to be patriotic and export.

What we feel is that people have a sense of the need for honouring the exporter officially and by the public at large, and that is precisely what we in the Government are recognising through the award scheme. When the noble Lord, Lord Erroll of Hale, criticised this award scheme, he was setting up his Aunt Sallies and knocking them down before we have even started. After all is said and done, in view of the people who are running this award scheme, I and my Party believe it is going to work, and work well.

I believe it is important when employers and union leaders, sitting together on a council such as N.E.D.C., agree a target for exports, and that is the sort of factor that carries weight. Every firm begins to compare its own performance; and many of us think we can cope with most world competition, excepting perhaps that of Japan and a few other countries. Here I will answer the noble Lord, Lord Royle. There is no single obvious reason why the Japanese are so efficient and proficient. Certainly they have a prosperous home industry. They have organisation and scientific appraisal of world markets; but, above all, they are making progressive and determined efforts in the export markets. They are quite determined to break into markets, regardless of cost.

I think, too, that the Western nations, including our own, should appraise what the Japanese do in terms of their scientific methods in analysing world markets. When I was there two years ago, they showed me what they were doing. With their computers and their analysts they Know whether a commodity is increasing in volume in the world markets. If their share is not equivalent to the growth in world trade, the Japanese authorities want to know why.

VISCOUNT DAVENTRY

My Lords, may I ask the noble Lord why he does not employ Japanese in his business?

LORD RHODES

I think that is a ridiculous question, if I may say so. I know that when the Party opposite were in power for so long (this was when I was quite a little child) it ruined labour relations for the whole of my lifetime in that village when, shall I say, businesses of those days imported Chinese. But that is nearly a century ago. Surely the noble Lord is not thinking as far back as all that. I think the Japanese beat us in marketing, and we have to face these criticisms. Are we doing as well? I am now speaking as a businessman. The Japanese have a flair for working back from the market to the factory, and that is something that many of us have not got. This is what wins export orders. There is nothing to prevent us from doing the same—it is not their prerogative and theirs alone.

I want industry to know that we are aware of the many problems confronting it. One thing we are certain about is that exporters need a good economic climate at home. The price of the article determines its success abroad, so we need stability and expansion at home. That is precisely why the Incomes and Prices Review Body, which has been set up today, is going to be a tremendous asset to British exporters.

My Lords, I am coming to the end of what I have to say. Large numbers of British companies are doing a highly efficient job in selling to world markets—and I mean that. I believe that a British firm at its best has no peer in the realm of export selling. There are firms who are making first-class products who have not fully assessed their products in the export field. May I urge the chief executive of every medium-sized firm to ask himself these questions? What percentage of his advertising budget is spent overseas? What percentage of his sales force is employed seeking overseas markets? What is his pricing policy on export business, and how does he assess his own prospects for making an export contribution?

Now to the firms who will enjoy the fruits of the export rebate. I want the Press to back the appeal of the noble Lord, Lord Francis-Williams to make this into something of a national cause. Would every firm calculate the saving in tax under the rebate scheme and spend some of it in one or other of the following ways: the design of products for export markets; overseas advertising, the employment of additional people with overseas selling know-how who are nationals of the country where they want to break ground?

To sum up the action that has been taken: there are the new arrangements for export finance. In particular, the

lower limit of £50,000 instead of £100,000 is a boon to the smaller exporter—he can now discount his bills and get his money circulating quicker. May I say to the noble Earl, Lord Dundonald, that I will send the information to him about the implications of the £50,000 and how it applies up to the three years, and why it is that consumer goods do not come under this particular scheme. There is the new arrangement for the financial guarantees which give an incentive to the overseas buyer to buy British; the assistance to buying missions coming into the country, and to those missions going out to sell; collective market research; the stepping up of assistance to industrial participation in overseas trade fairs, British Weeks and store promotions in many parts of the world.

We are bringing back commercial diplomatic officers from overseas to have personal discussions with manufacturers here about what, and how, to send to the countries in which they are working. Twelve are coming back from Australia this year and are going to Lancashire, Yorkshire and all over the place to talk to the people who know. There is the reorganisation of the Diplomatic Service, with trade promotion work as one of its first charges, and the export rebate scheme. These are all practical aids. This is not preaching; this is not hectoring; this is not exports by exhortation. This is holding out the helping hand to industry to help itself and, at the same time, help Britain to take its proper place—and we are proud of it—among the foremost exporting nations of the world.

9.28 p.m.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided:—Contents, 82; Not-Contents, 32.

CONTENTS
Aberdare, L.	Crathorne, L.	Falkland, V.
Albemarle, E.	Daventry, V.	Ferrers, E.
Allerton, L.	De La Warr, E.	Ferrier, L.
Amherst of Hackney, L.	Denham, L.	Forster of Harraby, L.
Ampthill, L.	Derwent, L.	Fortescue, E.
Auckland, L.	Dilhorne, V.	Gage, V.
Balerno, L.	Drumalbyn, L.	Glendevon, L.
Belhaven and Stenton, L.	Dundee, E,	Gorell, L.
Boston, L.	Dundonald, E	Goschen, V. [Teller.]
Bridgeman, V.	Effingham, E.	Grantchester, L.
Brooke of Ystradfellte, Bs.	Egremont, E.	Grenfell, L.
Chesham, L.	Egremont, L,.	Grimston of Westbury, L.
Colville of Culross, V.	Elliot of Harwood, Bs.	Hastings, L.
Conesford, L.	Emmet of Amberley, Bs.	Hawke, L.
Craigton, L.	Erroll of Hale, L.	Horsbrugh, Bs.
Howard of Glossop, L.	Mersey, V.	St. Just, L.
Howe, E.	Mills, V.	Sandford, L.
Ilford, L.	Milverton, L.	Shannon, E.
Inglewood, L.	Molson, L.	Somers, L.
Jellicoe, E.	Moyne, L.	Soulbury, V.
Killearn, L.	Nairne, B.	Stonehaven, V.
Kilmuir, E.	Newton, L.	Suffield, L.
Long, V.	Northchurch, Bs.	Thurlow, L.
MacAndrew, L.	Rathcavan, L.	Wakefield of Kendal, L.
McCorquodale of Newton, L.	Remnant, L.	Waleran, L.
Mancroft, L.	Rockley, L.	Windlesham, L.
Margadale, L.	Rowallan, L.	Wolverton, L.
Merrivale, L.	St. Aldwyn, E. [Teller.]
NOT-CONTENTS
Addison, V.	Chalfont, L.	Longford, E. (L. Privy Seal.)
Archibald, L.	Champion, L.	Mitchison, L.
Arwyn, L.	Francis-Williams, L.	Phillips, Bs.
Attlee, E.	Gaitskell, Bs.	Rhodes, L.
Beswick, L.	Gardiner, L. (L. Chancellor.)	Royle, L.
Blyton, L.	Henderson, L.	Shackleton, L.
Bowden, L.	Hobson, L.	Shepherd, L. [Teller.]
Bowles, L. [Teller.]	Latham, L.	Stonham, L.
Brockway, L.	Leatherland, L.	Taylor, L.
Burden, L.	Lindgren, L.	Williamson, L.
Burton of Coventry, Bs.	Listowel, E.

On Question, Motion, as amended, agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.