REVENUE (No. 2) BILL (Hansard, 7 March 1968)

§ LORD BOWLES
My Lords, I beg to move that this Bill be now read a third time.

§ LORD DRUMALBYN
My Lords, I should like to raise a point at this stage of the Bill and to draw attention to Clause 2, in which the termination of export rebates is dealt with. At present they are not to be payable on goods exported after March 31, 1968, except where there is a contract of sale to supply them which was made before November 19, 1967, which is the date of devaluation, and also where the transactions would not result, putting it mildly, in any exchange profit to the exporter resulting from devaluation and cannot be altered to protect the exporter from adverse effects of devaluation.
In the Second Reading debate my noble friend Lord Dundee asked the noble Lord, Lord Bowles, this question: My Lords, do I understand the noble Lord to mean that if the law courts should decide that a certain tender or bid before November 19 was irrevocable in character and binding on the person who made it, and it was accepted by the purchaser after November 19, it would then follow that the exporter would receive the rebate?". The noble Lord, Lord Bowles, said in reply: My Lords, I think that what would happen is that the exporter would take action against the Board of Trade, suing them for his rebate. If the court said he could have it, then he would have it."—[OFFICIAL REPORT, 27/2/68, col. 721.] I am bound to say—and I would ask the noble Lord to explain this point—that I do not believe there is any possibility of such an action being brought or, if it were, that it could possibly succeed if it arose simply out of a tender or bid. The Bill itself, as drafted, seems to exclude any such possibility unless there is a signed contract. So I would ask the noble Lord whether he would be so kind as to make this matter perfectly clear. The exemption, as I understand it, extends only to contracts under subsections (2), (3) and (4) of that clause.
I recognise that it would not have been possible to continue to give export 1427 rebates in all cases where a tender alleged to be irrevocable was put in before devaluation and accepted after it, but it does not seem to me to follow that because it would be impossible to cover all cases there was no alternative to covering none. It is true that a firm which has put in an irrevocable tender is not always bound to sign the contract if it is awarded to it; but the practical consequences of refusing to do so may be very severe, even if there is no financial penalty involved, as there may be. A firm tendering to a foreign Government or public authority would never have a chance of winning a contract in that country again if it now withdrew because of the withdrawal of the export rebate.
In my submission, it would not be difficult to provide that sterling tenders which were made to a Government or public authority abroad, and which had been published by that Government or public authority along with other competing tenders, should be exempted from the withdrawal of the export rebate. I see no difficulty in that. I am not suggesting that there should be a discretionary power in the Board of Trade to accept or reject such applications—although the Board of Trade, let us note, is becoming more and more accustomed to making discretionary payments, whether on investment grants or on payments under the local employment Acts. At any rate I would say to the noble Lord, Lord Bowles, that such a discretion would be a far cry from Crichel Down, which the noble Lord prayed in aid. I agree with the noble Lord that the courts should be able to decide, but what is necessary is to draw the clause in such a way that the narrow band of really hard cases to which I refer should receive their payments, and receive them as of right.
I know it is not possible for your Lordships to amend the Bill in the sense that I should like. What I am asking is that the Government should introduce a short Bill to extend the exemptions to irrevocable tenders quoted in sterling and made to and published by Governments and public authorities before November 19. I need not expatiate on the enormous blow to morale where a company has been working hard to obtain a contract for months, or maybe years, when the 1428 contract has been ultimately won and signed, but not signed before November 19, and where there may be a continuing responsibility to produce and export the goods, very possibly at a loss, over a considerable period of time, running into tens or even hundreds of thousands of pounds. I do not think it is good enough for the Government to say, "Too bad. We never said the export rebates were irrevocable". This sort of "Stop-Go" is as bad as any. This is real default on the part of the Government, and none the less unworthy because it is a default not to foreigners but to our own people.
I am asking the noble Lord to say that the Government will look at this matter again, and meanwhile to clarify what he said on Second Reading. It does not make sense to say that, because it would not be administratively practicable, however right in principle, to extend the exemption to irrevocable tenders, therefore it should not be extended to any.

§ LORD BOWLES
My Lords, I have given this matter a great deal of thought. The noble Lord was going to raise the matter on the Committee stage two days ago. I heard when I got up to speak that he was not going to do so. I do not know whether he has changed the ground on which he was going to speak then, but he did not raise the matter on Committee, when we could have had more than one speech each. Therefore, any questions I ask him he cannot really answer without permission of the House.

§ LORD DRUMALBYN
My Lords, may I reply to that, because one is in real difficulty in matters of this kind? This is a Supply clause, and it is generally considered not proper to attempt to amend on Committee. As I could not amend on Committee I did not think it worth while raising the matter on Committee; I thought it would be more appropriate to do it now.

§ LORD BOWLES
My Lords, the noble Lord knew it was a Supply Bill; he knew it on Tuesday perfectly well. He realised that he could not put down an Amendment, because his noble friend Lord Dundee said he could not; and that was made quite clear to the House last week.
1429 I was in this difficulty all the time, and I have been thinking about it a great deal. I am talking about whether it is possible in law to have an irrevocable bid, tender or offer. I was a lawyer many years ago, and they may have changed the law since I ceased to practise, but it seems to me to be a contradiction in terms. If I say to the noble Lord, "I will give you £10,000 for your house. Keep that offer open for me, please; it is irrecovable so far as I can possibly make it, until midday on Sunday", and the noble Lord says, "Yes, I will", but nothing is put in writing—if I make that offer off my own bat and say, "I promised by Sunday to carry this out or to complete my offer, if I do not revoke it then"—I still say then that I am sure in my own mind that I can revoke it the next hour. It is, as I say, a contradiction in terms. I have thought about it a great deal.
Furthermore, if, for instance, some of his right honourable friends in another place referred to a bond accompanying an irrevocable tender, offer or bid, I do not think that makes any difference at all. If I offer, or add to my so-called offer, a 10 per cent. deposit to him, or his solicitor, or to the estate agent, that does not make any difference to the fact he still cannot enforce it. It is not a contract, and I can still withdraw my offer and I can still withdraw my deposit. We all know that from experience. That is why all negotiations about house buying, land and so on, are made subject to contract.
There are other points relating to situations in which a man might find himself—for example on the Stock Exchange. It may be that a man instructs his broker to offer to buy certain stock at a certain price and the broker does that, and then the client changes his mind. It still probably is not a contract that can be enforced at law, and no doubt the broker who has dealt with his own jobber would feel he had been let down by his client; and possible Stock Exchange rules might be such that he would in effect have to go through with the deal. But I am trying to keep this matter as a matter of law.
The noble Lord just now referred to an English exporter who, if he withdrew an irrevocable tender, might suffer practical consequences of great seriousness. I understand that, and it is the kind of risk he has to take. But we have gone into 1430 this matter very carefully in the Board of Trade since my honourable and right honourable friends in another place said they would look into it. In fact, they tried very hard to look into it; they almost made an irrevocable offer to look into it. But they came to the conclusion that it was impossible in an Act of Parliament to put in words which would be stronger than a written contract of sale. An irrevocable bid, in my humble opinion, is something that cannot possibly exist.
The noble Lord asked whether we would look at the matter again, and asked if we could find some way, in a short Bill, of covering the point he has in mind. I, of course, would not refuse to make an offer of that kind. I will report this discussion to the President of the Board of Trade. I agree that, on the face of it, the business world would not expect suddenly to have a rebate withdrawn on a certain date because we have suddenly devalued or taken some such action. I understand how important the export rebate is in getting the contract at all, or even getting the offer considered. I appreciate all this, and I am sure that my right honourable friend the President of the Board of Trade does so, too.
The noble Lord may think it is a long way from Crichel Down. In his opinion it may be, but I do not think it is all that far. We have had the view expressed that public decisions relating to law should mainly be decided by the courts. If the noble Lord agrees that these bids are irrevocable, or if he, or his friends, can ever prove one before a court, he has nothing to worry about. This is the part in his speech I do not understand. If these offers or tenders are irrevocable in his sense, or the sense of his right honourable friends in the other place, then the court would hold so, too; and therefore I cannot understand why he takes that line. However, I promise the noble Lord that my right honourable friend the President of the Board of Trade will have his remarks referred to him, even if he does not care to read mine, and we shall see whether my right honourable friend can possibly see some way to meet the point of view raised by the noble Lord and his right honourable friends.

§ LORD DRUMALBYN
My Lords, with the leave of the House, may I say a word in reply to the noble Lord? I must say that during his speech, when 1431 he said that an irrevocable bid is something which cannot possibly exist, I was reminded of the child who looked at the camel and said, "I don't believe it!". These things are common, very common indeed, and they do exist. I was not speaking just from the legalistic point of view on this question. I am most grateful to him for his undertaking to look at the matter further. In those circumstances, I feel he has gone as far as can be expected at the present time, and I am much obliged to him.

§ LORD WALSTON
My Lords, may I add a word in support of the noble Lord, Lord Drumalbyn? I am speaking in no way as a lawyer. I have never been a lawyer—even twenty years ago—but it seems to me that it is purely a matter of both common sense and common decency that where an individual or a firm has made a bid under certain apprehensions that certain conditions exist, and that bid is then within a short while accepted, even though the conditions have changed afterwards, it would be wrong for the firm to withdraw its bid. Even though it legally might be able to, it would not be the right sort of thing for it to do. It had given its bid in good faith, and it certainly would not be good business either for it, or for the country, to withdraw it, especially in the case of considerable export contracts we are all familiar with.
I cannot accept the fact that the Board of Trade is unable to frame legislation to cover this point. It is, after all, the duty of the officials serving the Government to do what the Government want, and they have the ability to do it. It must be for Her Majesty's Government to tell them what to do. If Her Majesty's Government come out straight and say, "We want some form of arrangement to be made to cover this point, because we think it a good point", I cannot believe it cannot be done. I hope that Her Majesty's Government will in fact say that, because I think most of us, whichever side of the House we sit on, feel that the point which has been raised is a very fair and a very important one.