Lords Sitting of 9 July 1975

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Portsmouth.

UNITED NATIONS: MEMBERS' CONTRIBUTIONS
Lord BARNBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what instructions have been given to the United Kingdom representative to the United Nations to deal with the situation created by the reported deficit of 87·5 million dollars to some extent due to the default of 72 Member countries in respect of their contributions to the United Nations.
The PARLIAMENTARY UNDER-SECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the United Kingdom representative to the United Nations is instructed to support any practical measures to liquidate the United Nations debt, to reduce the present high rate of increase in the United Nations budget and to press for an effective agreement on the budget and on expenditure on future peacekeeping operations.
Of the short term deficit of 87·5 million U.S. dollars, 57·9 million U.S. dollars represents contributions to the regular budget withheld by Member-States. The remainder relates to peacekeeping operations. Her Majesty's Government support the principle of collective responsibility and do not accept that such shortfalls should be made up by additional assessed contributions from other Members.
Lord BARNBY: My Lords, arising out of that agreeably informative reply, in view of the fact that a regular contribution of 14 million dollars is made by this country, exemplary to a good many others, could the Minister indicate
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what is the period of grace allowed to the non-payers before any action is taken to withdraw the right to vote?
Lord GORONWY-ROBERTS: My Lords, Article 19 of the Charter provides that where a Member-State falls short by the equivalent of two years' subscription of membership its position shall be considered with a view to withdrawing its right to vote. It is not always easy to decide that there are not special circumstances why a country withholds part of its contribution. For instance, some of the best payers may overshoot the financial year and, on paper at least, be in default in the ensuing year. So Article 19 has not so far been called into operation.
Lord JANNER: My Lords, may I ask my noble friend whether it is a fact that the main nations which have not contributed or are in debt are those nations which have been advocating the violation of the Charter and have been involved in such bare-faced violation, against Israel, for example? Is it not a fact that some of the civilised nations are withholding their payments because of that type of action on the part of these other Members? Can something be done at long last to try to put the United Nations on a proper, decent footing instead of the miserable state into which it has brought itself in consequence of these actions?
Lord GORONWY-ROBERTS: My Lords, I do not think we would equate promptness of payment with purity of ideology, at least not in this case. On the other points raised by my noble friend, I can only say that generally we are in sympathy. We are constantly pressing for a better system of financing the United Nations, and any suggestions will be gratefully received, as, no doubt, will all contributions, large or small.
The Earl of LAUDERDALE: My Lords, can the noble Lord say what practical measures the United Kingdom delegate is invited to support? The noble Lord referred to "practical measures". Has he any in mind?
Lord GORONWY-ROBERTS: My Lords, there are a number of suggestions now being canvassed, among them the possibility of cutting down on the United Nations regular budget, particularly in

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regard to the work of the Fourth Committee. That is an example of the kind of practical proposal I think the noble Earl has in mind.
Lord BLYTON: My Lords, does not the Minister consider that these deficiencies are chicken-feed compared to the losses, on the balance of payments, we are having to face in the Common Market, of nearly £3,000 million a year?
Lord GORONWY-ROBERTS: My Lords, we are all entitled to our own mathematics as we are to our own ideologies.
Lord JANNER: My Lords, may I follow up the answer that my noble friend gave me. Is this not a question of ideology? Is not the United Nations itself supposed to be based on the ideology of a civilised institution? In consequence of the fact that it is not carrying out that particular function and is dealing wrongly with Members of its own organisation, is it not essential, if one really wants to get the funds to support it, to see that it carries out its legal duties?
Lord GORONWY-ROBERTS: My Lords, I would have said that the United Nations has an ideal bedeviled by ideologies.
Lord LEATHERLAND: My Lords, is my noble friend aware that France has been heavily in default on several occasions in recent years? Can he tell us whether France is still in default?
Lord GORONWY-ROBERTS: My Lords, the latest figures given to me indicate that this is so. I would not, however, wish to comment on the performances of individual Member-States in this field.
Lord BARNBY: My Lords, since the Minister made reference to the special peacekeeping forces, can he give this information to the House: Are the military aspects of peacekeeping expenses lumped in with the general budget, or are they kept in a separate category and financed through separate sources?
Lord GORONWY-ROBERTS: My Lords, I appreciate the point raised by the noble Lord. The figures I gave
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included something like 30 million US dollars accumulated deficit on the cost of peacekeeping operations, particularly those in 1957, on UNEF, and the 1960 Congo operation. It is true that, at least at that time, those expenses were borne on the regular budgets. I could not give the noble Lord the information as to whether the later peacekeeping operations were borne on the regular budget. I believe that they were, but if he will allow me to go into that particular point, I shall do so.
Lord GORE-BOOTH: My Lords, would the Minister agree that often when this subject is considered there is a great temptation to cut down on the peacekeeping budget, and that Governments should hesitate long before agreeing to that course since this is a quite basic object of the United Nations?
Lord GORONWY-ROBERTS: My Lords, it is a basic and a primary objective to keep the peace.

BRITISH AIRWAYS: OVERBOOKING
2.44 p.m.
Baroness BURTON of COVENTRY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government on what grounds they consider that the figure of 141,000 passengers who cancelled their bookings and received their money back justifies the failure to provide seats to 274 people when they attempted to travel on flights for which they had booked; and how many of the 274 people had paid for their flights.
Lord JACQUES: My Lords, the circumstances quoted in my supplementary reply to the noble Baroness's Question on 26th June merely illustrates that the off-loading of passengers and the cancellation of bookings are two sides of the same coin. A specific study of the question is being carried out by the Civil Aviation Authority which is the competent body to advise the Government on matters affecting the interests of air travellers. I understand that the Authority is expected to make known the results

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of this study to the Airline Users' Committee within a few months. The Government will await the results of this work before forming a view. So far as the latter part of the noble Baroness's Question is concerned, I understand from British Airways that there is no reason to suppose that the passengers referred to in my supplementary reply of 26th June had not paid for their tickets.
Baroness BURTON of COVENTRY: My Lords, taking the last part first, the House assumes from this that the passengers had paid for their tickets. Can I ask the Minister, who has some knowledge of consumer affairs, whether he can think of any other merchandise which people order, pay for and receive—in this case the flight ticket—which is subsequently removed from their possession?
Lord JACQUES: My Lords, at the moment I cannot think of any such merchandise or service.
Baroness BURTON of COVENTRY: My Lords, may I then ask the Minister whether he is aware that the report from the Civil Aviation Authority is not likely to be available in the near future, and that it is not likely to reach a conclusion? May I ask him about one other matter. Does he not feel anything on the ethical side of this? Do the Government really feel that people who have paid for goods should have them removed from their possession, and the Government be unable to form a view on this until some committee has reported on their own opinion?
Lord JACQUES: My Lords, may I try to help the House by summing up the position showing the differences between the noble Baroness and the Government? I think all of us feel strongly when we hear that a passenger who has booked on an airline has not been able to get on that airline because of overbooking. It generates strong feeling because we know that it is an experience that we should not like, and we are disturbed that other people should have it. So there, I think, we have a point of agreement.
But the record shows that there are two points of disagreement between the noble Baroness and the Government. The
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first is this: the Government say that there are two sides to this coin; first, there is the cancellation, which is in excess of 10 per cent.; and, secondly, there is the off-loading, which is certainly below 0·02 per cent. So far as the Government are concerned, they are two sides of the same coin. The noble Baroness, by the record, shows that she can see only one side of the coin, and on that point we shall have to disagree. The second point of disagreement is this. The noble Baroness is insisting upon immediate action—
Several Noble Lords: Speech!
Lord JACQUES: My Lords, please let me finish. The noble Baroness is insisting upon immediate action; so far as the Government are concerned, they see danger in this. There are certain remedies which could be applied but would undermine the competitive power of our airlines and increase the fares to our airline passengers. The Government therefore say that the Authority which has been appointed by Parliament to deal with this matter should report before the Government come to a view.
Lord GEORGE-BROWN: My Lords, with respect, that really will not do. There are not two sides to the coin.
Baroness LLEWELYN-DAVIES of HASTOE: Question!
Lord GEORGE-BROWN: My Lords, I am sorry, I did not hear what the noble Baroness said.
Several Noble Lords: Question!
Lord GEORGE-BROWN: My Lords, my question now starts, and I am obliged to the noble Baroness, who has been so long in public affairs, for reminding me. If I am the chairman of a company, as I am, and people cry off, having invited my services, there is nothing I can do about that; but when people have bought my services and paid for them, if I do not deliver could I ask the noble Lord whether I am not at risk of prosecution for trading fraudulently? Will he please tell me what is the difference between the law applied to my company and the law applied to his airline? They are trading fraudulently if they do not—
Several Noble Lords: Speech!
Lord GEORGE-BROWN: My Lords,
I am asking whether they are not trading fraudulently if, having taken the money, they do not deliver the services? We have a law—
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, the noble Lord is probably asking a question, concealed. Could he ask a short question?
Lord GEORGE-BROWN: Yes, my Lords—
Several Noble Lords: Hear, hear!
Lord GEORGE-BROWN: —and I seem to be particularly popular at the moment with Members of the Front Bench opposite. I will make my question very short. Would the Minister please tell me whether his airlines are trading fraudulently?
Lord JACQUES: My Lords, the answer is, No.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, on a point of order, is there not, in fact, a Petition for leave to appeal on this very point now pending before your Lordships' House?
Lord JACQUES: There is, my Lords.
Baroness BURTON of COVENTRY: My Lords, is the application for leave to appeal not being heard tomorrow, and is it not a fact that until it has been heard it cannot be granted and that until it has been granted it cannot be sub judice, so that it is therefore open for discussion today?
Viscount HANWORTH: My Lords, while regretting this practice as much as does the noble Baroness, may I try to put it in perspective by asking two questions? First, if this were done away with and there was not overbooking, by what percentage is it likely that fares would have to rise? Secondly, what is the number or percentage of passengers who do not get on those flights on which they are booked because of other causes, such as aircraft unserviceability, strikes and so on?
Lord JACQUES: My Lords, the answer to the first part of that supplementary question is that, as there are 10 per cent. or more cancellations, fares
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could have to be increased by up to 10 per cent. I regret that I do not have the information sought in the second part.
Lord ELTON: My Lords, may I ask the Minister if the 274 people referred to in the latter part of the original Question got back their money, and how long it took for them to get it back? Did they receive compensation, first, for inconvenience and, secondly, for consequential loss owing to the change of their arrangements?
Lord JACQUES: My Lords, in the majority of cases they went on the next available flight and there was no loss. In so far as there was a loss, they were paid expenses up to £20. Anybody who did not fly got back the whole of the money.
Lord LEATHERLAND: My Lords, would it not be possible to refuse to allow people to cancel bookings and get back their money? That would ensure that while 141,000 would suffer, the 274 would be sure of getting their seats.
Lord JACQUES: My Lords, that is one superficial answer to this question. The position is that there have been several attempts to reach an international agreement on a penalty for cancellation. Those attempts have failed and if our airlines inflicted a penalty and the others did not, that would undermine our competitive position.
The Earl of ONSLOW: My Lords. what was the value of those 274 tickets which had to be refunded? How much extra cost did this bear in relation to the total ticket turnover of British Airways?
Lord JACQUES: My Lords, I do not have my calculator with me today.

AID TO SOUTHERN AFRICA
Earl COWLEY: My Lords, I beg, leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government—

(a) the total amount of British aid being given to nationalist movements in Southern Africa;

(b) which nationalist movements are in receipt of this aid; and

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(c) what categories of aid are involved.

Lord GORONWY-ROBERTS: My Lords, in furtherance of our policy in giving support to liberation movements for peaceful purposes, we have made available £20,000 to the United Nations Save the Children Fund for help through liberation movements to women and children refugees from Namibia. We have also told SWAPO that scholarships and other educational assistance up to a total of £35,000 will be made available to Namibians. Apart from the liberation movements as such, we have made a contribution of £70.000 to the United Nations educational training programme for Southern Africa, by which Namibians and others can benefit. We have given £10,000 for the United Nations Fund for Namibia, again for training for independence responsibilities, and £5,000 to a special United Nations fund to be used for the establishment of the Institute of Namibia.
Earl COWLEY: My Lords, while thanking the noble Lord for that extremely full Answer, may I ask him to say what steps the Government take to ensure that these funds are used for humanitarian and peaceful purposes? Does he not recognise that the giving of such funds also releases other funds which can be used for non-peaceful and non-humanitarian purposes?
Lord GORONWY-ROBERTS: My Lords, to answer the second part of that supplementary question first, no doubt that is always possible, but we take very great care to impress on recipients that these grants are always for peaceful, educational and training purposes. On the first point, the noble Earl rightly asks whether we are taking every possible step to see that the purposes for which these grants are made are in fact the only ones. I can assure him that this is so. The grants are made through the agency of the Ministry of Overseas Development, through, in practically every instance, recognised United Nations organisations; and we do so in response to resolutions at the United Nations to which we are party.
Earl COWLEY: My Lords, is the noble Lord aware that the House cannot know whether the Government are taking all possible steps, unless we know what
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those steps are? Will he therefore say what they are?
Lord GORONWY-ROBERTS: Of course, my Lords; it is by constant consultation with the organisations to which these monies are paid, in the vast majority of cases United Nations organisations, on which of course we have representatives. That, I think, is a reasonably satisfactory way of checking the direction and disbursement of these monies.
Lord WADE: My Lords, will the noble Lord agree that in all these cases these are humanitarian causes that are being helped? Furthermore, will he agree that in cases of this type the persons in need in these areas of the world would very often not be helped at all, if it were not for movements and bodies such as those to which this Government have contributed?
Lord GORONWY-ROBERTS: My Lords, the answer must be Yes to both points.
Lord BROCKWAY: My Lords, is the Minister aware that many of us deeply welcome the statement he has made? Is it not quite clear from that statement, first, that these grants are made through United Nations organisations which have that responsibility; and, secondly, that the only instance when they are made to a political Party is for educational and technical assistance which would not take place unless these grants were made, and therefore could not be at the cost of extending their expenditure for military purposes?
Lord GORONWY-ROBERTS: My Lords, my noble friend refers to the one grant which is made to such a political organisation, which is SWAPO, and that is a grant of £35,000 for scholarships and other educational assistance. We should, of course, prefer to direct that grant to a Government, but at the moment there is no such Government in Namibia. We hope that there will be one, but in the meantime SWAPO is the recognised central organisation representing the Namibian people.
Lord SEGAL: My Lords, may I ask the noble Lord to say whether the Government receive regular reports on how these moneys are being spent and, if so, from what source they come?
Lord BARNBY: My Lords, as the Minister emphasised the assurance that these gifts were made only when it was certain that they would be used for peaceful purposes, but later admitted that it would be difficult to survey them—I use the word "survey" as "police" is disliked—may I ask him to indicate whether the amount to be given to Mozambique, which is admittedly a Marxist State and a foreign country, as was admitted in reply to a Question by the noble Earl, Lord Cowley, would fall under one of the categories he has just described, when put through the United Nations?
Lord GORONWY-ROBERTS: My Lords, I do not think that the noble Lord quite caught the phrase I used. It is always possible, when we make grants for humanitarian purposes, that there may be misuse. To put it higher than that would be to tempt fate. But we take every possible step to check that this is not so, and we are pretty well satisfied that the measures which we take are effective. That brings me to the point made by my noble friend Lord Segal, which I very much take on board. I entirely agree with him. Perhaps we can have a word about this after Question Time. On the question of Mozambique, prior to independence we made a contribution of £300,000 to the United Nations High Commissioner for Refugees for the resettlement of refugees in Mozambique. We have not yet concluded an aid programme with the new Mozambique Government, but we shall presumably discuss that with them as soon as they have settled down after independence. The same applies to Angola, though a little further in the future.
Lord SEGAL: My Lords, I must apologise to the noble Lord, Lord Barnby. I was not looking in his direction when I rose. May I ask my noble friend whether regular reports are received as to how these monies are being spent, and whether these reports come from the United Nations or from the organisations concerned?
Lord GORONWY-ROBERTS: My Lords, I had it in mind to go into some detail with my noble friend afterwards, instead of dealing with all the steps and processes involved during Question Time. Briefly, it is through the United
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Nations organisations concerned that we get reports, partly directly from our own representatives on those organisations, and partly from the published records and papers of the United Nations itself.
Lord DERWENT: My Lords, have we broken a record today? The first three Questions took 19 minutes yesterday, and today they have taken nearly 23 minutes.

STEVEN MEURS: ADMINISTRATIVE REVIEW
3.4 p.m.
Lord ELTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, following the findings in the case of Steven Meurs and the facts brought to light therein, they will set up a board of inquiry to establish the factors common to this and other cases of non-accidental injury to children and to make urgent recommendations for the improvement of procedures within and communications between the welfare and other public services concerned.
Lord WELLS-PESTELL: My Lords, I shall attempt to answer briefly. My right honourable friend the Secretary of State for Social Services shares the concern which is felt, I am sure, by all Members of your Lordship's House and all who have heard of the case of Steven Meurs. She welcomes the announcement by the Norfolk County Council and by the Norfolk Area Health Authority that they are to set up an independent review body to inquire fully into the matter. The Department will consider the report to see whether any particular guidance can and should be given.
Lord ELTON: My Lords, may I thank the noble Lord for that Answer and ask whether he is aware that he will have the support of the whole House, and, I believe, of all people of good will throughout the country if his Department will get together the results of the various committees of inquiry operating locally up and down the country on analagous cases? Does he not agree that it is beginning to appear that there are common contributory factors in these cases, and

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that these could be alleviated if the Department or some other agency could correlate the reports? Does he not further feel that, from this correlation, administrative directives could go out which, without legislation, would begin to remove this appalling stain from our consciences.
Lord WELLS-PESTELL: My Lords, I am in complete agreement with what the noble Lord has said, as I am sure is the Department. This is a matter we must look at in the light of what has happened, but it would be wrong to assume that no directives have been sent out in the past. These matters continue and therefore they must be looked at afresh.
Lord LEATHERLAND: My Lords, does my noble friend feel that the last Government made a mistake in their reorganisation of local government when they abolished the self-contained children's departments and merged them into the much greater social welfare departments?
Lord WELLS-PESTELL: My Lords, if the question is directed to me personally, I am of the opinion that the last Government made a number of mistakes.
Lord KINNAIRD: My Lords, is the Minister aware that all Governments make a number of mistakes?

STATUTORY CORPORATIONS (FINANCIAL PROVISIONS) BILL
Brought from the Commons; read 13, and to be printed.

BRITAIN'S EXPORT PERFORMANCE
3.7 p.m.
The Earl of LIMERICK The Earl of LIMERICK rose to call attention to the vital need for sustaining and improving Britain's export performance; and to move for Papers. The noble Earl said: My Lords, in contemplating this vast subject, I am encouraged by the number of speakers who are to follow me who will be able to draw on specialist knowledge based on years of experience in a wide variety of exporting industries, from the invisible to the largest and most solid. It is one of the strengths of this House that such experience can be brought to bear upon topics of national
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importance. Consequently and by a self-denying ordinance, I shall be saying almost nothing on my favourite subject of the Middle East because I know that my noble friend Lord Denman will be plugging that gap later on.
I count it an achievement to have persuaded my noble friend Lord Pritchard, who made such an outstanding contribution to the British National Export Council, to be tempted to make his maiden speech in this debate. I look forward very much to these and other specialist contributions and, in the meanwhile, I shall try to set an example of what I venture to urge on others by resisting the twin temptations of seeking to cover the whole waterfront and of turning this into a general economic debate. However, there is much to say and few chances to say it, so I do not promise brevity, though if shall endeavour to remain relevant.
Clearly, it rests with me, having had the temerity to raise the subject, to set the scene. My qualifications for doing so, such as they are, will serve also as a declaration of interest. Since 1958, I have been employed by one of our major international merchant banks, working largely on finance for overseas trade and currently much engaged in export construction projects. From the mid-1960s I have been concerned with overseas work of the London Chamber of Commerce, of which I am a Member of Council. Also, since last year, I have been President of the Association of British Chambers of Commerce, whose interests I have represented since January on the British Overseas Trade Board. Since 1968, I have been deputy chairman of the Committee for Middle East Trade, which was then an area committee of the BNEC and now fulfills the same function in relation to the Overseas Trade Board. During the past eight years, I have been privileged, in various capacities, to lead trade missions to nine different countries. There was an interlude from April 1972 until March 1974 during which period I was perhaps even more directly concerned as Parliamentary Under-Secretary of State for Trade. I then tried the patience of my noble friend Lord St. Aldwyn unusually high by visiting 23 countries in 23 months on trade promotional visits.
I shall divide my remarks this afternoon into four broad areas. These will be, what we sell, whom we sell it to, the terms on which we are paid and, perhaps most topically, the methods employed to promote or encourage further exports. First, however, it is necessary to say something about the very difficult climate in which our exporters are operating today. Mindful of my own warning about straying into general economic debate, I shall make only two preliminary points, starting with what must be acknowledged to be the vital one. It concerns the impact of the inflation which bedevils our whole industrial effort, specifically upon exports.
Speaking on 26th June at the inaugural meeting of the British Overseas Trade Advisory Council, Mr. Peter Shore pointed out that in the past year our rate of domestic inflation had far outstripped that of our industrial competitors and was still increasing while others had succeeded in lowering their rates. He ended with this warning:
"This is a situation which we just cannot allow to continue. If we did, it would kill our chances of export-led growth stone dead. More than that, we should price ourselves out of world markets with disastrous consequences for lobs and wellbeing in this country."
Those of us who for months have been preaching this message—not, may I say, of doom, but of the necessity to avoid doom—must rejoice that it is receiving such powerful endorsement. The fundamental point which eclipses all others—and I reiterate this with all the force that I can command—is that unless we can rapidly control our domestic inflation we shall cease in many overseas markets to be price-competitive. Sales which might have been ours will go to ever eager foreign competitors, and markets once lost are never easily regained.
My only other preliminary point is this. Evidently, a trade imbalance may be improved either by increasing exports or by reducing imports. Voluntary import saving is a worthy objective in many cases and fuel is an obvious example. But when it is urged—sometimes by those who should know better—that arbitrary import controls, basically designed to protect uncompetitive British industry, will at least help to solve our problems, then comes the time for some protests. There is no time to develop
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the case in full—it was put, unanswerably in my view, by Sir Frederick Catherwood, the new Chairman of the British Overseas Trade Board, in an address to the Institute of Export on 13th May—but essentially it rests on our unique vulnerability to retaliation both by importers of our goods and by foreign lenders, on the unsatisfactory nature of any mechanism, at least so far proposed, on the inhibition to exports implicit on bureaucratic control over import components; and not least on the negative reversal of the benefits of international specialisation and the denial of consumer choice. I hope that this afternoon no one will advocate such self-defeating policies.
Let me now turn to the first broad topic of what we sell, and the undoubted need to sell more of it. The Prime Minister has urged us to give more credit for recent export performance. I have cheered with the best, but I can give only two cheers, having four qualifications which inhibit the third. First, although export values have risen, the volume has not—it actually fell by 2 per cent. in the three months to May, and as already recognised there is a strict competitive limit to our ability to offset static or falling volumes by higher prices. Secondly, the recent improvement in the visible trade balance is accounted for substantially by lower imports of fuel and industrial raw materials, upon which future exports themselves will depend. Thirdly, a survey published last week by the Birmingham Chamber of Industry showed that, by comparison with the previous quarter, almost one exporter in three reported export sales down. Even more seriously, these exporters said that export orders had declined even more sharply. They considered that only the depreciation of the pound kept them competitive, and over half of them believed that their profitability would not only decline, but decline faster than their level of turnover.
This leads squarely into my fourth and most serious reservation; namely, about the level of investment. These Birmingham exporters—and one hears the same story across the country—now express unwillingness to invest in capital projects in anticipation of the expected upturn in world trade in 1976–77. We know that there is considerable under-used capacity, in pockets, to exploit in the short term,

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but we badly need more long term strategic investment in export industries. Are we likely to get it?
As a country, we are currently exporting 24 per cent. of our national product—I believe that last year the figure was even higher at 26 per cent.—to pay for our necessary imports. Incidentally, this percentage is matched by West Germany—Belgium has a higher percentage—but it is nevertheless double the percentage of national product traded overseas by Japan, and four times that of the United States. Therefore, it is to us of fundamental importance to get the balance right. During the boom of 1973 we faced the problem, perhaps for the first time since the war, of finding the capacity to make what we suddenly found the competitive value of the pound was enabling us to sell abroad, rather than struggling to sell what we made. The Government then urged in 1973as they are now urging in more difficult days in 1975, when our price advantage has disappeared—that export manufacturers should invest substantially. This is needed in order both to increase capacity and to secure some lasting benefit from the anticipated world trade revival, and to reduce unit costs by means of more efficient production.
I believe that the manufacturers' answer to this is quite clear and consistent. They will willingly invest when they see a reasonable prospect of doing so at a reasonable level of profit. However, expectations of profit have taken some substantial knocks in recent months—first over oil prices and escalating commodity prices; followed by controls over domestic selling prices, by increased stock and financing costs, and especially by wage inflation. For a healthy export industry, upon which a healthy economy substantially depends, it is essential that the private sector should be able to achieve a satisfactory return on invested capital. Apart from the obvious question of profits retained for reinvestment, if the level is too low there is no security for bank borrowing and no hope of raising fresh equity or loan capital from the market on terms which are not unduly onerous.
Whatever we seek to sell abroad, it must be at a competitive unit cost. This is the measure of productivity. And on this vital issue of industrial productivity one
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must feel deeply concerned for the future. We rely almost entirely on imports of raw materials for our industry, but latterly the decline in our relative efficiency as converters and adders of value has been revealed by the large increase in imports of finished goods. The stock answer is that we should devote more resources to products of the higher forms of technology. The problem here is that the development costs and the risks of commercial failure are enormous, while success demands larger markets than we can readily command; witness, my Lords, the post-war history of our civil airframe and aero-engine manufacturers, most recently Concorde and the RB.211 engine. Unless my eyes deceive me, the noble Lord, Lord Beswick, is today wearing his Concorde tie; I might have thought to wear mine.
Our alternative is the indirect one of the export of the technology itself which, in some sense, is equivalent to selling the seed corn over the hedge. Lacking, as we do, both natural resources and the ability to generate sufficient capital to exploit our own skills of invention and conversion, we shall, unless we increase our productivity very substantially, be forced back increasingly into the role of intermediaries. The continuing contribution made to both national and international welfare by the City of London is the best example that this role is neither unworthy nor unprofitable, but it is hardly enough to provide a rising standard of living for almost 60 million people.
It is now time for me to take a look at invisible exports—the sale of services to overseas customers. Again, this is a subject dear to my heart, but I shall say very little about it because others, I know, will contribute later, and also because, happily, the record is one of steady success. We must recognise that invisible exporters benefit most from sterling devaluation, both because there is a negligible import content in what they sell—so their sterling prices gain in competitiveness—and also because such of their earnings as are payable in foreign currency become worth more in sterling terms. My sole points, therefore, are of caution. Net invisible exports are currently worth to the balance of payments £130 million a month, in excess of £1,500 million a year. It is vital that

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these earnings be sustained, and indeed increased, and the 1974 report of the Committee on Invisible Exports—published, coincidentally, today, and recommended as the most cheerful reading on the economic scene—highlights the remarkable success of the City of London and other invisible exporters in retaining confidence during that difficult period.
Let me point to just one fact which I see the Financial Times has already picked up. According to Bank of England statistics, about half of the surplus of the oil countries for 1974—which amounted to between 50 and 60 billion dollars—was invested short-term in New York, London and a few other major centres. Of these deposits, London received four times as much as New York, mainly in Euro-currencies. This is a measure of what we would lose if the City of London declined as the world's main financial centre, which brings me to my caution.
London is a centre not only for our own financial institutions, but for branches and associates of international financial institutions across the world. Without them it cannot continue its success. There are more American banks represented in London than in New York City. Last year, the rateable value of premises within the GLC area increased by a factor of 2·5 per cent. Yet within this average the rateable value in the City of London increased no less than 4·7 times. I am not talking only of the obviously devastating effects on the profitability on domestic business but that there is nothing to stop international institutions from moving their European operations to Paris, Frankfurt, and Zurich and, faced with such penal increases, several are talking of doing so. It would be madness for the policy of the Department of the Environment—and it is their policy and not that of the City Corporation or the GLC—to drive these institutions out because the Treasury will be the chief mourner if they go. If the golden goose is too hard pressed, she will fly away and lay her eggs on the Continent.
Before leaving the topic of what we sell, one should ask where the scope for increase lies. Obviously, we should reinforce success by selling more of what
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we currently sell into existing markets. It is a matter of record that 64 per cent. of our visible exports are accounted for by the 200 largest export companies and no less than 55 per cent. by only 100 companies representing an enormous variety as well as enormous volume of goods. A good deal of this volume is in areas where the competition is fiercest—major construction contracts, machine tools, automotive equipment, arms sales and so on. These are handled by specialists with generally sophisticated sales staff who have been in the game for a long time and whose success is likely to depend more on price competitiveness, the capability of their factories to give favourable deliveries and the ability to quote favourable credit rather than it is upon identification of new buyers. Thus, while the volume of these exports is naturally vulnerable to general economic conditions, there is relatively little that is new to be said about them.
Often, though, it is difficult for these established exporters, whose voices are naturally most often heard in trade promotion circles, to appreciate how daunting it is to get into the export business for the first time. I believe that there is considerable scope for initiating the sale overseas of products which hitherto have been sold only domestically—and I am not talking only of the small firms. It is interesting to note that large and small firms have a similar overall percentage of export to domestic sales; so that the potential exists throughout British industry. But to get into exporting demands positive commitment. Half-heartedness, or withdrawal after a few months, is damaging to Britain's overall reputation as a trading nation.
There is an almost infinite number of first-rate products whose manufacturers have never tried to sell them overseas for a variety of reasons; most commonly perhaps from the feeling that they lack knowledge of export procedures. Such potential exporters can be enormously helped by local chambers of commerce and export clubs as well as by regional exports officers of the Overseas Trade Board and by the central mechanism of Export House, once they take the plunge and get in touch. Nor should the scope be overlooked for selling through the medium of established export trading houses which have an overseas turnover

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of some £2,000 million per annum and to whom the intricacies of export documentation are a matter of daily routine.
Once the plunge is taken, the water overseas often turns out to be more agreeable than expected. Firms wishing to expand their exports can also profit from overseas selling missions organised by chambers of commerce, trade associations, export clubs and the like. They benefit in three ways: by travelling and exchanging ideas with experienced exporters; through the aid of our overseas trade representatives in organising a programme which has their products in mind and, in approved cases, by receipt of a subsidy on their travelling costs. I should add a word of caution that it is increasingly felt that the days of the horizontal or general selling mission are over, except in exploring territories into which Britain sells relatively little. Greater impact now is made by specialised missions concentrating on areas known to fit the buying programme of the country concerned. This formula also enables local commercial staff to arrange a far more effective programme.
Naturally, we supply the highest percentage of the import needs of these countries with which we have the closest past associations where the bonds of language, education and sentiment give us a natural selling advantage. Conversely, we find the going is harder in areas such as in Francophone Africa where these advantages are enjoyed by others. Increasingly the destination of orders is governed purely by commercial criteria sometimes reinforced by a positive desire to diversify away from overdependence on a single national source of supply. There are many success stories of British products penetrating unlikely territories against the trends, given a good product and an enterprising sales approach. There are some lovely stories.
Your Lordships may have seen a few weeks ago the announcement of the incredible export award for 1974. Selling sand to Arabia is old hat. The 1974 award went to a firm who is selling tom-toms to West Africa and maraccas to Caraccas. In the same vein, in March I was asked to give the awards to the smaller exporters and there were some beautiful instances of what I mean. Chatting afterwards to the entrepreneur behind one of these companies I asked what was
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the total of his staff and he said: "Including the driver and the gardener, there are seven; and they are all in it."
My Lords, I wish to make two quick points under this heading. The first is that the more unfamiliar the territory the greater must be the initial reliance of the British exporter on official information and guidance, especially on the ground, from commercial officers. The need for such services is in some way inverse to the past British success. Secondly, there is no need to have a sales organisation covering the world in order to export successfully. Many success stories have arisen from specialisation, from building really good outlets in only one or two territories. This theme of concentration of sales effort was recently highlighted in a detailed report for the BETRO Trust suggesting that in many cases total sales overseas would benefit from coverage of few markets in greater depth.
Of course, the relative attraction of different markets changes. Currently, the major new potential lies with the oil-producing countries and in triangular deals matching their surplus funds with British technology and knowledge of third markets. To the OPEC countries, Britain's exports increased, 1974 over 1973, by 46 per cent. During that same year, the USA was up by 86 per cent., Japan by 100 per cent. and Germany by 79 per cent. Our main rivals were forging ahead faster than we. Japan and the USA were already well ahead. We were overtaken last year by France and Germany; and Italy is closing the gap. But I want to bring this up to date and to pay tribute to efforts subsequently; because if we compare the first quarter of 1975 with the first quarter of 1974, the picture is this. British exports to OPEC countries are up by 120 per cent. which—although exceeded by 131 per cent. for Japan—is now fully abreast with and, indeed, overtakes the 104 per cent. for USA and the 105 per cent. for Germany.
My Lords, so far I have looked at questions of commercial opportunity and judgment. As soon as we turn to questions of payment terms, however, we tend to find that Government policy is increasingly important. The first and obvious area is export credit. I should here like to say roundly that, however much it may be criticised when it fails to

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meet the full expectation of exporters, undoubtedly we have in the Export Credit Guarantee Department the best credit agency in the world. Certainly this is the view of those of our foreign competitors who should know something about the competition. For almost 50 years it has built up an armoury of new instruments, after leading the field, and has maintained its commercial underwriting integrity.
We have to remember that export credit cover beyond providing insurance against default in payment by the foreign buyer, is the key to special medium-term financing arrangements from banks. These credits are provided at a fixed rate of interest. Nowadays it is also a subsidised interest rate. The importance of this mechanism is of course that the Government control the rate at which banks may make medium-term export finance available under ECGD guarantee. The Government thus are also in a position, through restriction or withdrawal of credit insurance on political rather than commercial underwriting grounds, to control the availability of such credit even though there is no export/import bank which provides the funds direct. It is of fundamental importance that both exporters and our foreign customers should retain confidence that cover will not be restricted on political grounds.
Hitherto, those arranging to use export credit have not had to concern themselves unduly with the quality of their credit. "How much can I have?" "For how lone?" "At what price?". These have been the basic questions. The question of quality now has a new meaning. The buyer is concerned about the currency in which he is being asked to pay. It is a sad fact that, "You can pay in sterling", is currently one of our major selling points where substantial credit periods are involved, and many of us have a lingering suspicion that for the past ten years, during which our export interest rates have been relatively low, we have often been selling credit as much as selling goods. It is evident from a national point of view that to offer credit for five years and more at a subsidised rate in terms of currency likely to depreciate relative to that of the buyer represents a massive discount on a cash selling price before even considering any
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further subsidy implicit in an indemnity for cost escalation. As one who has been engaged in assisting British exports by arranging such credits, I am naturally reluctant to suggest a restriction when competition demands that we match fully the terms offered by our rivals, but obviously there is a limit to what nationally we can afford to do. May I draw attention to another option, which is that of invoicing sales in the buyer's currency rather than in sterling. In the case of strong currencies, for which a forward exchange market exists, it can assure the exporter of a fixed benefit.
I turn finally to export promotion and the methods which may be employed to promote or encourage further exports. Let me say at once that I am making no demand for complicated, costly or contorted new Government services. Indeed, I have some concern, despite the current British inflationary problem in securing longer-term business in the face of fixed price competition, that we have already gone too far, especially in devising that subsidy to major foreign buyers which is politely described as "cost escalation insurance". Before I am accused of disloyalty or worse, may I make it clear that the advice given to and accepted by the Government to adopt this scheme was formulated before I joined the Trade Board, and I have never disguised my personal dislike of the scheme on two grounds. The first is that just as one can subsidise the price of bread and then declare that the rising cost of living matters less, so one can subsidise exports, and having also removed the discipline of a fixed parity by floating the currency, can then be persuaded that there is less urgency in dealing with the fundamental problem of an inflation rate higher than that of competing countries. It cannot be too strongly stated that such a form of export promotion is merely a palliative, whereas if the inflationary disease were cured the need for the subsidy would disappear as exporters pursued their profitable opportunities unassisted.
Secondly, I am uneasy because, for the first time since the introduction of this scheme, along with other recent proposals for insuring pre-shipment finance and also recourse liabilities on major contracts, ECGD is being asked to administer policies written other than on sound underwriting criteria and its commercial

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independence is thereby diminished. Difficult times demand stern measures, so I shall say no more on that; but we must beware of going too far. I am glad to learn at least that it is proposed to keep the accounting for these new schemes quite separate from ECGD's traditional commercial underwriting.
Before I sit down I must say something about the function of the work of the British Overseas Trade Board. It is, I believe, winning more friends, but it still has critics. The first group consists of those who gave their time to the predecessor body, the British National Export Council, who disliked the fact and the manner of its demise, and who find it hard to think well of the successor body. Being myself an old BNEC man, as are many others on the BOTB, I sympathise but can only affirm that now the new regime has settled down we find our new involvement equally worth while.
The second group criticises the Board for sitting somewhere between Whitehall and private industry, yet belonging to neither. In so far as it may still be failing to relate effectively to either, then the criticism must be accepted. But the very concept of the Board is to operate as the link between the two and the criticism betrays a misunderstanding. The BNEC gave advice to Government on matters needing action by Government. The BOTB can give advice no less forthright, but based on direct Whitehall briefing as to facts and options. And unlike BNEC, the Board is an executive body concerned with making the best use of budgeted Government spending of £13·4 million on direct export services, which rises to over £38 million a year if all related salaries are included. BNEC never claimed perfection, but it was very good, thanks largely to those like my noble friend Lord Pritchard, who devoted so much time and effort to it and made it work so well. The Trade Board is different and may arguably be more effective in today's conditions. At least it is now attracting comparable support.
The last group of critics considers the Board to be simply irrelevant to exporting. I suspect that few of them are aware of what it does. This in itself is valid criticism and I can now confess my own misgivings about the original "low profile". The Board is now raising its profile consciously and considerably,
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being determined (and eschewing exhortation) to make its many and varied services better known. Its own membership has been strengthened, and a primary purpose of the creation of the British Overseas Trade Advisory Council, which held its initial meeting a fortnight ago, is to strengthen links with the Board's own area advisory committees and with other representative bodies themselves active in the export field, such as the Institute of Export.
Here is a challenge. At the other end of this bridge of communication about export services and export opportunities lie the companies, substantially private but public sector also, which must win and execute the export orders. I believe that all of us with responsibility for industrial management or the provision of export services have a duty to explain much more clearly than hitherto to all concerned—and I mean all, including shop floor packers, typists and documentary clerks, any of whom can frustrate promising business—just what is involved, personally for them as well as for the country, when export business is secured. And perhaps even more, to explain what is involved if it is consistently lost. We need a much broader commitment to succeed. This could be the foundation for confidence to make vital investment.
I am reinforced in this comment by the knowledge that my noble friend Lord Redmayne, had he not been obliged to withdraw from the debate for very topical reasons, would have stressed it also. Some firms already send shop stewards on visits to their export markets. It is the intention of the Trade Board to seek substantial shop-floor involvement in its forthcoming regional export conferences. And at the national level, bodies like the Overseas Trade Board (whose new chairman Sir Fred Catherwood has self-evident credentials) and the Association of British Chambers of Commerce could and should contribute to longer-term constructive planning through membership of NEDC.
I have one final question, my Lords. What innovations could or should the Government undertake to bring about export growth? Organically, some would advocate an Export-Import Bank rather on the lines of the United States model. Personally, I am unconvinced that Government involvement in the provision of

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export credit would offer any new benefit and perhaps the implications for public borrowing are unlikely to be appealing just now. Then there are advocates of sweeping change in Ministerial responsibility for export, particularly for the creation of a Ministry of International Trade, as in Japan. The noble Lord, Lord Kissin, has been kind enough to write to me putting a detailed case about this, and, lacking time to do it justice, I should like to send the letter to the noble Lord, Lord Beswick, for his consideration. This is an option which should clearly be kept in mind, but my own verdict currently would be "not proven".
What Government alone can initiate—and I make no apology for stressing this—and what Government must do urgently, with the broadest possible support from all responsible groups, is to push through the tough measures necessary to control inflation and create confidence associated with a steadily, albeit slowly, expanding economy so that exports become self-promoting. No task is more important today. My Lords, I beg to move for Papers.
3.41 p.m.
Lord BESWICK: My Lords, the noble Earl was good enough to remind us of his exceptionally wide experience in the export business, and his knowledge puts us additionally in his debt. He made some most useful and constructive suggestions in the course of his speech. They certainly must be considered by the Department, and I imagine that they could be profitably studied by potential exporters. I am grateful to the noble Earl for moving this Motion, because it gives me an opportunity of paying tribute to British exporters for the contribution they are making to the national economy. The noble Earl at the outset was, I thought, inclined to be a little gloomy, but the exporters have helped us to achieve a major and welcome improvement in the current account deficit.
The noble Earl was concerned to put the story, as he said, in perspective, and since it is an encouraging story in perspective perhaps I may start a little earlier. In 1974, in the aftermath of the three-day week and the burden imposed by the rise in oil prices, the visible trade deficit soared to over £5 billion. Nearly half this deficit was the direct result of the
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deterioration in the oil trade deficit, but rather more than half was a deficit on trade in other goods. The 1974 deficit resulted from a 17 per cent. worsening in the terms of trade, only partly offset by a 7 per cent. rise in export volume, as compared with a 1 per cent. rise in import volume. But during 1974 there was a marked slow-down in the rates of increase in import prices as the growth in world commodity prices abated, and a lower level of domestic activity resulted in a gradual decline in the volume of deliveries. Export prices, on the other hand, continued to surge ahead, leading to an improvement in the terms of trade from around the middle of the year.
In 1975 the picture has further improved. In the three months to May, the lower oil deficit and a much improved position in non-oil products helped cut the overall deficit on visible trade to £424 million, less than half the deficit in the previous three months and well under a third of the deficit in the final quarter of 1974. This trend in the volume of exports has held relatively level, despite the general recession in world demand, while the volume of imports has fallen away rapidly. Coupled with this has been an improvement in the terms of trade: export prices have risen by 4½ per cent. against an increase of only 1½ per cent. in import prices.
As the noble Earl said, our export trading pattern in recent months has been marked by the lack of growth in deliveries to the developed countries. This reflects not a lessening of effort on our part but a depression in most of those markets. But a turn-round has been achieved in our trade with the oil exporting countries where, in the first five months of this year, our exports covered nearly two-thirds of our imports. This has been partly due to a fall in oil imports but also to a very welcome rise in the value of exports of more than 120 per cent., as compared with a year earlier. I think the noble Earl said that the Germans had done even better, but if we take the quarter upon quarter position he will see that in the first quarter this year we have just surged ahead of the Germans in percentage growth.
I cannot conclude a review of export performance without paying my tribute to our invisible exporters. As the noble

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Earl said, it is a record of steady success. In 1974 there was a surplus on invisibles of nearly £1,500 million, as compared with the £1,200 million in 1973. Despite difficult trading conditions, the surplus this year is estimated to be running at around £120 million a month. These efforts, in which the noble Earl has himself taken part, deserve to be recognised and applauded.
The trend, therefore, is satisfactory. Last year our current account deficit was nearly £3,800 million and in the last quarter of the year it was just over £1,000 million. In the first five months of 1975, the deficit was just over £400 million—less than a quarter of the total for the same months of 1974. This is a substantial achievement, but I absolutely agree with the noble Earl that whatever satisfaction we might get from this recent achievement, we cannot afford complacency about the future. In the period ahead, the growth of our exports will turn critically on the recovery in world trade. Given the scale of the reflationary measures taken in the United States, the recovery there should shortly be under way. The expansionary measures taken in West Germany. France and Japan, though fairly modest, should also help.
Lord HARMAR-NICHOLLS: My Lords, may I intervene to make a point regarding our export potential. The noble Lord has just paid a very deserving public tribute to the invisible income in terms of our earnings. Could he use the influence of his Department to try to persuade the Treasury not to put so many obstacles in the way of what they call "unearned incomers"?—because it is they who provide the invisible exports to which we are now paying tribute.
Lord BESWICK: My Lords, I shall certainly note what the noble Lord says. I was going on to say that there is reason to expect that the growth in world trade, in our view, will begin to be rapid after about the turn of the year. There is no doubt about the potential capacity of manufacturing countries, but we can also expect the imports of the oil producing countries to remain the fastest growing element in world trade for some time yet. Our ability to take advantage of these opportunities will depend, as ever, on the design production and marketing of competitive goods and ser-
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vices. There will be a particular need to adjust further to the substantial shift in the pattern of world trade, though this must not involve a lessening of effort in major traditional markets, including the rest of the European Community. All will agree with the noble Earl that there is much to be done at home before we can be properly equipped to meet this challenge ahead.
I agree with the noble Earl unreservedly that the overriding need is to curb inflation. This is central to all our economic problems. It undermines business confidence, affects investment and employment, has a direct and damaging impact on our competitiveness, and constitutes the most important single threat to our export business. Our customers have no wish to import inflation and generally have the remedy of buying from alternative sources. There are limits to the possibilities of offsetting the effects of inflation by escalation insurance schemes which, welcome as they may be to some, are, as the noble Earl said, essentially palliatives.
Even continued depreciation of sterling, were it tolerable on other grounds, is not a satisfactory answer for exports. It adds to the uncertainty about forward prospects and directly increases the cost of many essential materials and components. We all have a duty to support and share in the fight against inflation. Accepting the inescapable need to stem inflation, what more has to be done? If we are to exploit the trade recovery, we must also ensure that the necessary physical capacity is available to deliver the goods quickly. We have not done this in the past. Now is the time to make selective investment if future opportunities are to be used to the full.
Our case for the Industry Bill, for which I shall invite a Second Reading tomorrow, is that the National Enterprise Board and the operation of planning agreements will help get our industrial effort on to a more competitive base.
Lord HAWKE: My Lords, may I ask the noble Lord one question? The noble Lord is anticipating a trade boom in a year or so. In previous trade booms we have always been caught napping, because the raw materials were not in this country; they were abroad, and as the boom progressed we had to pay higher

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and higher prices for our raw materials. Is there any method of anticipating the trade boom by buying the raw materials which are now at rather low prices?
Lord BESWICK: My Lords, I know there are companies in the country which are not unaware of the difficulty to which the noble Lord refers. I was going to say what I thought ought to be done, but I am bound to tell him that I do not have a special note of that. It is a useful point and I will see that it is considered.
In the meantime, the Chancellor has recognised the difficulties facing companies and has taken practical measures to alleviate them. In part, this is an answer to the point put to me by the noble Lord, Lord Hawke. For example, the stock appreciation relief scheme, which will involve total transfers to industry of about £3·8 billion, of which £1·3 billion will be available in this financial year, will be helpful. In his April Budget, the Chancellor also announced that £100 million would be made available for selected industrial investment projects and this measure should generate additional investment by industry of some £500 million to £600 million. But as well as the volume of investment, higher additional output for each increment of resources devoted to manufacturing investment is both possible and necessary. I hope to say something more about that when we consider the Industry Bill tomorrow.
Another requirement is that output should not again be limited in vital industries by shortages of skilled labour. This is a point to which my attention has been drawn more than once as I have travelled about the country. There is a tendency for firms to reduce training levels during a recession, and in his April Budget the Chancellor therefore allocated an additional £20 million in 1975–76 and r30 million in 1976–77 to the Manpower Services Commission, for the purpose of accelerating the growth of the training programmes of industry and of the Training Services Agency. Overall the best form of assistance to exporters is the creation of a healthy industrial and commercial sector, but there is a valuable contribution to be had from Government sponsored export promotion services. In certain markets, as I think the noble
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Earl recognised, including the oil producing countries, official assistance to exporters has become particularly important.
The British Overseas Trade Board, of which the noble Earl is a member, directs a very wide range of services and overseas promotions for exporters provided by the Department of Trade. It ensures that in the development and management of its services, officials of that Department, whose task it is to administer the services, have the backing of an experienced body of businessmen. It is able, too, to draw on the experience of a large number of other businessmen who serve on the Board's area advisory groups which cover virtually all the markets in the world where Britain trades. Much store is set by the two-way traffic of information and ideas between Government and industry.
The Secretary of State for Trade has recently extended this area of consultation and discussion by the creation of an Advisory Council, which consists not only of members of the Board and the Chairmen of its area advisory groups, but also representatives of various other bodies concerned with our export performance. The TUC, the CBI, the ABCC, export clubs and a number of other national and regional bodies are among those represented on the Council. In addition to holding regular meetings, members of the council will be available to the Department of Trade and the Board to give advice on a day-to-day basis and to take part in various export promotion activities from time to time.
In the current financial year, the BOTB's direct budget will total just over £14 million, over 85 per cent. of which is on support for industry in overseas promotions. Last year, the Board's staff were in contact with some 15,000 British exporters and answered over a quarter of a million inquiries about overseas marketing conditions. This year demand has risen strongly, and is running at some 50 per cent. above the level of a year ago. This appears to confirm what the noble Earl said and is convincing evidence that industry attaches value to BOTB services, and of industry's current determination to seek and obtain additional export business.
The Export Credits Guarantee Department's support to exporters is equally

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well known and valued. It remains Gov ernment policy that the general package of facilities available from the ECGD should stand comparison with that avail able to exporters in our competitor countries from their credit insurers. The ECGD currently provides credit insur ance for some 36 per cent, of United Kingdom exports. During 1974–75, the ECGD insured exports to a total value of £6,535 million. This was an increase of 36 per cent, over the level of exports insured in the previous financial year. More satisfactory still was the 42 per cent, increase in insured exports on cash or short credit terms.
It remains our intention that the sup port offered by the ECGD should be flexible and that, where this can sensibly be done, it should be adapted to reflect changes in the competitive world of exporting. In the last few months, the ECGD has introduced two new facilities; first, a form of protection against the effects of high and unpredictable cost escalation; and, secondly, cover to support performance bonds for cash or near cash contracts. While accepting what the noble Earl said, that these schemes are no substitute for con trolling inflation, they provide a welcome form of assistance to exporters. This has been amply shown by the demand from exporters for these facilities. Both schemes will be kept under review and the contract value guideline for ECGD support for performance bonds was re cently reduced from £20 million to £2 million.
The introduction of these schemes has especial relevance to major overseas con tracts in oil producing countries. Much of this business is under Government control or influence and inter-govern mental co-operation is of the utmost importance to the business effort. The Secretary of State for Trade has him self travelled widely in these markets to inform himself at first hand of the range of opportunities and the scope for Government help. We have also regarded as a priority the strengthening of inter governmental relationships. In appropriate cases we have set up joint com mission arrangements, on the lines of those which have operated successfully in recent years with the USSR and Eastern Europe, with Iran and Egypt,
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and we are negotiating similar instruments with a number of other countries. By close relations with other Governments and joint working between our own Government and industry, we aim to identify and create new opportunities for British industry and to monitor closely the progress of projects in hand or which we hope to develop.
Changes have also been made at home. A new division specifically for the Middle East has been created in the Department of Trade to co-ordinate the official effort. Changes have also been made to the organisation of the overseas project group of the BOTB which should give it more impetus and enable it to work more closely with industry, particularly on the increasing number of projects where the overseas customer is looking for a single British bid. We are also seeking to harness more effectively the experience and expertise in the public sector. We see an extended role for these organisations in assisting, or even leading in certain cases, the British effort to win major contracts.
To summarise, we can look back with some satisfaction to the recent achievements of our exporting firms. They have given us a base from which we can do more, both to seize the immediate opportunities in the OPEC markets and to meet the challenge of the revival of world trade. There are formidable, but by no means insuperable, problems to be over come, but with co-operation at home and abroad between employers, employees and Government we can solve them. Above all, we shall need to solve the problem of inflation. But, given confidence that we are moving towards a stable currency and given the full utilisation of our national skills, we can more certainly assume the improvement for which the noble Earl asks in his Motion.
4.3 p.m.
Lord CARRINGTON: My Lords, the Motion of my noble friend is welcome. Doubly welcome, I think, is the well-informed speech with which he introduced it. The noble Lord speaks from great experience of these matters and had a number of constructive suggestions to make which I hope the Government will take into account in the future when thinking about and reading this debate. Welcome, too, is the decision of the noble Lord, Lord Pritchard, to take part in this

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debate. He has had, and is having, a very distinguished industrial career. In addition, he has made a particular speciality of exports and of being concerned in them. The House is very lucky to have in my noble friend a new recruit who is so well qualified to take part in this debate.
The whole House appreciates and accepts the need for increased exports if this country is to survive in an increasingly competitive world. Indeed, there is nothing new about us accepting that. In earlier Elizabethan times Lord Burghley once said,
"Nothing robbeth the wealth of England but when more merchandise is brought into the Realm than is carried forth".
And so say all of us! The difficulty, however, about such a Motion as that of my noble friend is that, when one is asked to discuss anything so self-evident, the debate is inclined to deteriorate into a declaration by all concerned of a belief in goodness, beauty and truth. We are all against sin. I am not at all sure that there is a very great deal more that the Government in their own right can do to help in the matter of exports. They can put a number of obstacles in the way of exporters, but the positive steps which they can take are fairly limited. All Governments, therefore, should beware of taking upon themselves the credit for increased exports. That is not to say that we as a country have reason to be totally dissatisfied with our export record since the war. Compared with many of our neighbours, I should not have thought that our performance has been bad. On the contrary, in some fields it has been very good. The difficulty is that we need to be better—and much better—than most of our friends if we are to increase our standard of life.
I said that there are certain areas in which the Government could actually impede exports; and there is no doubt whatever—as, indeed, we have all said—that the most important factor at the present time is the incidence of inflation upon our competitiveness. This is not the occasion for an economic debate, but the recent good export figures which are due in part to the fall in the cost of raw materials will undoubtedly fall away as the inflationary pressures in this country—notably labour costs—take effect and
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price us out of the market. Everybody so far has said that, and no doubt everybody will say it in this debate.
It would not be too much to say that our economic future depends upon the success of the Government's measures, which I understand will be announced later this week. If they fail to curb inflation, if they fail to reduce the percentage increase in wages, then no exporter, however able, however competent, can be expected to compete. The Government must also have some regard, although the balance is obviously difficult, to the maintenance of a sufficiently buoyant home market, both to enable investment for the future and to encourage exporters. There can be very few companies which can live by exporting alone, although there can be very few which, if given the right climate, cannot export more.
It is right to comment here upon one area of our exporting record. When one examines the figures it is very significant that one sees that credits on invisible account rose faster between 1964 and 1974 than exports of goods. For example, in the last quarter of 1974 invisible trade credits—which includes interest, dividends and profits—amounted to 63 per cent. of the total value of our goods. Too frequently, I think, action to improve the export of goods is inclined to act adversely on invisible earnings in which Britain still retains a comparative advantage, and because they are invisible people seem to forget about them. Certainly, credit is not given sufficiently to those activities which make up our invisibles. For example, last year invisibles were responsible for £2,700 million of our exports, and of this over £700 million was due to the City.
I believe that there is one way in which possibly the Government could help rather than hinder. For example, the Government could help by not introducing Bills like the Policyholders Protection Bill, which in its original form would have had serious disadvantages to the insurance industry. Incidentally, thank goodness for the House of Lords! But on the positive side there might be something to be said for bringing the overall sponsorship of invisibles under the aegis of one Minister; at the moment there are, I think, at least two. The Committee for Invisible Exports made

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this suggestion, but I do not think that there has been any response to it.
Generally speaking, however, the Government are inhibited from taking positive action to help exporters by the various international agreements to which we are party—GATT, the European Economic Community and so on—and it would not be right for us to circumvent the obligations into which we have entered. Perhaps it is not entirely irrevelant to suggest that there are others who seem to be a good deal less delicate than we are in their approach to their obligations. I know that this is difficult to prove but I have a deep-seated suspicion that there are countries which, if not actually contravening their obligations, are certainly going very near the bone. It is always galling to be the good boy when a number of others seem to be the bad boys. The sanctions policy in Rhodesia seems to be a related point.
One thing we could ask the Government to do is to examine very closely those classes of imports from those countries which we suspect. Motor cars and textiles are two possibilities. We have a right to an assurance from the Government that they take this matter seriously, and however difficult it may be to prove these allegations they should inquire very carefully into them if there is any suspicion of contravention. If, as I think probable, our export performance slips during the latter part of this year, partly because of inflation and partly because recently our good balance of trade has been helped by destocking, by the mild winter and by the fall in imports due to the recession in this country, there is an even greater need than usual to encourage exporters.
I remember nearly 20 years ago when I was High Commissioner in Australia, there were far too many cases of British businessmen relying upon the traditional market and descending, as it were, from above with an attitude, if not of condescension, certainly of "take it or leave it", and that was, of course, an attitude which derived from our imperial past. Until 25 years ago we did indeed have a captive market in countries which, if not obliged to buy from us, were at any rate in some difficulty in doing anything else. Of course that was very agreeable. A captive market is splendid; not
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only do you not have to worry too much about the quality of your goods but you have an assurance of production which makes life easier for all concerned. But that era ended a long time ago and I do not believe that the sort of attitude which I encountered from time to time in Australia now exists. There has been a considerable shift in attitude.
Harold Macmillan once said that exporting was fun and that was one of the few remarks he has made with which I profoundly disagree. Exporting is not fun. In some cases it is very hard work and, in some cases, it is not as profitable as selling in the home market. But the fact remains that over the years, due to successive Governments, public opinion and industry generally have come to realise the need to export. But despite this realisation I sometimes wonder whether British firms are as aware of the need for high-class representatives abroad as are our competitors, or are prepared to send their representatives for sufficiently long periods to countries where contracts might be available to make the necessary contacts and to familiarise themselves with the problems of that country.
I remember on a recent trip abroad one British Ambassador told me that, in the country in which he was, only one British company—and I will name it, since let us give credit where credit is due and I am not in any way connected with it; it was Guest, Keen and Nettlefold—had sent men of sufficient standing for long enough periods to ensure the winning of contracts. The Ambassador went on to say that in too many cases British companies sent representatives for a very short period who were not of the seniority required to deal with Government Ministers or the functionaries who play such a large part in the placing of contracts in so many countries abroad.
When talking the other day to the export director of a company of which I am a director, he told me, naturally, that he placed the very highest priority on sending exports sales managers out into the world market to generate business and he said that he never expected to see more than 20 per cent, of his export managers team at their desks in London on any one day. He went on rather ruefully to say that this was an extremely expensive

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business and that there was one thing the Government might consider doing. I will ask the noble Lord who is to reply whether he will be good enough to pass on this idea. He understood the purpose of outward missions which are, I think, sponsored by the Department of Industry for those who are eager to establish themselves in export markets, but for those who are already established in export markets he thought it would be much more useful that there should be some sort of Government travel assistance which would reimburse companies, say, half the annual expense which is incurred in the effort to seek a higher level of export sales. I think it would be generally agreed that it would be wrong if the cost of travel for the export management team were to be the inhibiting factor because of the depressing effect of profit margins which now exists in British companies. Better quality men, more frequent and longer visits are, it seems to me, an essential element in our export drive.
I read a very convincing pamphlet the other day in which it was argued that investment in several hundred export salesmen would, in fact, be more effective than a 12 per cent. devaluation, and of course with none of the adverse effects that devaluation brings. To some of us who travel a good deal, either on politics or on business, it is sometimes a puzzle—and the noble Lord, Lord Beswick touched on this—that there are products from Britain which it is almost impossible to obtain abroad. Of course one knows about strikes and about difficulties in regard to delivery, and all that is greatly to be deplored, but may I take one example of a company which has recently been in the news, British Leyland. Land Rovers, Range Rovers, Jaguars, could be sold in very large numbers, if they were available, almost everywhere in the world and yet people cannot get them. I cannot believe that the reason why they are unobtainable is not, at any rate, in part due to the lack of investment in production facilities and a lack of foresight. In this country for whatever reason, whether it be lack of cash or lack of confidence, it is sad to see opportunities of this kind wasted when we have products unrivalled in the rest of the world, and I am afraid I must tell the noble Lord, Lord Beswick, that I am yet to be converted to the idea
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that the Industry Bill and the NEB will help in this respect.
But if one looks at exports commodity by commodity it is noticeable in this field of transport industries that they have done comparatively badly; for example, if you look at the figures for them and for the chemical industry. It is equally true, as has been said, that exports to the Middle East, though showing a considerable percentage rise are nothing like so dramatically increased as those of Japan, the USA and Germany. I was glad that both my noble friend Lord Limerick and the noble Lord, Lord Beswick, referred to this. I hope the Government might look particularly at this area and that there might be something to be said for a programme of trade promotion in this area.
But, my Lords, in the end the success or failure of our export trade will depend on the Government's actions in this next week or so. We have talked about the pressing need to reduce inflation: if we do not reduce it, we are sunk. The Government will have to go very carefully about price control. Although it may appear to be an attractive political weapon (if one may use the phrase), if the Government impose even stricter price controls there will be greater pressures to squeeze increasing profits out of exports, and that would be disastrous since our competitors operating without our appalling rate of inflation will exploit their ability to offer equal quality for a lower price.
Finally, my Lords, let us consider for one brief moment the consequences of the downward drift in sterling. Those who say that exports are encouraged by the higher profit margins which sterling devaluation might allow ignore the influences which I think are becoming increasingly important of quality, of design, of service, of salesmanship and, above all, of delivery dates and reliability. As the pound falls our imports of raw materials rise and cost us more in real terms. There must be some end to this and we await the package to be produced by the Government upon which the success or failure of our export policy must in the last resort, depend. But, my Lords, whatever that may be let us be resolved, on whichever side of the House we sit, to do what we can to ease the burdens of the exporter.
4.20 p.m.
Lord PRITCHARD: My Lords, as your Lordships can imagine, I rise in great humility on this first occasion of my speaking in your Lordships' House; and I crave your Lordships' indulgence. If I may, I should like to begin by thanking very much the noble Lord, Lord Carrington, for what he said about my humble efforts in exports. His remarks were undeserved by me. I was lucky enough to lead a great team and to follow a great founder in the noble Lord, Lord McFadzean, who more than myself contributed to this important area of British economy. I wish to apologise to the noble Earl, Lord Limerick, because I missed just a few of his opening remarks. However, I got the gist of the argument earlier this morning when I was unsuccessfuly battling with my own humble contribution.
With the leave of your Lordships, I would make three points. First of all, as the noble Earl said, there is no room for complacency in our export efforts. Indeed, it is a non-political, purely British operation to which everyone in the country, whoever he may be, whatever are his ideas, should give his greatest possible efforts, because on this our livelihood depends. There is a great need for action not only in all the export markets of the world, but also in our own home market, because saving imports is just as valuable in many ways as exporting. As the noble Lord, Lord Carrington, was saying, it is essential that people both here and overseas should be able to buy equipment such as Range Rovers, Jaguars and other things which are in short supply, for reasons that I hope the Government, in their very difficult period ahead, will be able to overcome.
My Lords, the noble Earl also drew the attention of your Lordships to the fact that, while imports have fallen recently both in value and volume, a substantial part of our imports is basic materials, which indicates to some extent a destocking by industry. This is serious. This is due to a number of reasons, not the least being the shortage of finance needed during the period of processing those raw materials, and building up stocks against the time of market demand. An upturn in world trade is reliably forecast to start next year, but will British industry have the stocks ready to take
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full advantage of this? It is vital that this preparation is done now. There could be a case for Her Majesty's Government exploring the need to improve facilities for financing short-term exports and preshipment problems due to liquidity difficulties which industry is experiencing at the present moment in both large and small companies.
As the noble Earl, Lord Limerick, said, the Export Credits Guarantee Department is one of the great successes of Governments and provides a tremendous service to industry, but this area before the goods reach the docks is naturally and rightly outside its scope. There may be need for some investigation to see whether industrialists who are tight for cash have an opportunity of at least obtaining what they need on as favourable terms as some of our competitors. One of the things British exporters have lacked for quite a long time is a national shop window in which to show and sell their goods to overseas buyers. We should thank Her Majesty's Government and the noble Lord, Lord Beswick, and, indeed, the former Government, for the new National Exhibition Centre which I understand is to be opened in Birmingham next February. This will be a very great strength and a very great help to exporters, both present and potential. It will give some of the smaller firms the opportunity of dipping a toe in the water.
My Lords, I strongly support what was said by the noble Earl, Lord Limerick, that it is no good anyone going halfheartedly into exporting. As we used to say in the Army, reconnaissance is never wasted. It is in support of that that we should have such a centre. But the only real form of salesmanship is to get out into the market places of the world and to see for yourself. By "yourself", I mean the person who can make decisions in the company, not a junior. One should see what is wanted, at what price, in what quantities, and what is the method of distribution. One should then come back and make what the customer wants to buy, not what we necessarily think he ought to buy.
That, my Lords, brings me to my second point. I myself spend about half my working time on the Continent and abroad, so I constantly see British goods through the eyes of the consumer. Our greatest weakness is still our lateness in

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delivery, our falling down on our promises. Second only to this perhaps, particularly in capital goods, are our attempts during negotiation of a contract, and sometimes afterwards, to alter the terms to suit ourselves, which naturally does not go down well with our customers. We do not always face up to the fact, as we should, that the world is a buyers' market. We may place the blame for breaking our delivery dates on industrial or shipping disputes; we may excuse our unwillingness to tie ourselves down even to short-term contracts on our rate of inflation, but as your Lordships will know better than I, the world does not owe us a living. If we cannot match what our competitors can offer, we will lose business. The sooner this fact is learned and understood by management, by Government, by the shop floor, by the public, the better it will be for the nation.
If I may make a quick aside, it is as well for exporters who let down their customers, or feel that they are going to, with regard to deliveries, to telephone the customer, wherever he may be, and especially if he is in Australia. It is as well if the exporter can explain to the customer the reason for the delay and to give him as much notice as possible. This is much better than either a cold cable or a tardy letter. It softens the blow; helps the customer to delay other production, to come in line with our own supplies, or make other arrangements. At the least we hold his good will.
My Lords, thirdly and lastly, may I congratulate the Government on the prompt way in which they have implemented the Montagu Report by the setting up of the British Overseas Trade Board Advisory Council under the chairmanship of the Secretary of State for Trade. More has been clone to restore confidence, to close the gap between industry and the Government than has happened for a long time. It is not that industry is against co-operating with the Government, but just that they do not always understand. To my mind, the measures recently taken will make a very big difference in that connection.
The remarks of the noble Earl, Lord Limerick, about the British National Export Council were kind. I can assure the noble Earl, and the Secretary of State
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for Trade, and also Her Majesty's Government, that every member of the BNEC in the past, and every member of industry in the present, has nothing but admiration and support for the British Export Board. We wish it every success in what we know is a very difficult role.
There is one final point I would add, and this is something that helped us tremendously in those old BNEC days. We were lucky enough to have as sponsors four distinct sectors of industry: the Government, industry, the City of London, and, most important of all in my humble opinion, the Trades Union Congress. I believe that today it is vital that we involve the workers on the shop floor and in the offices in the whole of our export efforts, that they not only are given lip service but that they are taken into our confidence, enjoined in our plans; that they come overseas with us, whether it is an individual company mission or a Government sponsored mission; that they see at first hand the problems we face, the need for urgent deliveries, the importance of not breaking our word, so that they can then come home, and whether it be in the office or in the factory, they can convey the same enthusiasm to all their colleagues not only to meet exports but to win the battle for Britain.
4.31 p.m.
Lord AUCKLAND: My Lords, it is a very special personal privilege for me to be the first to congratulate the noble Lord, Lord Pritchard, on a particularly distinguished maiden speech. Over the years in the field of both visible and invisible exports the noble Lord has contributed an enormous amount, in the brewery industry, in the insurance industry and elsewhere; and his record in both peace and war is one which is the envy of many of us. In these particularly difficult times, with the problems of inflation and otherwise which this nation faces at the present time, it is particularly delectable that we should have somebody of the noble Lord's experience joining this House and contributing such a very distinguished maiden speech. I know it would be the wish of noble Lords on all sides of the House to hear the noble Lord's wise and practicable words again before very long.
My Lords, my noble friend Lord Limerick has performed a most useful

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service in initiating this debate today. As my noble friend Lord Carrington mentioned, the expression "Exporting is fun" will be taken rather cynically by those who have been actively engaged in this field. I have had, and indeed still have, business connections in two fields where export is concerned: one is insurance and the other is management consultancy. It is a rather traumatic thought that at the present time, certainly in the management consultancy organisation with which I am concerned, practically all our contracts are overseas, there is very little demand in this country. Indeed, one of my colleagues returned recently from a successful visit to Brazil, and we are currently negotiating with Finland, where I have had some experience and to which I should like to refer again in a moment.
The field of invisible exports is certainly not one to have received the share of credit to which it is entitled. I know it has been fashionable over the years to attack the City of London. As one who has worked in the City of London since 1948 I am bound to say that part of that is the City's own fault. Its image, if I may use that very over-used word, has not always been projected in the most practicable, or perhaps even the most discreet manner. If, for example, one takes the insurance industry, in 1973 invisible earnings from that industry, much of it from Lloyd's of London, were nearly £400 million. I go back to the mid-1960s, when I was a working member of Lloyd's. Then, as I know to my own cost—and other Lords will be in a similar position—due to certain catastrophic disasters through hurricanes, the insurance industry, and particularly Lloyd's and those connected with Lloyd's, suffered some grievous losses. The then chairman of Lloyd's, to his eternal credit, did not merely sit in the boardroom and weep, as he was fully entitled to do; he went out to attract new business. He went to America, he went to Australia, and he went elsewhere. Gradually, since then, Lloyd's has pulled itself round and is now contributing most valuably to the invisible export industry. Last year the chairman of Lloyd's went with a strong team to Scandinavia, a part of the world where I believe there is enormous potential still to be tapped in the export field, because this country and Scandi-
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navia over the years have had enormous rapport. They went to Oslo, to Copenhagen and to Helsinki, a city of which we hear all too little. The visit brought very favourable results.
My Lords, what then are the problems facing exporters? I suppose it is always easier to talk about problems than about a fait accompli. Only the other day, in preparation for this debate, I was talking to the director of an international bank, and he was particularly keen that I should raise some of these problems before Her Majesty's Government. He mentioned that not sufficient pressure is brought to bear through diplomatic channels when contractual obligations are not met by overseas customers or suppliers. I think there is strength in this complaint; but I should like to make it quite clear that I am certainly not criticising our commercial counsellors overseas—very much the contrary. At such times as I have travelled abroad I have found our commercial counsellors to be unfailingly co-operative. As has been pointed out to me, what is absolutely essential is that people who are going out on exporting missions, whether with a chamber of commerce, in a small party or as individuals, should give as much notice as possible to the Embassy concerned and as detailed an account as possible as to what they want, who they want to meet, and what is their general purpose.
Another criticism made was that there are no tax advantages for firms willing to take the added risks of exporting. This may be a bad time to ask for too many concessions there, but of course if we are really seriously to increase our potential in the export market—and I think particularly of invisible exports, which do not, in my submission, get quite the same perks as the visible ones—the Government should at least look sympathetically at this point.
The other point is that there are no foreign exchange guarantees or incentives. Anyone who has had, or has tried to have, any dealings with the COMECON countries knows the problem there, particularly with a country like Rumania which is consistently asking to do more business with us even though the terms of trade are heavily in their favour at present. The

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problem of exchange controls is a real one.
Then a pretty voluble criticism was made to me by a director of one of our leading breweries—I may say not the one with which the noble Lord, Lord Pritchard, has had a distinguished association. It was a very scathing criticism of some of our Embassies and the difficulty of getting en rapport with them. I make this point purely because the person concerned has had a lot of experience of travelling overseas. I must say, speaking purely for myself, that I have not come up against this problem, but it arises at times.
One of the directors of the company with which I am associated went recently to Teheran. Such was the difficulty of telephonic communication there that he could not fix the appointment for which he had hoped, although he received a courteous communication from our Embassy and has, I believe, had quite a successful mission. It is obviously vital that rapport between our Embassies and our exporters should be of the highest order.
A word about delivery dates. I suppose most of us who travel get this one thrown at us. I have had it thrown at me several times. The most recent occasion was a few days ago from a friend of mine who is shortly going back to New Zealand. The New Zealand Apple and Pear Marketing Board contracted for some tinfoil from this country, and due either to an industrial dispute or another reason this tinfoil arrived at a time when the apples were not in the kind of condition when this particular commodity could be used. Further supplies of tinfoil had to be imported from Japan. Many such incidents are taking place. This has been a problem for successive Governments. One cannot necessarily blame any one stratum of society in business or industry for it, but, now that there are clearly going to be close negotiations and talks between the CBI and TUC and other bodies. I would hope that this question of delivery dates could somehow or other be raised, because, particularly with visible exports, it is a matter of such vital importance.
I mentioned Finland just now. So far in 1975 our exports to Finland have gone up in the first five months to £100
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million, whereas imports have increased by only £58 million. However, there is a danger here that if the wood pulp industry in Scandinavia gets into a more buoyant state than it is now, substantially more paper and wood pulp may come into the country. Clearly, with countries such as Finland, we have to increase our exports, and there is enormous potential for this. There are problems on the invisible side, but I think rather fewer on the visible side.
This debate has served a particularly useful purpose. It has given an opportunity to raise problems at a time when exporting will be more and more vital. I believe that there are good opportunities now for the invisibles to receive more attention, and indeed more publicity. One very good move is made when the Lord Mayor of London goes on his annual overseas tour. The noble Lord, Lord Mais, who is to speak shortly, will know about that. The present Lord Mayor is due to visit Australia and New Zealand at the end of this month. I cannot imagine two more delectable countries to go to at this time, because I believe there is still a very strong potential market to attack there. This kind of matter gets all too little publicity. It should get more because it shows in a practical way what the City of London does in this vital battle for our survival, because I think that the subject matter of this debate may well be an extremely important one in the context of our survival as a. trading nation.
4.48 p.m.
Lord SELSDON: My Lords, in what one might call these twilight hours of our economic history, there are some of us who do not know whether it is night or dawn which will follow. If it is night we will see the longest, most horrific night this country has ever endured. I find myself at a crossroads in my own life. I do not know whether to back my own country. which I have tried to do throughout my working life, or to leave it and look after my family's interests and move abroad where I could afford a better standard of life. I am an international person I suppose; completely British at heart. I have been involved in exports, export promotion, projects overseas, and all my life I have worked for a British group, and I would never work for a foreign company. But I have

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now reached a stage where I am not sure whether my country has an economic future, and I have said this in your Lordships' House before.
The reasons for this are, first, inflation and secondly, leading from that, exports. It is not the role of Government to export, and no amount of exhortation from your Lordships' House or another place, or from outside in the country, will improve our exports. Government have done a lot. It is fair to say with pride that through our Foreign Office, the BOTB, the DTI and numerous other organisa tions we have perhaps the strongest poten tial base for Government co-operation of any country in the world. I made some inquiries the other day out of personal interest to find out how many different agencies there are within the Government which are willing to help, and I discovered that there are so many that it is impossible to define how they all fit together; yet many of them, when one speaks to them, ask, "Why isn't industry approaching us?" There is, on the one hand, the Overseas Projects Group, which can allocate sums up to £50,000 to help companies in their expansion abroad on overseas projects, and the Inward Mission Scheme, on the other. They are all there, yet there is no co-operation.
There is a danger here, because it is the duty of Government to create the climate in which companies export and wish to export, and the one thing that the present Government have done is to create a climate in which companies not only do not wish to export but are actively seeking to divest themselves of their United Kingdom interests and to move overseas. We make a mistake in this country, unlike the French, of thinking and living in the past. When one listens to noble Lords speaking on the Front Bench opposite, or reads reports of debates in another place, it is always said, "We did this in 1950 or 1960" or, "We took this step or that step." One hears very little about forecasts of what is likely to come.
On the other hand, when one goes to Paris one finds the French thinking entirely in the future, of what will happen and how best to adjust their country and their industry to take advantage of the opportunities which will arise. It horrifies me to learn with what conviction
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people say, "There will be an upturn in world trade." That upturn will come too soon; this country is not ready for it. It cannot, as we know and have heard, deliver now and it will be in an even worse position to deliver abroad when the upturn in trade comes, because, after all, there is no shortage of export opportunities now.
I suppose that I should declare an interest in that I work with a group which is an invisible exporter of about £170 million a year, and I am currently involved in overseas projects and in promoting the exports of many British companies. It is not, as we have heard, a question of price. I should clarify that; it is not a question of a price written on a piece of paper, but a question of the inflation price. We have had Questions in your Lordships' House about how competitive British industry is; abroad and there was a comment by the noble Lord, Lord Jacques, recently that we are 9 per cent, more competitive than anyone else. I accept that comment, but when I ask the companies with which I work, "Can you quote for jobs and tenders abroad?", they say, "We dare not, because we cannot gamble with the ability of this Government to control inflation. Do we, in our calculations and tenders, quote with a 25 per cent, margin for this year when it is a three-year con tract? Do we double the price, because the size of some of the things we are involved in are so great that if we go for them and gamble wrongly against inflation we go bust?"
I would not criticise the efforts which the Government and Departments make to encourage companies to export, but the Government are going the wrong way to create the right climate. One cannot, as a marketing man knows, have a successful export market in the long term unless one has a good home market. One will never export unless one can get the right people, as the noble Lord, Lord Carrington, pointed out, to lead one's export drive abroad. I am talking about people of calibre. Exporting is not fun. It is not fun going off to countries with temperatures of 127 degrees in the shade, unable to ring one's wife and family, trying to get on a plane to get back only to find it has been double booked so that one has to spend two weekends abroad, obliged to miss such things as children's sports days.

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It is not fun having to spend money without knowing that one will get a return. It now costs £65 a day minimum to operate abroad—£20 for one's hotel—and one may need to take someone out to dinner, or one may be taken out to lunch. The costs are horrendous, often when it is speculative, and the people at home cannot afford the burden that is placed upon one by declining currencies. When one's own currency starts to decline against even the Egyptian pound, it is not an easy business exporting, and more and more people are realising that the effort may not be justified. It is no good saying, "Your country needs your exports", because this does not help industry, and when industry feels that earnings generated by extra effort are not really justified then we have a real problem.
That is perhaps an emotional start and I will try if I can to be practical, because our potential is greater than that of any other country in the world. We have without doubt some of the best political links with the new expanding export markets, including the Middle East, of any other country. We have in Britain more know-how and experience in the developing and designing of products or services than any other country in Western Europe, and we can certainly compete with the United States as we have seen with new developments of which we are capable. We have the middle management, the people who can cut their way through bureaucracy and use one sheet of paper instead of 10, people who are willing to make decisions on their own account without needing the consensus opinion of a board or committee.
Let us not forget that almost half of the most powerful companies in Western Europe are British, and that we have people in those companies who are patriotic, who wish to live and build their businesses in the United Kingdom and who are willing and waiting to invest here when the Government can create the right climate. The Government should bear in mind, as I know they do, that exports depend not on nationalised industries but on the private sector. They depend not on a bulk of hundreds and thousands of companies in the United
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Kingdom, but on the efforts of a minority of perhaps 100 companies. It is right to encourage every company to export, but it can be dangerous to encourage small companies to devote too much of their time and cost in travelling and developing markets overseas, without a secure and solid base at home.
This is the worry and it is not to do with export credits and so on; it is to do with the climate that is created for British industry now, and that climate is disastrous. I go further and say that one of the biggest handicaps I have found in trying to promote these activities abroad has been the attitude towards Her Majesty's Government—the fear that the Government may do something irrational, something which could condemn or hurt the company which is seeking to develop a project in a certain market. I do not know whether the Government are aware of this. I do not know either whether, when they send Ministers abroad to promote trade in certain markets, they are aware that if they send a Minister who is anti-private sector and anti-capitalism to a country which is pro-capitalism and pro the private sector, or send a man who is anti-EEC to a country which is pro-EEC, this does not create a feeling of good will and support.
In the developed markets of the world where we are seeing a recession there is not so much need for Government support; these are sophisticated markets that know companies know countries and know products. They do not need or seek Government interference. But in the new rapidly emerging export markets of the Third World one has a combination of three factors; government, technology and finance. It is this package that gets exports off the ground. There are many countries which suddenly decide that they wish to buy from a particular country. This decision is not necessarily based on a selective judgment on products, but can be a political decision—a sudden decision to switch away from the Soviet Union or away from the United States and towards Western Europe, and more often than not towards the United Kingdom which they have known in one way or another for many years.
These factors are critical and when the noble Lord, Lord Pritchard, points out the third factor—there is the company,

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the industry and the work force—I recall that when I have been involved with companies there has often been a certain amount of pride that it is possible by good relations to get men to work overtime or long hours or to give up their weekends, so that one can stamp on a crate "Abu Dhabi" or some other place and be sure that it will get there and catch the flight abroad. I would far rather do that than mark it "Glasgow" or "Birmingham". There is a feeling when one is doing this and selling abroad, and it is a feeling that one should encourage. It is really a question of education, and within all our companies—and it is right that one can sometimes criticise export people—too much priority is often given to the home market. The home sales manager almost always takes priority over the export sales manager, because he is in touch on a day to day basis and he is selling a greater part of the company's products, but when there is a recession people suddenly start to turn to exports, often too late.
These are three areas of exports which we should look at. The first is the visibles. The Socialist Government have always concentrated too much upon visibles, as we know. Perhaps one might recall a rhyme which I learnt when I was trying to learn Latin:
"Abstract nouns in 'io' call
Feminine are one and all;
Masculine will only be
Things that you can touch or see"
The potential of the United Kingdom lies in many things we cannot touch or see. One of those is, as we know, the invisible export. I shall say no more about that, as your Lordships' House has heard a lot about it from me, but the outside world knows the potential for invisibles, and it would be wrong to assume that the French are not trying with all their power to divert and take away the potential for invisible earnings from the United Kingdom to Paris.
Paris is becoming more and more a centre for Third World development. Also, more and more of the up-and-coming entrepreneurs of this country are leaving it, because they see no reason for staying here. They are moving and working abroad and using their diligence and efforts to earn money and to promote from abroad companies which are often of non-British origin. We also have that
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invisible export which has caused a lot of problems on many occasions which is the amount of private capital which will continue to find its way out of the United Kingdom, and the amount of know-how and resources that will go abroad in the current climate. It is not just the invisible side. The technology side has almost as much potential as anything. Here, one uses that word, "know-how", which is the traditional magic word for converting common sense into cash.
There are certain areas where one can pay tribute to Government Departments and to State industries. One, in particular, which may not be widely known is the electricity supply industry. Because they happen to have the right people who have the true enterpreneurial spirit, they formed a consultancy division which set out to sell abroad British know-how in the electricity supply industry and, leading from that, British products in other industries around the world. In the Third World they are welcome, because they are British and, in a way, they represent the British Government. People trust the British. Electricity is important. The amount of work and the growth in their business has been very considerable and they need support. I hope they will not be hidebound with bureaucracy. We are faced, too, with the question of British consulting engineers who, again, lead Western Europe. In a way, they have the power to specify British products.
All these areas give room for hope and encouragement. When we come to visibles, I am pessimistic. We never have been a manufacturing nation which has been successful in exporting. It is no good pretending we are. The noble Lords, Lord Carrington and Lord Pritchard, spoke about British Leyland. I could sell £1,000 million worth of British Leyland products abroad during the next year if they were available now. I have no doubt about that at all. But what does one do with a company like that which has the highest unit cost of labour per car, the highest warranty cost, 246 bargaining points instead of one and delivery dates that run out to goodness knows when? One could sell their products. The only cars one can sell in the world at the moment are British cars. People in the Third World are buying and paying premiums for second-hand Land

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Rovers that would make a Rolls-Royce Camargue look cheap. Here is the car industry. Here is what the Government are trying to help. It is one production area. Personally, I believe that if we cannot resolve its problems we should give up making cars and go back to making other things. It is not a question of the over-manning, but it is one industry which has it.
Let us go to another nationalised industry. I could, within the next year, sell 5 million tons of coal. I have written to the National Coal Board saying just as a beginning that I will buy a million tons of coal. It is for foreigners who want to buy coal. We have it in the ground. It was even suggested by some of my French friends that they should bring people from their own country to dig it out or that they should buy a coalmine. They are even trying to buy the slag heaps because people need coal. They read in Le Monde that the British have enough coal under the ground to look after the whole of Europe for generations to come. We have strikes all the time and there is no coal. We must exercise force majeure. We cannot export or sell it.
My Lords, one can go through the companies listed in Compass or Fortune or any similar list, and can look at the individual products. One can go to the companies and ask for kilometres of barbed wire to be delivered. The answer will be, "Oh, no!" All this is a production malaise. But it is not just an investment malaise; it is a social malaise. It is not, as I said at the beginning, the Government's responsibility to export; it is industry's responsibility. But the Government have not created the climate in which industry will be encouraged to export. They have done the reverse. It is a dangerous state of affairs. I would willingly cross the Floor of this House and sit on the Benches opposite if I felt that the Government would take the right steps, but they are not doing so.
They may not be aware of all that is at stake. I know that they take advice from different people, but when one is involved in countries abroad and is in the Middle East or wherever it may be three days a week, as I am, and when one sees the new markets and new potential in countries such as the Sudan, which has the greatest potential for the production
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of food of any country of the world that I know of, other than Brazil and which, with the right amount of tripartite cooperation with the Arab world, could become a major market for British exports, one is depressed. The pioneering spirit which the British used to have has been dampened by interference and legislation, and by the Government taking away the willingness of the entrepreneur to grow and expand. My Lords, the fault and the future lie not in exhortations, but in the Government creating the right climate for industry to expand and export.
5.8 p.m.
Lord MAIS: My Lords, may I begin by adding my congratulations to those already expressed to my noble friend Lord Pritchard. I have known him for many years and it gives me great pleasure to see him in your Lordships' House today. I express the hope that we shall hear similar words of wisdom from him on many occasions in the future. It is but a few weeks ago that we had a most interesting debate in this House on the economic and political situation. Here we are today debating exports. I feel that we shall find it difficult to divorce one from the other and I sincerely hope that we may not cover the same ground twice over. I shall endeavour not to do so. I should also like to say that some of us may find it difficult to believe what is said by those who consider themselves to be experts and who forecast that there will be a strong recovery in world trade next year. I for one hope that this will be so, but I must confess that I have my doubts. However, let us assume for the purposes of this debate that we shall have an improved world trade in 1976. If so, it is vital that the country should take a long hard look at its own export procedures and at its record in the past, if we are to obtain a fair share of that forecast increase in trade.
It would be as well to look for a moment at the incredible change in the pattern of our export position over the past years, for I believe that we are, to some extent, suffering from our past and from our history. We live in a country which was responsible for the industrial revolution and which was the birth place of sophisticated modern commerce and trade. In the glorious Victorian times—though some of us, looking at them in

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retrospect, may not be quite so sure that they were as glorious as reported—and for several decades thereafter, we delivered manufactured goods to an Empire. We received Empire produce and raw materials in return. It was a "tied" market and this became even simpler when, in the twentieth century, we added Imperial Preference; preferential trade, conducted in sterling, in the English language, with British weights and measures and shipped predominantly in British ships. Frankly, with all respect to those who set out on the trade routes of the world in those days, it would have been difficult to go too far wrong, because the markets were there ready-made and so were the raw materials.
Today, we live in changed times. Fifty per cent. of our visible exports which, for example, went to the Sterling Area in 1950, 25 years later go to Europe. But in those 25 years our share of the world trade of manufactured goods has dropped considerably, although I am happy to say that it is reported that there has been a slight indication of an improvement. I do not think that many of us engaged in the export market would exactly hang out the flags or utter a cheer about that, other than to say that at least the swing may have stopped, but the improvement has not been all that marked for us to relax in any way at all.
When I spoke in the debate on the economy I gave certain figures. I shall not repeat them now, nor waste your Lordships' time. But I wish to remind your Lordships that I then said that firms generally were more pessimistic about future orders than they were four to six months ago, and that this particularly applied to export prospects over the next 12 months. I also said on that occasion that there was a danger of our pricing ourselves out of the export markets of the world, and that the rate of inflation in this country was tending to make us uncompetitive in world markets, due to our rising production costs. Therefore it is with some anxiety that we await the Government's measures which they propose to introduce, because, my Lords, it is one thing to introduce measures but another thing to see that they are carried out. I was brought up on the old adage that it is no good giving an order if you cannot see that it is obeyed,
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and I sincerely hope that, whatever the measures Her Majesty's Government will produce for us in the next few days, they will at least ensure that production can proceed without delays arising from shortage of materials and from industrial disputes and, above all, that we shall have a stable incomes policy.
Without these we are sending our army of exporters out to do battle in world markets utterly and completely unarmed. Clearly we cannot go on increasing the value of our exports simply by putting up our prices. Our customers have no wish and no reason to import inflation from us. They have the obvious remedy. They will buy elsewhere. It is necessary to consider whether we have the capacity to produce more goods for export. It is natural that in a period of economic downturn—and this was being referred to by other noble Lords—one could expect a fall in the stocks held by companies both in their works and in their stores and, also, a fall in the import of industrial materials. If these two go hand in hand with substantial reductions in industrial investment in industry, there will be a danger that as world trade recovers and expands we shall find ourselves unable to take advantage of these markets due to a shortage of materials, a shortage of new equipment, plant and production capacity.
I gain some comfort this afternoon from the words of my noble friend Lord Beswick, and I was glad that it appeared obvious that Her Majesty's Government are conscious of this problem. This is where I believe they could be of inestimable help to industry in ensuring when the time comes that we are not short of raw materials or of stock and, above all, where possible that our plant and equipment is in a state ready to meet the challenge of growing world markets.
In a recent study more than half of the firms interviewed found that exports were more profitable than selling in this country. That is rather strange and it contradicts what one or two other noble Lords have said. But this is what was said in the survey, and the fact also remains that those firms had a much lower ratio of salesmen engaged on export than they had in the home market. First, you have to persuade the firms and then you have to persuade the men themselves to go, and with the present system

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of taxation this is a very difficult problem. How can you reward a hard-working man who is probably married and who has to be absent from his home and family for months on end, probably living out of a suitcase for an equal length of time frequently suffering from what is known as "jet lag", and no sooner does he recover than he is pushed off again on another trip?
I do not doubt that such men do it and get a certain amount of thrill out of the competitiveness of the export market, but it is an exhausting business and, as the noble Lord, Lord Selsdon said, it is not enjoyable. It is a tough, hard world and a very exhausting one. How can you make it advantageous to a man—or a woman—to undertake this when at the end of the day the net income will probably not be all that much more than if he or she stayed at home and caught the 9.30 up and the 5 o'clock back, always supposing that they were running? The Government must look at this problem. I know that it is very difficult to have one law for one and another law for another, and this is a problem. We must give not only firms but the individuals who work for them an incentive to operate overseas.
Over a period of time our failure in some cases to re-equip and modernise British industry has meant that very often we are producing the wrong sort of product for export, or where we have the right type of product we are not producing it in sufficient quantities. It is here that the Government could make a considerable contribution towards helping industry. One problem in any discussion on export is the confusion which exists between export generation and export promotion. The fundamental issue of the former is: do we produce the right goods, in the right quantities, at the right price, for the right market? If I may offer a personal opinion, it is that if the National Export Development Council is to be re-organised it should have a role in export planning. We cannot talk about exports without talking about overall production capacity. One comforting thought is that there are more firms today showing an interest in export than perhaps we have ever seen before, firms which can see that it is in the overseas market—possibly in the overseas market
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alone—that they will be able to sustain their profit levels over the next few years.
If I may declare an interest by mentioning the London chamber of commerce—the noble Earl has already mentioned the body one above it—I would draw your Lordships' attention to the fact that it was that chamber which largely pioneered the British trade links with Eastern Europe and, for that matter, Western trade generally with the Eastern bloc countries. These markets are now developing very rapidly and, while there are some welcome signs—such as a large tractor order from Poland, and the Prime Minister's visit to Moscow—the fact remains that Britain is falling behind again in Eastern Europe. In the 1950s we were the leading Western supplier to the Eastern bloc, but now we are fifth behind West Germany, France, Italy and Japan.
I also wish to refer to the rather considerable change in the pattern of trade. Here I refer, in particular, to the large projects which have now been drawn up. I think that Mr. Peter Shore referred to them as "jumbo projects". I do not know about them in general, but I know something about them so far as engineering and construction are concerned, of which I have some little knowledge. Today one is frequently asked to bid for the design of, say, a hospital, to build it, to equip it, to man it for the first few years and, during that period, to train local people either in this country or in other countries so that gradually they will take over. To bid for a project of that nature is a very costly business; and over a period of many years the risk that the consortium would run is considerable.
I do not see how we shall be able to compete in that type of market—which is a growing one, particularly in Middle East countries—unless we receive every possible support from the Government. While I appreciate that there is an overseas project group attached to the British Overseas Trade Board, I would with some temerity suggest that it needs reinforcing. That is not in any way a reflection on their ability, which I know to be good; but I believe that they are undermanned and that we need all the strength we can get.
Lastly, but by no means least, it is essential that we so organise our affairs

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in this country that when we give dates to deliver goods abroad, we keep to those dates. One can blame industrial disputes; but when one inquires one finds that these are only one of many causes. The fact remains that we not only are late with our deliveries but fail to back up with spares. There are many instances. Britain's image as a reliable supplier has become tarnished in recent years for the very reasons I have just mentioned. Late deliveries; shortage of spares; no adequate or efficient back-up. If we are to regain our reputation, every person concerned with meeting delivery dates will have to make a personal effort. The general public, and particularly a company's operatives—and by that I mean everybody from the boardroom to the shopfloor—must be enthusiastic about our export trade and, above all, about the export problems of their company. I wish we could get the same enthusiasm into a company, and into this country for that matter, about the position of our country in the export league as they show in the position of their local football team or their international team. I was going to say that it is more profitable and, also, there are fewer fouls, but having spent many years in export markets I would say that there is as much need sometimes for a referee in that game as in an international football match.
My Lords, I would associate myself with those noble Lords who have referred to the scope for greater improvement in the relationship and connection between the shopfloor trade unions and the export market. If you want to get the maximum out of your operatives, I believe it is essential that they must have an interest in the end product and where it is going. I should like to see shop stewards—trade union representatives—included on trade missions which are sent overseas. I should like to see them when potential customers visit your works; let them meet the trade union representatives and let them really know what it means to that company and this country if they get that order and what it will mean to them if they default on deliveries or quality. I think we have not scratched the surface of this aspect yet I believe that in it could lie the solution to many of our problems. I agree with the noble Lord, Lord Selsdon; this country has the greatest potential of any. We started a long time
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before most as an exporting country and it is for us to exploit that potential and not to destroy it by lack of understanding and lack of unity.
My Lords, may I end by thanking the noble Earl, Lord Limerick, for introducing this debate and giving us the opportunity to discuss this subject, particularly at the moment; for never was there a greater or more important opportunity for this country than exists at the moment. We are at the crossroads. We can go down one road and up over a hill to a very bright future or we can take the wrong turning and face disaster.
5.25 p.m.
Lord GLENKINGLAS: My Lords, for almost all of the last five years, wearing one hat or another, I have been directly involved in the export market. In thanking my noble friend Lord Limerick for introducing this subject today, I should say that he asked me whether I would deal specifically with the agricultural side of exports, as Chairman of the British Agricultural Export Council. So that although a little of what I say may in some degree, overlap what other noble Lords have so ably said, I hope not too much will do so, and I also hope not to delay your Lordships for too long.
Many people do not realise that last year the agriculture industry as a whole exported £850-million worth of goods overseas, excluding anything for the "invisibles" and excluding processed human foods like whisky and biscuits. This is a considerable success story and most people hearing those figures would assume that this was all tractors and machinery and such like. It is not, in fact, quite as simple as that, because engineering and equipment are roughly half the total. There were £300-million worth of exports in livestock, poultry, wool, meat, milk products, vegetables, potatoes and so on and £130-million worth of chemicals and animal feeding-stuffs. As my noble friend Lord Selsdon has said, the chemicals industry has done particularly well over the last few years, particularly in the plant protection field. The first quarter of this year, I am glad to say, is still showing a good strong upward trend. We did just over £300-million worth of trade in the first quarter, against £191 million for the same period

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last year, so we are still, I believe, going a little ahead of the normal inflation rate; but there is a vast amount that can still be done.
My Lords, there have been two rather remarkable changes in the last few years—perhaps I should say that one is a change and the other is something brought forcibly to our notice. The first has been in the Middle East, in the oil producing countries. They are suddenly aware of the fact that the oil reserves may not last for ever and that they had better use some of their enormous sums of money for developing something of real value in those countries, and they have chosen, among other things, the development of their land. This is an enormous, exceedingly difficult and expensive, task. The second change is that suddenly very large numbers of people in the world have woken up to the fact that with the day-to-day increase of population the danger of the world running out of food is very great. This should not be so, because we certainly have ample supplies of land to produce all the food the world needs.
My noble friend Lord Selsdon referred to Sudan and Brazil as two countries in which there is an enormous potential for developing food. But, as your Lordships know, the problem is not just how to produce the food but how to distribute it, how to sell it and how to get it to the countries you want to have it. With these potentials in front of us, with the market for developing the countries that need to be developed (and that are willing to pay large sums of money to have their agriculture developed) there is in the field I have chosen to speak about a really remarkable potential. How are we facing up to it? The British Overseas Trade Board, of which much has already been said, have been given no extra money this year to spend on the vitally important promotion of exports. I do not mean they may not have had a few extra pounds, but in relation to real terms they have been given no increased budget. I wonder whether the Government have their priorities right when they spend large sums of money on the other side of the Ministry of Industry. I believe they are not giving enough to the promotion of our exports without which the country will fail.
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My own export council is perhaps lucky in being the only export council to which the Government allocate any money at all, and every few years the Treasury decides this must now stop. This year we get from the Government the handsome sum of £25,000, plus of course some help in other ways, which other people get too. If you compare that with my opposite number in France, who gets something like £5 million, or my opposite number in Germany, who gets £3 million or £4 million, and my opposite number in America—there are several of them who get millions and millions of dollars—you will see that, if I am not entirely successful, I am slightly handicapped compared with some people to whom reference has been made, who have done better than us in certain markets.
I have a hard-working staff of two, with four girls to cover the entire world and promote exports therein, and we do our best without having to admit often that exporting is fun. Over and above that, the bulk of our competitors in the developed world have a large number of entirely commercial agricultural attaches. The Americans have 80, the French have 40, and there are other countries on that scale. We did not have any. We are now, I believe for the first time, putting one into Teheran—and about time too!
In agricultural terms as a country we produce more per man and more per acre than any country in the world. How often has any ambassador sold that story to any country to which he was assigned? I have never heard of that happening and I have visited most countries. How many of our Embassies—and here I am not wanting to be unkind; they are extremely courteous and generally enormously helpful—have a single person on their staff who knows anything about agriculture at all? This is not their fault; farmers do not tend to go into the Civil Service. If one or two slip in, they tend immediately to be picked up by the Ministry of Agriculture. It is the rarest thing—and I have been connected with both Ministries from time to time—to find anybody in either the Foreign Office or the Department of Trade who knows anything at all about agriculture. Therefore this enormous potential field, of which I am trying to speak for a few minutes, is not easily promoted by the people who are, in many other respects,

837
doing an excellent job of work in their own field.
If that is so, there are many things we ought to do, and in a minute or so I will come to one or two minor recommendations. In this field we have one or two possibilities where, in the form of production, we do not have quite the same difficulties as have some of the others which have been spoken about earlier in this debate. This is because we have the potential of selling know-how—and noble Lord, Lord Selsdon, had a good expression for it—in the agricultural field, simply because we have greater skill than any other country in the world. We have the ability to sell knowledge about training. To those of your Lordships who have visited the Middle East and seen the terrain that they want to develop and the people who will have to run these enormously large herds of dairy cattle, sheep and huge farms that they talk about, it is absolutely clear that without basic training often at quite a low level, these schemes are bound to collapse. We in Britain can help in this situation, and I hope we will be paid for our help, because training is absolutely vital to the success of these schemes. We can also do a great deal to help in the whole process of marketing, packaging, storage, and so on, of the goods produced. These are all items highly saleable in the Middle East at the moment, yet not needing the enormous production techniques which have been mentioned concerning some forms of equipment.
I must say a word about Land Rovers. I have travelled the world extensively over the past 10 or 12 years, and in every country I have visited I have been asked why there are not more Land Rovers. I suppose I have a love/hate relationship with Donald Stokes about it. I have written to him so often, and I have never had an answer. I do not believe any other big company in the world could have had such a continuously high demand for a product and so totally failed to meet it. My advice, if I dare give it to an engineering industry, which, by and large, is doing a tremendous amount of skilful work, is not just to watch delivery dates and spare parts—we are not much worse than most of our competitors on this, if we are worse at all—but not to over-sell. I find it disstressing, arriving in a country, to be
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told, "We like your tractors very much. Your firms promised us 300 last year but they delivered 20. This year they have promised 250. Do you think we will get 10?". This is not late delivery, this is sheer straight over-selling. I believe that in the long run it does more damage than good.
Now if I may refer quickly to one or two points where I believe we, as an industry, have a special contribution to make, and where, to some extent, the Government can help us. In selling livestock—I am thinking particularly of big farms in the Middle East—I believe that it is essential for us to produce a really effective after-sales service. This is something no other country is yet doing. I believe it would create a great deal of good will if we were to say, "We will sell you 1,000 dairy cows, and not only give you the management for them, but have somebody come out two or three times a year thereafter in order to check that everything is going right".
Lord DAVIES of LEEK: My Lords, would the noble Lord give way after that interesting point in which I concur? Does he not agree this shows the need for more research into climatology? In the Philippine Islands, where I had the pleasure of seeing British stock being reared, management can be followed up with climatology. There is much more potential export if we follow up with climatology and management help after we sell.
Lord GLENKINGLAS: Certainly. My Lords, in Baghdad ten days ago I was interested to hear that they wanted 50 meteorological stations in order to provide the information that the noble Lord mentioned to improve the management of their crops and stock.
If I may now come to my second point, it is vital that we get early intelligence in the case of these huge agribusiness concerns. I have not been to one country in the past two years where I have not, merely by talking to the right people, discovered one or more large projects of which our Embassies were totally, absolutely and completely in ignorance. This shows that visits are the key operation. I hope in the thinking of the British Overseas Trade Board they will, with the limited money I know they have, be more generous than they

839
have in the past to what I might call the research operation rather than the full mission. Equally, at the other end of the scale, it is vital, if we are to get a higher proportion of these big orders that are floating around, to invite the right decision makers to this country on inward missions and give them really slap-up treatment. I know this is what our French, German and American rivals do. They do it very successfully, and it is an important part of what is needed.
My next quick point is that, if the Government will accept what I said earlier about the people in the Embassies being a little limited in their agricultural knowledge, I believe we should make a deliberate policy of training in agricultural matters at least one person in each Embassy when they return to this country. This is something which could be done and my organisation, and indeed many others, would be happy to do it.
I do not entirely agree with what the noble Lord, Lord Selsdon, said about the visits of Government Ministers. I find it quite possible to have extremely good relations with Communist countries, whose political views I do not entirely share; but as regards agricultural exports I think it is extremely important that we get the Department of Trade, the Ministry of Agriculture and the Department of Overseas Development closely coordinated, and that we use our Ministers regularly for visiting the countries that matter.
My Lords, I have spoken for longer than I meant to, for which I apologise. I also must apologise to the noble Lord who is winding up the debate, and say to him that if in fact I am not here for his winding-up it is because I have waiting a group of Brazilians who are busy buying in this country, and I want to give them a decent dinner.
5.42 p.m.
Viscount SLIM: My Lords, may I, too, join in the congratulations to the noble Lord, Lord Pritchard. It was a great pleasur6 to find myself sitting beside him, because in the past he knew my father and has done me a number of kindnesses, and finally, because he is a good man. Perhaps I should also apologise for not being in your Lordships'
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House as often as I should be. The reason is simply that I am an export salesman. Most of my life is spent abroad and I travel, obviously hotly, in the Middle East at the moment, and also in COMECON, mainland China, Asia and Africa. I work for an industrial group, and in case some of your Lordships may think I have never got my hands dirty, perhaps I should say that I have worked in a factory and have run a factory.
I have some fairly strong views about British industry. I may sound impertinent, because I have not been in it for as long as several other noble Lords in this House, but British industry is slack and it is idle. Some of the criticism of management is well taken by us in management, and some of the criticism about trade union leadership is well-made and well-deserved. There are today a number of young managers and young trade union leaders in our country who have not had to fight for survival; they have not had to fight a war. They have taken what a Welfare State gives, and have put little back.
In my company we have a different philosophy. We have small groupings, and we know one another. We are not perfect, but there are seventy of us in, the international trading company which I am working with at the moment, and whose running I have something to do with, and we probably speak just over 22 languages between us. There are seldom more than 25 or 30 people in that office at any one time. We are everywhere; and, if I may follow the noble Lord, Lord Carrington, there is nothing glamorous or "fun" about exports today. In fact, I would go so far as to say that it is a very hazardous and dangerous occupation, especially if you were in Beirut last week as one or two of us were. We are no longer paid to fight—at least, I am not, though I was for many years—and I certainly found it rather difficult to reach Beirut airport in time. That is just a very small hazard; but there are bigger ones.
Make no mistake, my Lords—if I may bring this debate down to the ground, as did the noble Lord, Lord Selsdon, as regards the business of selling—if you are a salesman, it is not easy today to get an order for Britain. It is not easy, because the ills—the rot, I would almost say—lie

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not in overseas countries where the opportunities are, but in our own country, in our own industry, in our own City and in our own general political make-up today. We British today make many excuses. We talk a lot, and we talk pretty well. We were a nation of shopkeepers, but perhaps we are not even being allowed to be that today, with some of the doctrinal governmental stuff that is being pushed at us.
For many reasons, I do not share the optimism voiced by the noble Lord, Lord Beswick, about exports. Certainly it looks good; we can all make figures speak. But the situation is dangerous and in my experience there is—and I am only talking for myself and my company—a very definite falling off in parts of the world where we think business is. We can blame a number of outside factors, if that is what we feel inclined to do, but our weakness as an industrial nation is the lack of productivity. I believe it is as simple as that. And even our excuse—from management, from employers or from any trade union leader you like—about failure to invest, cannot continue to be used as an excuse or as a handicap for not producing and performing on time.
When we go out to sell we do not have much in our quiver. We are not necessarily very competitive, particularly in comparison with our two major European rivals, and we are not necessarily as well covered in the rear as they are. Because of our inflation, which has been mentioned already, and the fact that somehow we have to make a profit because of the very heavy tax burden a company is lumbered with today, we find we are over the top of other quotations. You can pare it down a bit and bring the price down a bit, but you are in very grave competition, and you start off with quite a number of points to your disadvantage. Behind that, you have this British performance, this British service which is not up to par and not up to scratch.
Then you have the British salesman—because we are not all good and we are not all perfect—who flips in and out of a place, hangs around for two days, then gets up and goes and is never seen again. I could quote the experience of many countries in this respect. I was
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in Algeria for a fortnight not too long ago, and time and time again I was asked, "Why don't you come and see us and stay for a bit? Why don't you send someone who can speak French? Why don't you write to us in French? We might answer some of your letters then. We don't speak English in Algeria." There is also another point which I feel I must mention, because it made me very cross at the time. too, got "a left and a right" on behalf of the noble Lord, Lord Stokes—his Land Rovers and his trucks—from a number of Ministers and a number of technical people down below. I, too—because I will not have people being rude about our country when I am overseas—took this on the chin and wrote to Lord Stokes, and I have never heard from him since.
If I may, I should now like to talk about export salesmen in a little more depth, because although the noble Lord, Lord Carrington, is correct in saying that Governments can do only so much, I believe there is much that this Government, or any group of people aspiring to be a Government, could do for the export market. There are the unsocial hours and the dangers which I have mentioned. May I suggest to noble Lords that they try six weeks in COMECON, in the Middle East, or go to South Korea for three weeks on the trot. You are living a life that no trade union leader would allow his people to suffer, and you get nothing for it.
However clever we are in management about making an incentive scheme for the chap who works, however hard we try to look after him, when he comes along to get his bonus half of it goes immediately in income tax, and when he gets home and opens another envelope he finds the other half has gone in surtax. It is very little recommendation for getting out on the road today. I merely highlight that point, because I would ask the noble Lord, Lord Beswick, to see whether there is some way to give relief, perhaps, as mentioned by the noble Lord, Lord Carrington, on travel costs. Our travel costs have gone up 34 to 44 per cent., and we do not travel first-class in 1974/75. I would ask the noble Lord whether he could see some way of alleviating the burden, and rewarding the work of the export executive and the technical man who goes with him.

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There is one point on which I should be happy if the noble Lord would correct me or perhaps add a few figures. In my study of the number of people from industry and manufacturing who physically go overseas and sell, I can find only 3,000. We have a population of 55 million, we have a large workforce, and I do not think 3,000 is enough. We are also very aware, as the noble Lord, Lord Carrington, suggested, that the calibre of the man who goes to sell may not be good enough. Like the noble Lord, Lord Selsdon, I am always finding that when we come out of an office door in Teheran, Shanghai or somewhere like that, that there are four or five Frenchmen, three or four Germans and half a dozen Japanese waiting outside. They come with a package, they come with a plan and a purpose. They have worked out how it will be paid for, how to get extra credit and easy terms.
We go in alone. There always seem to be three or four lone Englishmen, and we meet in almost every capital in the world. We bounce in and out and do our best. My company has partnerships with many other groups and companies in the country, and we have tried hard to go along in reasonable numbers of three or four to offer a package, a complete requirement, and not only to offer it but to know, having done the research, what a developing country wants. So often people flip in and the country concerned does not know what it requires and they have to guide it diplomatically.
Lord WIGG: My Lords, is it not a fact that the British Government have set their face steadfastly against putting Government resources at the service of industries, in order to facilitate package deals? I think the noble Viscount is aware of my interest in Algeria. I had cause to have correspondence first with the Prime Minister and then with Mr. Peter Shore, and as long ago as June last year I was promised that the matter would be referred to an advisory committee, but I have not had an answer from that day to this.
Viscount SLIM: My Lords, I cannot answer for the noble Lord, Lord Beswick, and I do not know what correspondence the noble Lord, Lord Wigg, has had. The noble Lord and I have certainly discussed
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Algeria together, and he was very kind in helping me to get there. I cannot say of my own group that we have been blocked by the British Government or anything like that, but I would go so far as to say that, in my view, the failure is in this business of the package deal on which we seem to agree. There is no leader to give financial management and co-ordination in order to run this package deal—not from industry, and we are guilty, no volunteers from the City, and certainly not from some of the Government bodies which we have heard discussed today.
Lord SELSDON: My Lords, there is a volunteer here. I know the names of 30 or 40 who are very interested in package deals. If the noble Viscount would care to talk to me about it afterwards, I feel that I could reassure him.
Viscount SLIM: I thank the noble Lord very much.
Lord BESWICK: My Lords, as the noble Viscount is being so gloomy, may I say that I was connected with a company which did package deals and had orders of nine figures and seemed to be doing them very well.
Viscount SLIM: My Lords, maybe that company's incentive scheme works, I do not know. In this debate I am trying to highlight the problems and difficulties of the salesman. There is a lot of smooth talk in Government circles and other places which gives the feeling that everything is all right. I should like to make it clear that my view is that we are in a very dangerous position.
I wonder whether the noble Lord would let me make a point or two about loans; he has much more experience than I have. I should be the first to congratulate him on this extremely good loan and the arrangements made with Egypt, a country with which I am familiar as I have been asked to lead delegations and missions in the past. When we wander around trying to sell, we get the impression that loans are given rather easily overseas and are practically impossible to get in this country. We also feel that we do not tie our loans down as tightly or as well as the French or the Germans. I should not like to bore the House, but there are instances where we

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have given loans to people and the money has been immediately used to buy other than British goods. If we, hard up as we are, are kind enough to give loans I should like to see them tied in a more positive way than they have been in the past, to buying British goods.
My views have been rather lengthily expressed. I have tried to show your Lordships' House what it is like to sell today. I come back always not with anger but to face the challenge because, unlike the noble Lord, Lord Selsdon, however attractive the proposition, I feel that it is not right to go away. There are many overseas propositions which are more attractive than working from this country. I feel we should face that fact. There is one thought which I should like to leave with your Lordships today. If you look at the world today through the eyes of some of our friends on the Continent—and here, if I may have a quick aside. I have been told in Asia, Africa and the Middle East that if only German goods were sold by British salesmen how happy they would be—there is a much more warlike, aggressive posture for survival. This is the economic battle, the economic war, and they are determined to win it.
I feel that the question of exports is at the very essence of British survival. Without exports we shall not win; we shall not survive. I believe that our export performance to date is not good enough. Even at the present rate, with the graph going slightly up as people prophesy, although I am not too sure about it, we are still not in a strong enough position to win through. I would merely say to your Lordships' House that it is time we knuckled down to a hard day's work. There are many people who are willing to tell employers where to go and what to do, but there are not many today who are willing to tell people, whoever they are, that it is time they did a job. If we want to survive and win, we must retune the whole of our export thinking; we have to revitalise and galvanise the whole of our industry. Lastly, I beg anybody who is forced to cut his overheads today—as we all are—to remember that the one area in which he will not be able to make cuts is the export force that he is busy trying to train and build up.
6.2 p.m.
Lord DENMAN: My Lords, I wish to take up your Lordships' time for a few minutes on the Middle East. Before doing so, I should like to congratulate my noble friend Lord Pritchard, who spoke so movingly. I hope that on many future occasions we shall hear his wise words. It is a great pleasure to me to congratulate the noble Lord because I have to declare an interest as chairman of COMET. I was a member of COMET when the noble Lord, Lord Pritchard, was a member of the National Export Council, and later its chairman. Therefore, I regard him as a friend and colleague of many years' standing. Also I should declare certain interests. When one joins boards one has business interests; mine extend over 25 years and include trading and banking. I am now also a member of the BOTB Advisory Council which was referred to by the noble Lord, Lord Beswick; and COMET is one of the advisory groups which he mentioned.
First may I say that I am conscious—as we all are as a result of what has been said this afternoon—of the immense effort which is being devoted to the Middle East. This is right. It is the area of central importance to our economy. May I say also that there are very many people, both in Government and in the Civil Service, who give great service to what we are trying to achieve. Mention was made of the new Middle East Division in the Department of Trade which is staffed by very able and devoted people. On Monday of next week there will be a seminar in London to which we have asked about 200 of the decision-makers in industry. The Prime Minister has agreed to address this seminar, and the Secretary of State at the Department of Trade will also make a speech. This is a measure of the interest and enthusiasm of the Government, and I should not like to do anything but praise it.
May I add that I believe that all of us are pushing at a wide open door. There is no area in the world that is more ready to receive British culture, British people, British machinery, British ideas. It is against this background that I report with sorrow that although the noble Earl, Lord Limerick, told the

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House about the percentage of increase in our trade, if you look at the actual figures of United Kingdom trade in the first part of this year they are still well under half those of America and about half those of Japan—and Germany's trade is nearly half as much again as our own. This is in an area where we have all these advantages besides those of historic association; and it is the measure of our incapacity to walk through this wide open door that I wish to stress.
May I give your Lordships one or two thoughts on why I believe this to be. All the way through this debate emphasis has been placed on the problem of inflation. This problem is paramount. Until we resolve it we have no hope of restoring the confidence which will gain the business that is available to us. We are no longer believed to be credible exporters. It is a very serious point to state, but I believe it to be the fact.
My next point has been emphasised by many speakers. Over the past two years I do not believe that individual British companies have devoted anything like the effort that they should have done to matching the opportunity. I believe that this is because they have been operating in a period of acute personal insecurity—personal within their businesses, personal to their ambitions, personal to their staffs. I have talked to countless people who have given me the impression that their fight has been for the survival of their companies and of their workforces. In no way is this a base line which is conducive to any kind of export effort and promotion. How can you devote your own personal efforts and those of your staff to exports if you are not sure of your home base?
I should like now to touch on a very difficult issue. Today we have talked a great deal about co-operation between Government and industry. I pay full tribute to the efforts that are being made, but I believe that there is still a great gap to be filled, in that the Governments of the Middle East expect a major British order in some sense to be backed by the British Government. They believe that in certain circumstances the British Government may impose some restriction which will cause the order not to be fulfilled. Certainly this arises out of activities that have taken place in the
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arms industry field where, for purely political reasons, spare parts have been withheld. This has created a climate of unsureness and insecurity about the attitude of the British Government. We have talked about visits of Ministers, and indeed we have had very great help; but I do not believe that we have yet achieved the situation in which we can convince our friends in the Middle East that British industry and the British Government are pulling as one team to achieve our export successes and the economic relationships which they want and we need.
May I congratulate the noble Lord, Lord Selsdon, on his most moving speech. On the matter we are debating he seemed to me to speak with a sincerity and a dedication that has been unmatched this afternoon. I believe that he has touched the heart of this matter—that we can do everything that is right to achieve the right formalities, the export documentation and everything else, but unless we have the spirit to create confidence and the right relationships we shall never achieve our aim. This is an extremely difficult concept to put over. That spirit comes only from people. It is not done by Government decree or by the direct spending of money; it is done by individuals creating the right opinion. I believe that few people have been able to speak with the kind of confidence that is necessary to overcome the difficulties and to create confidence in the minds of the Middle East buyers—the Middle East Governments.
I would add a word to what has been said by the noble Lord, Lord Glenkinglas. He and I have been working on the agricultural problems in the Middle East to which he so generously referred. I believe that the Vote which he receives is totally inadequate. I compare it with a figure of over £½million which I believe is being devoted annually to the development of the trade centre in Japan. In the development of agriculture we have in this country a situation where we have to overcome enormous problems of organisation—or the lack of it. There is a handful of firms which are what I describe as being in the agri-business. By "agri-business" I mean that they have the manpower, the financial muscle and the experience to manage on a long-term basis, which is what the Middle East

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countries want. They want major agricultural ventures. It is going to take a great deal of effort by the noble Lord's committee and by other people—and, I believe, a great many resources—to develop the techniques, the companies and the organisations that will match the opportunities. Unless we do this, we shall fail not only in the opportunities that are before us but we may do very serious damage to our reputation in a field where rightly we hold our heads high throughout the world.
May I also add one further word to what was said by the noble Lord, Lord Beswick. He gave an interesting catalogue of the resources available from the Department of Trade, and he mentioned at length the various facilities offered by GCDE. Unless I failed to hear him rightly he made no reference to the investment guarantees which have been in operation for the last two years. These are on an entirely different basis: they are not ensuring credit, they are ensuring investment that is made in an underdeveloped country. It is my experience that the key to many situations is to get an investment from a British company to back up its management skills and its technological know-how in order to provide a firm base for the expansion of high technology industry. If that investment—it may be 10 per cent., it may be 20 per cent.—in the equity of a company is not there, the order will not come to this country. This facility is available and I believe it is working very well; but I believe it is known, and the failure to mention it may be part of the problem—that we are not letting industry know sufficiently of this facility.
In conclusion, may I say that the Middle East is an area of enormous opportunity. I believe many people here think of it as an area that was rich three years ago and today is five times as rich. That is true. What I do not think is appreciated is that these great riches have created a totally new climate of opinion. It is a climate of opinion which we must come to understand if we are to develop successful associations with it. I think the genuine intention to spend their money in support first of their own underdeveloped countries in the Arab world, and then to take the lead in trying, in their eyes, to obtain a fairer share of the world's cake for the primary
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producers of the world, is creating a totally new world force which in itself has enormous opportunities for us. But I believe it is important for people to go to this area and to understand its rapidly developing new feeling, if they are going to get a grasp of the opportunities that are before us. I hope that the seminar to which I have referred will give impetus to this greater understanding.
6.13 p.m.
Lord WINTERBOTTOM: My Lords, it is a convention in this House to congratulate and thank the noble Lord who introduces a topic for discussion on Wednesdays. May I say that my congratulations and thanks to the noble Earl, Lord Limerick, are far more sincere because I believe that the topic he has raised is of absolutely fundamental importance to everything else we are trying to do. If we can get our foreign trade balance right, if we can get a strong, successful export policy, then it is comparatively easy for us to solve our problems at home. If we cannot get this basic problem solved we shall have to struggle and suffer in all the other things that we are trying to do. So from my own experience I thank him most sincerely.
Having expressed my thanks to the noble Earl, may I also express my congratulations to the noble Lord, Lord Pritchard, who made his maiden speech today. He spoke from great knowledge. He was chairman of the British National Export Council, and of course his experience of industry goes far wider than that. I am not paying false compliments when I say that we are all waiting impatiently for him to speak again. Perhaps noble Lords who spoke first will forgive me if I turn straight away to two points made by the noble Lord, Lord Pritchard, as they struck a chord in my mind.
The first point the noble Lord made and which I felt was profoundly true, and it is something that I have been saying for the last 20 years to a number of people, is that the world does not owe us a living. We have to go out and win that right to live, and live prosperously. He made a point with which I agree; that it is not a question of directors or export managers, but one of the whole organisation of industry understanding what it is all about. The noble

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Lord mentioned that we ought to get the trade unions involved. Indeed, he may have seen that it is now the intention of the Department of Trade to do just that. It is the intention that should a Minister go abroad on some mission he should take with him, as the French have done, not only business men but also trade unionists. This is of prime importance and is something that in my own commercial career I have always followed: If there was an inward mission from some foreign country one of the very first people they met was the convener of the shop stewards and other shop stewards. I was never able to get people to agree to take them abroad, but I think now it is the policy that the actual representatives of the work people on the shop floor should go out with the directors and the export managers to see exactly what is required, and in fact to get excited by what they see.
In spite of the fact that Mr. Harold Macmillan said it was, I would disagree with the general attitude expressed that exporting is not fun. I do not merely think it is fun; I think it is absolutely absorbing. I admit that one may meet an overflowing earth closet at four in the morning and suffer from an excess of twika. But on the other hand, you can stand on the site of Nineveh; you can see Nimrod; you can have enormous intellectual stimulus in getting to know a new country and this, I know from the experience of people that I have sent into strange parts of the world, is for them terribly exciting. It is a new experience. So I think we must work towards involving everybody in every organisation in the sense of purpose, and often the excitement, and occasionally the pleasure, that comes from major exporting operations.
The second point that the noble Lord made, and which I think is of great importance, concerns pre-shipment finance. In this time of ever-growing contracts this produces major problems wich I think we must consider, although I must say quite frankly that we have not yet quite solved them. May I just tell your Lordships the present state of play on pre-shipment finance, in his Budget Statement on 15th April, the Chancellor of the Exchequer made the following announcement:
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"I have also decided to introduce a series of measures to encourage the shift of resources into the balance of payments. To facilitate the provision of working capital for exports ECGD will provide facilities to guarantee loans for pre-shipment finance on large export projects. The details are to be announced in the next few days."
That is a statement of intent. But although discussions have continued with the banks over the details of a pre-shipment finance scheme, these have not been finalised, mainly due to the difficulties which the banks feel are produced by a scheme which will by definition involve them in being asked almost to provide or support lending over and above their existing lending limits or the maximum which they consider acceptable for an exporter. I know of cases where firms are trading most successfully, but at the same time are becoming, in the view of the bank, a risk because they are over-trading. They are suffering the penalties of their success. I think your Lordships should bear in mind when considering the problems facing industry those elements of industry which are willing to tackle the great opportunities that now face us.
May I now turn to the opening remarks of the noble Earl, Lord Limerick. I thought his speech was excellent, rational, down to earth and just what was needed. One thing he said was of very great importance indeed, and I should like again to underline this in my speech. Quite rightly, the noble Earl stressed the importance of our invisible exports. The noble Lord, Lord Selsdon, said that if you export something physical, people know you have produced and exported something, but if you export and sell a service, all that happens is that an invisible transaction takes place across the exchanges, but no one sees it. Nevertheless, if we look at history and at the figures for the balance of trade since the middle of the last century, this country has seldom been in positive balance on its visible figures. We have always balanced our accounts on our invisibles, and these are of great importance.
The importance is recognised, but may I recommend your Lordships to read the report by Sir Cyril Kleinwort, the chairman of the Committee on Invisible Exports, which came out last night, and which, therefore, will not have been on your Lordships' tables this morning. I

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think it is a report written clearly, one which raises issues of great importance. I should like to quote one or two sentences from the first paragraph on page 11, because I consider this to be of fundamental importance. Sir Cyril is talking about the capital transfer tax in relation to invisible exports. He says:
"We are now giving every support to members' representations with regard to the proposed wealth tax and the higher incomes reference which is being considered by the Royal Commission on the distribution of income and wealth. My Committee believe it is of vital importance that the City's financial pre-eminence in Europe, and its contribuition to the balance of payments should not be imperilled by inability to provide incomes sufficient to keep good people in London against all pressures of foreign competition."
What we are talking about is the simple fact that people working in the professions, people who provide our invisible exports, can go anywhere. Thank goodness we are not a closed society! Anyone can go anywhere in the world and earn his bread. For this reason it is essential that a climate should be created in the City where all those various elements which help us to produce these quite extraordinary results in the sphere of invisibles are able to continue to remain and to operate. Egalitarian policy is one that I have always supported, but there is a limit. People with specialised skills are in demand all over the world, particularly in the Middle East, as was indicated by the noble Lord, Lord Denman.
Lord HARMAR-NICHOLLS: My Lords, is the noble Lord, Lord Winterbottom, aware that he is taking precisely the same stand as did the noble Lord, Lord Beswick? He is saying things which must be accepted because they are true. He is paying tribute in areas which deserve tribute, but the whole policy of the Government and their representatives on that Front Bench is to do the exact opposite of what they say is desirable. The discouragement far people to go and do things, whether by tax or the bureacracy, or the separating of unearned income and putting the extra impost upon it, is doing the exast opposite of what the noble Lords, Lord Beswick and Lord Winterbottom, have said is essential for the good of the country. It is a paradox which leaves me quite amazed.
Lord WINTERBOTTOM: My Lords. I am sorry that the noble Lord, Lord Harmar-Nicholls, is amazed. He must realise we are living in changing times, and I am quoting what the Government are doing in fact. There is an element of paradox but nevertheless, the Government are aware of it, and studies are taking place. May I now turn to another point made by the noble Earl, Lord Limerick. This was a point also touched upon by my noble friend Lord Mais. The noble Earl, Lord Limerick, touched upon the possibility of creating a Ministry of Overseas Trade on the lines of the Japanese MITI. I was also impressed by the very important maiden speech made by the noble Lord, Lord Kissin, the other day in which he made just this proposal. The noble Earl cast some doubt upon the possibility, but I would have said that we must realise that, in this country, we are not putting enough resources behind the whole area of exports. The noble Lord, Lord Glenkinglas, mentioned a figure of £20,000 a year as against £5 million. One has only to study what the MITI are doing in Japan to see the sort of competition that we are facing. While there is an element of overkill in all this payment, we must face the fact that many of our competitors are devoting resources to exports which we ourselves as yet are not matching. I am not saying we are doing nothing. The speech of my noble friend has shown the wide range of services we are providing, but we are not making a political issue of this area of study.
My Lords, it would be possible to say that the noble Lords, Lord Carrington and Lord Beswick, could have exchanged their speeches. Both could have said very similar things and we would hardly have noticed the fact that the speeches had been exchanged. Nevertheless, I am sure the whole House supports the noble Earl when he says that we must realise the competition we are facing and the resources we should be devoting to it. I come now to the speech of the noble Lord, Lord Carrington. There were three points in his speech that struck me as being important. Perhaps the most important was the need for high-class representation in the people we send abroad. This is a truism, perhaps, but one that is often ignored. The proposal of the British

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Overseas Trade Board for special training for export representatives is of the first importance. We should train our export representatives as professionals in their own special skills—in languages, techniques of finance, techniques of approach and so on. The best British firms are as good as any, but we are now talking about the average firm which is feeling its way into the export market. We cannot spend too much time or money on training representatives who we send abroad.
The noble Lord, Lord Carrington, also mentioned the possibility of certain tax concessions on the cost of travel. One has a very great deal of sympathy with this, because if we are now starting to shuttle between this country and, for instance, Caracas or Rio, we are spending vast quantities of money in just getting there. In addition, one stays there in an expensive hotel for a long time. This was a point made by my noble friend Lord Mais. If you are going out to tender for a major contract, you can spend £100,000 as easily as kiss your hand. Whereas it lies within the power of the Overseas Projects Group to pay half the costs of tendering, I believe, first of all, we should realise that at the moment there is only £½ million available to the Overseas Project Group for its export work, which is excellent, and carried out by devoted people. Nevertheless, if we are to send people all over the world to tender for major export contracts, we must be prepared to provide finance for the firms which may not be rich or large, but which have a very good chance of getting contracts if they once get their best men out to these countries, and then let them stay there long enough. How one would manage a general policy of paying for travel for exports I am not sure, but I will bring it to the notice of my right honourable friend the Secretary of State.
My Lords, finally I go back to the point made by the noble Lord, Lord Carrington, in relation to my remarks with regard to the noble Earl, Lord Limerick. The noble Lord, Lord Carrington, mentioned that it might be advisable if invisibles were placed under one Minister. It might be advisable if they were put under a Ministry of Export Trade, the British Overseas Trade Board,
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for instance, of the 'thirties. It is something that might be considered.
Nevertheless I believe these are soluble problems and we are discussing them in a rational manner, not as a matter of Party policy, merely with a professional view of how we can best compete in a world which is becoming extremely competitive. People have mentioned the success of France and Germany in the Middle East; the noble Lord, Lord Denman, mentioned this. Of course, they are willing to fight according to their own rules. We may be playing soccer, but they are often playing rugby football in these matters. One of the good things that I think we have done with this new power which has been given to ECGD, is to match the credit mix, which is a French concept; it is a mix of normal commercial business with grants in aid. The only problem we are facing is that we have to prove that they do it. If any noble Lord gets any information about other countries—I am not saying France specifically—where credit mix is being used, I am certain that the ECGD would be very glad to hear of it.
Lord GLENKINGLAS: My Lords, I am grateful to the noble Lord for allowing me to intervene. As he knows, I have had a good deal to do with ECGD. I do not know of a single case where matching has got the contract. I know it sounds good, but once you get to the stage where somebody else has the contract fixed, the fact that you can match it never wins it.
Lord WINTERBOTTOM: My Lords, I think this is very true, but it is helpful if information can be fed back, with no publicity, to the Government Departments trying to help us in this difficult area. May I turn now to the points made by the noble Lord, Lord Glenkinglas. I found them extremely interesting because I have some agricultural yearnings even if I am not an agriculturalist myself. Those of us who have seen the desert blossom like a rose will realise the exciting potential of these desert areas. Supply them with water and a certain amount of black soil and at once things begin to grow. Even Riyadh, which is a rather dry town, is now becoming quite green because of the water that is available to the trees and plants and so on.

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As the noble Lord says, this country is in fact in the forefront of agricultural theory and practice. He made one point with which I agree completely, and it does not only apply to agriculture but to every operation we are undertaking in that part of the world; that is, that it is no good sending livestock and high-grade specialists there. You have to have the chaps underneath who can do the technical work; the technician is as important as the expert in this area. This also, of course, is what he means by after-sales service. It is really to make certain that, having delivered your flocks, herds, seeds, machinery, there are men there who will make certain that the things you have sold are satisfactory and a success. This is true, of course, of almost every other operation, hospitals, desalination plants and the rest.
May I now turn to the points made by the noble Lord, Lord Denman, and I am speaking having made my first trip to the part of the world in which he is so expert. I would agree completely that we are moving into a new world there. Something has happened. An explosion has happened in the Middle East which is breaking the moulds of our thought and way of life throughout the rest of the world. At the end of the day, uncomfortable though it is at the moment, it will be to our good. We will have to adapt to it. But, if this explosion of power—monetary power and real power—arising from the OPEC policy on oil prices had not come about, we would have talked ad infinitum about the needs of the developing countries et cetera. Now we have really to take their needs seriously, because the whole of the balance of power in the world is changing.
I find this encouraging and exciting. It is a challenge which has to be met. It is a new world force. Let us hope that the people who wield it will wield it wisely. I think it is really a question of education. The noble Lord has mentioned the seminar next Monday. The whole business of teaching people what is happening in the world is a continuing process. I believe, at the end of the day, the opportunities are very great, and if the Government can find the resources—and I am certain the determination exists to do so—then we will be able to gather to ourselves the benefits that will come
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from this great interchange of ideas and potential between ourselves and this new world that is opening up in the Middle I East.
At the moment we are in difficulties, but I believe that our standing there is good. If we can recapture our credibility as reliable exporters—and I know we can, given the effort—I am certain the future that lies there for us is very bright indeed. May I turn finally to one of the remarks made by my noble friend Lord Mais; that we have reached a crossroads. I believe it is true to say that the "picturegram" in Chinese that represents "crisis" is disaster or opportunity. We in this country do not accept disaster, but I think we are willing to grasp opportunity, and this is what I think the present situation will enable us to do.
Lord HARMAR-NICHOLLS: My Lords, I am rather surprised that the noble Lord did not make any comment on the speech of the noble Viscount, Lord Slim. I thought it was down to earth, realistic and worthy of comment. I was wondering why it was omitted from what was otherwise a very detailed answer to the debate.
Lord WINTERBOTTOM: My Lords, I try to speak within limits of time. I have spoken for 25 minutes and I think that is probably long enough. I would have liked to comment at length on many speeches, but there is a time limit.
6.38 p.m.
The Earl of LIMERICK: My Lords, the House will certainly not wish me to speak more than a few moments, least of all the noble Lord, Lord Brockway, waiting patiently in the wings, and especially after the most helpful summing up by the noble Lord, Lord Winterbottom. My task, anyway, is easy, because we have had a remarkable coalition of Benches and all the speeches following mine were wholly admirable; they were eloquent, well-informed and constructive. So my thanks to those who have so carefully thought out their contributions and given their time to attend are both deep and sincere. I am not sure what is the male equivalent of Susanna among the Elders, but whatever it is I feel that I am it. I have sat succesively in various trade promotion

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bodies at the feet of the noble Lords, Lord Pritchard, Lord Denman and Lord Glenkinglas.
In general, I was struck by the number of speakers who picked up the point of the necessity of shop floor involvement, the point I made myself, and commitment to exporting. I hope this message will go out loud and clear. I see that the noble Lord, Lord Feather, is here, and perhaps we might enlist his advice on how to proceed. The other message which was astonishingly general was the fact that we had all had some experience over the years with Land Rovers. Perhaps that also will go out from this debate. I was delighted that the noble Lord, Lord Beswick, underlined so strongly the message about inflation and the fact that the best service to exporters lies in the creation of a healthy manufacturing sector. He touched on the shortage of skilled labour, and, of course, this is a constraint. But it was the Chancellor of the Exchequer who said recently that to make full use of our present unused capacity would have more impact in the short term than a decade of investment. I think this is a point that we need to have strongly in mind. My noble friend Lord Carrington pointed out that the Government can hinder, but perhaps not help very much. I think this was a little bit inverted in the summing-up Certainly one must agree that the attitudes of salesmen have changed, and one can share frustration at the failure to invest in success, and again we think of the Land Rover.
The maiden speech of my noble friend Lord Pritchard was one on which he has been widely congratulated. It is most indicative that, though he is sitting in the middle of this House, he is referred to as everybody's "noble friend". He has this great experience, and has reinforced the message about de-stocking. I was grateful to him for his mention of the National Exhibition Centre, which I visited yesterday. We had a meeting of the British Overseas Trade Board in Birmingham. It will be an enormous asset to our British exporters, and I endorse most strongly the commendation of all the initiative that has gone into that. It is proceeding on time and, as he said, should be open for business in February. Again, my noble friend was so right about
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this question of reconnaissance. I was charmed that he felt able to put his benediction on the Overseas Trade Board, and he left us with the same point about the involvement of the shop floor.
The noble Lord, Lord Auckland, is always listened to with much attention when he speaks on the insurance industry. I am grateful to my noble friend Lord Selsdon. He made two points which I had no time to make, particularly about the co-operation of the Government and the private sector in opening up certain markets where the Union Jack can and should be planted as a matter of Government will. Secondly, I strongly endorse his reference to the role of the nationalised industries, flowing both from their procurement programme and also their role in the consultative field. I should like to see it done even more, specifically in airports.
The noble Lord, Lord Mais, pointed out that many manufacturers now find exporting more profitable, partly at least because there is no formal price restraint in the form of a Price Code, but the price limit is now being imposed by competition, as he recognised. He made the most valuable distinction between export generation and export promotion, and I would echo his tribute to the work of the London Chamber in promoting East/West trade. One of the missions to which I referred earlier, and which I was privileged to lead, was a London Chamber mission to Rumania. My noble friend Lord Glenkinglas helped me to survive my first weeks in the Department of Trade and Industry. He filled a yawning gap in our debate on agriculture. His mention of joint ventures and inward missions was most apposite. People have to come to Britain to realise how it is that 2·8 per cent. of our population can produce 3 per cent. of the national product, and 50 per cent. of our food needs. Finally, on after-sales service. I hope that all the after-sales service in his agricultural field will be provided by pedigree British bulls.
The noble Viscount, Lord Slim, among a wealth of valuable and earthy information about weeks in the life of a travelling salesman, made a very valid point about the desirability of promoting more package deals. That was taken up by the noble Lord, Lord Denman. I should not like to leave the noble Lord, Lord

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Selsdon, with a monopoly in his offer to help with the promotion of such ventures. I, too, would be personally interested to hear about them. My noble friend Lord Denman expressed admiration for the Government's services in relation to the Middle East. This I echo, and I strongly reinforce his points about joint working of the Government and private sectors, both in agriculture and industry.
The noble Lord, Lord Winterbottom, pointed to the invisibles. I think I am right in saying that there has been a positive balance of trade only five times since 1800, and, strangely enough, two of those years have been within the last five, so that is the foundation of a great deal. He must have second sight, because the point he made on invisibles and taxation was one that was in my speech. I omitted it only because I thought I was going on much too long, and I was delighted to hear it from that Dispatch Box. On the Ministry of International Trade, I merely said that there was no time to deploy the case. I regarded it as not proven. But I am delighted to hear that he is looking seriously at it. It remains only for me to renew my thanks to all those who have participated and have stayed to the bitter end. I ask leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

CONFERENCE ON SECURITY AND CO-OPERATION
6.45 p.m.
Lord BROCKWAY Lord BROCKWAY rose to ask Her Majesty's Government what achievements they foresee at the third stage of the European Conference on Security and Co-operation. The noble Lord said: My Lords, it is the hope of many of us that in a few weeks—the date is uncertain, it may be in a few months—the representatives of 35 nations will meet to consider the most far-reaching proposals for peace and co-operation that have been made since the Second World War. The composition of the meeting is quite extraordinary. It will include representatives of NATO and of the Warsaw Pact Alliance—among them, on the NATO side, the United States of America and Canada. It will include all the Governments of Western Europe, the neutral
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Governments as well as those which are part of NATO. It will include from Eastern Europe, Yugoslavia, which is not part of the Warsaw Pact Alliance. It will even include the Mediterranean countries, Spain, Malta, Cyprus, Greece and Turkey. This is a really remarkable occasion of the comprehensive representation of all the Governments which are concerned in Europe.
I mentioned just now that the date is uncertain. The hope is that the Conference will be held in Helsinki on 28th July, and even at this late hour it is the fervent hope of many of us that it may take place. If that does not happen at the end of this month, it will take place in October. The Question refers to the third stage. The first stage was two years ago at Helsinki, when representatives of all these Governments met and decided to set up first in Vienna a meeting of representatives of East and West to seek to balance their military arms. Secondly, they set up commissions in Geneva, which were to seek agreement on almost every aspect of co-operation between East and West. One has to acknowledge that the Vienna meeting, seeking some mutual military reduction, has been disappointing, though in recent weeks it has gone further towards agreement. This only emphasises the conclusion, to which I am becoming more and more drawn, that disarmament in the world is likely to take place not as a result of two sides seeking military agreement, but by greater political, social and economic co-operation between the peoples of the two sides.
The commissions which have been meeting at Geneva have had quite extraordinary success. For some technical reason they are not called commissions. I am amused to find that they are called "baskets"; a proposal made by the French Government. There has been the most amazing agreement on political principles, and economic, social and cultural co-operation at these gatherings in Geneva. I acknowledge that I am in some difficulty in that those agreements have not yet been published and I have to rely on unofficial information which I have received, but which I am convinced is reliable. I acknowledge that the Minister who will reply is in some difficulty; no doubt he is aware of the agreements which have been reached, but because they are not yet public he will be unable

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to comment on what I say. I can only say I very much hope that what I report will represent the actual achievements at Geneva.
First, I recognise that most of the political agreements are platitudinous; they are all accepted in the Charter of the United Nations and in the Declaration of Human Rights—the recognition of existing frontiers unless they are changed by agreement, and so on—but there is one principle which has been accepted by East and West which seems to be extraordinarily significant. It is that all the Governments concerned
"… respect human rights and fundamental freedoms including freedom of thought, conscience, religion or belief for all without distinction of race, sex, language or religion".
That is a quite extraordinary acceptance of human rights by some of the Governments who have signed it, not only the Communist countries but, for example, Spain and Turkey, and I will later suggest ways in which it will be possible not only to accept these principles but to urge their implementation.
I turn from the political agreements to the extraordinary comprehensiveness of the agreements reached at Geneva by the commission, or "basket", which was dealing with economic affairs. That commission has agreed on co-operation, first, in large-scale projects relating to energy and raw materials; second, in electrical power; third, in the peaceful use of economic energy; fourth, in road networks across frontiers; fifth, in unified systems for shipping on rivers crossing frontiers; sixth, in the protection of the environment; seventh, in the development of economic ties; eighth, in scientific and technical co-operation; ninth, in transport; tenth, in tourism; and eleventh, in the training of personnel in economic activities. There was until yesterday still some disagreement regarding the "most favourable treatment" arrangements between countries. This astonishing area of agreement in the economic sphere indicates that we are now approaching a situation in which the new economic pattern for Europe can be established unitedly, both East and West.
The most difficult subject discussed at the commissions in Geneva was the
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freedom of movement, information and ideas. The West stood for the principle of these freedoms and I welcome that fact. Those of us who are libertarians feel that we are citizens not only of this country but of the new groupings of nations—citizens of the world—and we want to see the freedom of movement of all peoples, and the freedom of information and ideas across frontiers. However, your Lordships will forgive me if I say that the West was a little illogical in making that stand for those principles. Western countries also have their limitations on the movement of peoples. We have our immigration laws and the West also has its limitation on freedom of ideas and association; for example, many countries, including Western Germany, make the Communist Party illegal. The Communist representatives at Geneva declined to accept the principle of absolute freedom, but they made considerable concessions. According to my information, these included the reunification of families across frontiers, intermarriage across frontiers, access to private information including newspapers and journals across frontiers, cooperation in the provision of the study of foreign languages and free access to and exchange of arts and cultures. As a libertarian, I should have desired much more, but we must be realistic. The extension of freedom as some of us would desire will take place only as trust and confidence between East and West develop by the implementation of the decisions which have been reached.
This summit meeting of the Heads of State at Helsinki will take place with this extraordinary volume of agreement in recommendations. How will they be implemented? What are the means of implementation? They are not to be legally binding. I make this suggestion for consideration by the Government. Even if they are not legally binding, it would be possible for conventions to be established which would subsequently be recognised by Government for ratification. Secondly, as to the means of implementation, if this extraordinary sphere of agreement—social, economic and cultural—is to be implemented, there must be permanent commissions, representing East and West, to plan. There must he experts in continuous session, with the right to call representatives of industry involved to work out the success of the

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proposed co-operation. It may be necessary for those commissions to bring pressure for co-operation through the national Governments. The acceptance of the agreements on the movement of peoples, information and ideas, should be open to continuous surveillance by these commissions.
It has been suggested that annual review conferences would be enough, but they would not. They should take place every year to hear the reports from the continuing commissions, and to consider further proposals as they are made. For example, at this moment, the island of Malta is suggesting that the Mediterranean should be made a "lake of peace", and that both the American and Soviet navies should be withdrawn from the area. That is too much to hope for now, but I believe that this conference could be made the great breakthrough for peace in the world. NATO and the Warsaw Pact Alliance are the main instruments of confrontation between East and West. When this proposal was first made, it was suggested that their military aspects should be ended. That is too much to hope at this third stage of the renewed conference at Helsinki. It is not too much to hope at the fourth, fifth or sixth stages, if we accept this great opportunity for peace in the world. My Lords, I ask this Question and I hope that, from other Members of this House and from the Minister, we may have encouragement that this hope of destiny may be fulfilled by the co-operation of the Parties here and of the Government.
7.7 p.m.
Earl COWLEY: My Lords, I feel that the whole House must be grateful to the noble Lord, Lord Brockway, for asking this Unstarred Question. As the noble Lord has said, the first two stages of the European Conference on Security and Co-operation have taken nearly two years and, with the likelihood of the third stage taking place at the end of the month in Helsinki, this is an extremely appropriate time for the House to discuss the issues involved. When Mr. Wilson goes to the Heads of Government meeting, he will at least have heard the views of one of the Houses of Parliament.
We on this side of the House are in favour of improving relations with the
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Soviet Union and the Communist bloc countries. However, our support for detente is dependent on the proper maintenance of the security of Britain and of the West. It is noticeable how the Russian defence policy seems to operate independently of any moves by the Soviet Union towards détente with the West. Thus, irrespective of any developments at the CSCE talks in Geneva, the Warsaw Pact countries continue to expand their armed forces. We now have a situation in which the balance of power between NATO and the Warsaw Pact countries is vastly in the latter's favour. One has only to look at the Government's own White Paper on defence to see that, and the military balance of NATO's central front is one to two in the Soviet Union's favour. Thus, while Britain is cutting its own defence forces, the Communists are expanding theirs.
While we want a successful conclusion to the Conference, it would be wrong for the moves towards détente to be used as a reason for further savage defence cuts by the British Government. I hope that the noble Lord, Lord Goronwy-Roberts, when he answers this Unstarred Question, will give the House the Government's assurance that détente will not be used as an excuse for further reducing the security of the country, and that they will resist any possible pressure from the Labour Left Wing to take the country down that path in the name of détente. Although I recognise that military and defence questions are the concern of the mutual and balanced force reduction talks in Vienna, and that only peripheral questions are now being discussed by the CSCE, to divorce the two would be the height of folly. One can properly judge relations between East and West only by looking at the whole picture, not at just one part of it.
I believe that my noble friend Lord Home of the Hirsel struck the right note during his debate on 30th April this year, when he said on the subject of the Conference on European Security and Co-operation:
"… we should not concede any point of substance unless it is matched by a concession of equal weight; we should not allow any treaty that we have signed or intend to sign to be broken without bringing the breach immediately to the public notice and releasing ourselves from the obligations assumed unless that breach is rectified at once. The price in terms of security of turning a blind eye

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to Communist deception is too high."—[Official Report, 30/4/75; col. 1260.]
I believe that the contents of Basket 3 which, as the noble Lord, Lord Brockway, said, concerns improved human contacts and the freer and wider dissemination of information, are the most important from the point of view of this country and the West. While the reunification of families, the increased meetings of their members across frontiers, and marriages between citizens of different States in the East and West are excellent objectives, none of them is subject to any form of guarantee on the part of the Soviet Union. Each is preceded by a nebulous preamble; for example, such phrases as to give "favourable consideration" to, or to consider in a "positive and humanitarian way". Improved access for Western newspapers into the Communist bloc is an advantage to us, and so is the greater freedom to Western journalists. But of course this is entirely one-sided, since Soviet newspapers are already being sold in this country and journalists from the Eastern bloc countries can operate with comparative freedom here. But whereas we in this country think of security in terms of freedom of access and movement, the Soviet Union thinks of it in terms of control and non-interference in its sphere of influence.
Consequently it is Basket 1, with its declaration of principles and its military confidence-building measures, that appears so attractive and important to the Communist bloc. Of course it is necessary to remember that any agreed CSCE documents, which are signed by the Heads of Government, are only of political, and are not of legal, status. However, the Soviet Union still appears to hope to set the final seal upon its European conquests of the last war, and to gain the recognition and acceptance by the West of its declaration of principles, which include the non-interference in the affairs of one State by another, the inviolability of frontiers, and the preservation of quadripartite rights in Germany.
My Lords, I trust that the CSCE documents will not produce this result, and I hope that the noble Lord, Lord Goronwy-Roberts, will confirm this point when he speaks. It is perfectly obvious that the declaration of principles is in complete contradiction to the Brezhnev
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doctrine. The rejection by the Soviet Union of the tough Rumanian proposal to prevent the USSR doing a "Czechoslovakia 1968" on them, or on any other country for that matter, proves that when the cards are down it is the Brezhnev doctrine that counts. Thus I am certain that despite the Conference and any decisions that are taken there, the Prime Minister will have another opportunity to forgive and to forget with alacrity.
I feel that one should be realistic when considering the military confidence-building measures and the exchange of observers and prior notification of manoeuvres. The Warsaw Pact countries can invade Western Europe whenever they want, and thus these provisions can only be of real benefit to us, because I believe it would be highly unlikely for Western European countries to invade Eastern Europe. It is interesting to note that where it suits the Soviet Union they are willing to overlook ideological considerations. At the moment they urgently need Western technology, and therefore ideology takes second place. The involvement of the European Commission in the discussion on the commercial and the industrial exchanges is of vital importance, since its involvement, and the possible agreements in this area, could provide a future framework for Pan-European trade. I agree with what the noble Lord, Lord Brockway, said on this point.
I strongly urge the Government to tread with very great care when they come to consider any follow-up to the Conference. I believe that any permanent secretariat—as I believe the noble Lord, Lord Brockway, was advocating, if not in detail, then in spirit—if set up immediately, could provide a very useful propaganda platform for the Soviet Union against a Western Europe that appears to be split and divided. I feel that a better course would be to wait and see how matters develop over the next couple of years, then look to see to what extent tile Communist bloc countries have fulfilled the terms of any agreement that is reached, and consider then what course to follow there. This is the only realistic approach to take.
It should never be forgotten that in seeking detente the aims of the Soviet Union and its allies are not the same as I those of the West. To the Communist

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bloc peaceful co-existence means the continuation of the revolutionary struggle by all means short of war. On Moscow radio on 14th October last year it was said:
"In conditions of peaceful co-existence the ideological struggle between the two worlds and between the two ideologies not only does not cease, but, on the contrary, intensifies. The forms and methods of this struggle change, but the struggle between the ideology of scientific Communism and the ideology of the capitalist system of exploitation cannot cease until the complete liberation of labour on our planet."
This bears out an earlier statement by Mr. Brezhnev himself, who said:
"While pressing for the assertion of the principle of peaceful co-existence, we realise that successes in this important matter in no way signify the possibility of weakening the ideological struggle. On the contrary, we should be prepared for the intensification of this struggle and for it becoming an increasingly more acute form of struggle between the two social systems. We have no doubt as to the outcome of the struggle, because the truth of history and the objective laws of social development are on our side."
Thus, we on this side of the House believe that détente, although very worth while and something of which we are in favour, is no substitute for defence. On balance we are properly in favour of the results of the CSCE, but without the documents mentioned by the noble Lord, Lord Brockway, we must reserve our position until we have seen them.
In the long run it is not a signed piece of paper that will matter, but the extent to which its terms are implemented by the parties to it. The peace of Europe has in the past been broken not because there has been a lack of treaties of nonaggression or statements of good will and friendship, but because countries have refused to respect them. A practical approach must be maintained. Any lack of fulfilment in one sector would no doubt affect the others. If there are rotten apples in one basket., then the other apples in the other baskets will become affected. It will be on the results, rather than the intentions that the CSCE will be judged. As for myself and my noble friends, we are in favour of détente, but it must be in the form of realism.
7.19 p.m.
Lord SOPER: My Lords, first, I wish to thank most heartily my noble friend Lord Brockway for his introduction of this theme and for the pressing of the
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Question to which it is hoped the Government will give a reply that will be creative and that will move towards the type of change which the noble Lord so eloquently described in the penultimate part of his speech. I must confess myself bitterly disappointed with what the noble Earl said. May I say to him professionally that where you are dealing with two bunches of sinners, it is always the worst of tactics, and is liable to the most lamentable of mistakes, to assume that all the evil lies on one side and by judicious selection of the delinquencies of one side, one can give the impression that the other side has been whitewashed into purity. This is not so. It would have been possible to have arranged and deployed arguments that would have proclaimed the same kind of delinquency on the part of the Western Powers as has been advocated and, at least, deployed by the noble Earl. May I remind him that there is an elementary mistake in saying that if you have two baskets of apples and one of them contains bad apples, the other basket will be liable to the bad apple infection as well. Not at all! If you have the kind of situation in which you are prepared to recognise the competing and complementary conditions that prevail in both sorts of apple baskets, then I believe you have the opportunity of the kind of inquiry to which we are invited to attend at this moment.
Earl COWLEY: My Lords, whether one basket could be contaminated by the other depends upon how close they are together and how much one is dependent upon the other.
Lord SOPER: My Lords, I was going on to say that as a matter of fact it would seem that the contents of my noble friend's speech is almost totally unknown to the majority of people who ought to be concerned about it. This is lamentable and, in my judgment, a matter of urgent trouble. I believe that there is widespread complacency with regard to the military situation and the nuclear threat that now confronts us all. I believe that that complacency is to some extent due to the attitude of the Press, but I think also due to a widespread prejudice in favour of the idea that at the moment the mutual terror of the nuclear threat neutralises the situation and provides for the kind of freedom from the likelihood

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of war to such an extent that it can postpone its possibility. This is "Cloud Cuckoo-land" logic; rather like the man who falls over a cliff and comforts himself halfway down with the thought that so far he is getting on very well. The fact that the calamity has not happened is not due to the assurance that it will not; but to the size or the height of the cliff. We are already and continuously in a position of ever-increasing urgency and ever-increasing danger.
I would respectfully ask the House to consider one or two aspects of it. I remember clearly—and it sends still a shiver down my spine as I reflect on it—something that my noble friend, Lord Snow, said about the proliferation of nuclear weapons: that even if these weapons are not intentionally fired, the probability of an accident and a chain reaction to that accident becomes more cumulative as the number of those weapons increases. This constantly haunts me because there is a proliferation of nuclear weapons. There are far more triggers and far more fingers on the triggers. Twelve countries now, in addition to those already in possession of the know-how can, within a short time, provide themselves with nuclear weapons. We have already ten times the overkill and the results of the SALT talks were not to reduce the power of the nuclear threat but to add a great deal of power to the multiple warheads on both sides of the Atlantic.
Furthermore, the Clausewicz doctrine that a particular war is the inevitable consequence of the policy of which it is a continuation is illustrated not only by the problem of Cuba—in which the outstanding historical fact was not that Khruschev was deterred but that Kennedy was prepared and probably was within half an hour of using the threat of war and deploying instruments of perhaps nuclear war—but that only on Monday of this week Mr. Schlesinger, the Secretary for Defence in the American Government, made a declaration which is ominous, repetitive and supremely dangerous. It is that the Ford Government has no intention of changing the attitude hitherto preserved by the United States of being ready for a first-strike nuclear threat and not a retaliatory one; and, that that threat of using nuclear power as a first strike would not be limited to the one
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or two occasions which in the past have been advertised as qualifying for that atrocity.
These are matters which, for me, make the question of security far more important even than the question of cooperation; although I agree with my noble friend that one of the best ways of creating détente is to provide in the economic sphere and the social sphere opportunities for such co-operation as will reduce the fear and the distrust which prevails in the military sphere. But it is noteworthy that in this matter there has been considerable and outstanding success in the economic and social spheres and prospects of even greater success. This stands in stark contrast to the lack of success in the military sphere.
The inquiry should be made by all concerned as to why this has happened. I suggest that two of the reasons are obvious. One is that where fear is dominant, rational thought is at a discount. Where war is concerned, or preparation for war, nothing is more true than the observation of Sir Winston Churchill that lying in wartime is an indispensable ally. I do not know what actual conditions prevail in Western Europe. I read—and if I were not standing in this tribune I might advertise the document from which I derive this information—that what has been going on in the calculations in Europe as to the relative strengths of conventional forces may not be true and in many cases is obviously false. Nevertheless, I would not wish to disagree with the proposition that conventionally the weapons of the Eastern bloc are superior in number and perhaps in efficiency to those of the Western bloc.
Therefore, whereas with economic and social matters, reasonable thinking and the quiet atmosphere of conference may provide the right opportunity (as hitherto it has begun to do with the kind of changes for the better which have been succinctly represented by my noble friend), yet fear and lack of information and distrust prevail in the military sphere—and here I would disagree with the noble Lord, that there is a great deal to be done in allaying the kind of suspicions and rebutting and repudiating many of the extravagent claims made on both sides and not a few in your Lordships' House in the debate a few days

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ago. Therefore, I hope the Government will press for certain realisable unilateral decisions in the light of the kind of situation which will not respond, however much we hope it might, to the administration of conference and the opportunities of close reasoning.
My Lords, for that reason, I would make three observations. First, I hope that Her Majesty's Government will try to do something to restrain the iniquitous and increasing wickedness of the arms trade which has grown enormously over the last few years. In many cases the only way to get oil—at least for some countries—is to sell arms, obsolete, outdated or, even, the most sophisticated. This is a wicked and dreadful business. I hope the Government will present at the convening of this Conference their declaration on this matter and make constructive proposals. Then I hope the Government will foresee the opportunity of a further reduction in armaments; but when I say "reduction in armaments", I am aware that hitherto the deterrent of the nuclear power has operated until people have realised that a conventional, more gentle bomb that is not nuclear nevertheless has a lethal effect. We may be in the position where the nuclear threat is not so dominant as the conventional one. Therefore, I do not believe partial disarmament is really much good, and I ask the House to bear with me for a moment in considering this matter. It may sound somewhat strange to people to think this is a practical suggestion.
I have lived long enough to come to the conclusion that there is something crazy about the attitude of the crossing-keeper who opens one of his two gates when he is half persuaded that there is a train coming. I do not believe that in the issue of disarmament there is anything which stands between a total commitment to full armament and total rejection of the whole instrumentality of violence. This is a pacifist position, and I make no apology for advertising and advocating that in your Lordships' House. I know it is universally repudiated in the high quarters of Government; I know it is regarded as jejune.
I reflect that CND is a long time ago. Where have all the flowers of its enthusiasm gone? I would not pretend
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that only I am left—and certainly they do not seek my life to take it away. There are others in your Lordships' House this evening who marched in the wet and the rain and were very close to a victory. We now realise that as we marched our Achilles heel was that we sang, "We shall overcome some day". Time was not on our side, and I would claim from this House that the situation is just as urgent and imperative now as ever it was. You will halt this iniquitous and dreadful business of nuclear power not when a conference will agree multilaterally to do so, but when one country is prepared to take the unilateral risk of encouraging the others by its overt act to do that.
There are 12 countries in the process of getting their own nuclear weapons. I believe a country like the one in which I live could have a moral effect which far outdistanced the practical arguments which could be advanced against it, if it were to say, "We will unilaterally give up the nuclear threat, nuclear arms, and invite others to do the same." I know the arguments. I stand in open spaces and defend this position from time to time. I know there are all kinds of arguments which can be proposed against it. We are in an absolutely critical condition, and I wonder whether we have much more time. I entirely and heartily subscribe to what my noble friend said about the need for recognition of and welcome to the prospects that lie within the economic and social opportunities of this renewed Conference, and I believe it is worth while to continue to talk with those with whom we profoundly disagree and, in many cases, accept what they say.
But, above all, the time is still right, still apposite, for taking that final step of saying that we have argued, some have prayed, we have thought about it and it is not happening; we are in a world of absolute crisis, and it needs another kind of attitude. The CND was right. I hope that the Government take their courage in both hands and offer this Conference a CND, a campaign for nuclear disarmament, and take the initiative by saying, "We will be the first to put it into practice."
7.34 p.m.
Lord BANKS: My Lords, I should like to join in expressing gratitude to the

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noble Lord, Lord Brockway, for initiating this debate today through this Question, so enabling us to discuss the Conference, and also to hear the Answer which is to be given by the noble Lord, Lord Goronwy-Roberts. When the Conference on Security and Co-operation in Europe began in July, 1973, it was widely felt that the Russians were looking merely for a means of securing ratification of the status quo in Europe, a freezing of the present division in Europe. The West were thought to be taking part in the Conference more for appearance sake than from any hope of anything practical coming out of it. It was described as a Conference about the cosmetics rather than the practicalities. It seemed that the discussions about the real problems of European security would take place outside that Conference in the SALT talks, the talks about a balanced mutual force reduction, and in the normal meetings of Heads of Government and other Ministers which are constantly taking place. The Conference, too, in these past two years has been taking place against the background of the increasing preponderance in conventional military power of the Warsaw Pact countries. This very fact is bound to put Western countries on their guard, and I think that they are entitled to ask: If détente is the genuine aim of the Russian Government, why is this preponderance in forces required?
We all agree in this House that Russia does not want a major war. But what does Russia mean by "peaceful co-existence"? Does it mean the acceptance of the maxim, "live and let live", or does the Russian Government wish to extend its dominion wherever it can do so without danger to itself? So far as Russia is concerned, is it just an obsession with the fear of attack from the West and East, or possibly both, with the Warsaw Pact countries in the West regarded as essential buffer space against such a contingency? Or is there a design to turn the flanks of NATO, to outstrip NATO in military power, so as to bring Bonn, Paris and London as much under the shadow of Moscow as Helsinki is today or, ultimately, as much under the domination of Moscow as Prague and Budapest? The fact is we cannot be sure and, faced with the conundrum of Russian intentions, although we may sincerely desire
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détente, we cannot abandon entirely a hard-headed vigilence.
In the light of this fact and position, how should we judge the likely achievements of the Conference on Security and Co-operation? It has been divided, as the noble Lord, Lord Brockway, told us, into three different sections: political cooperation, economic and scientific cooperation, and freedom of movement and information. I shall be interested to hear how the noble Lord, Lord Goronwy-Roberts, feels that the political co-operation section has advanced. There cannot be anything against re-stating a belief in the peaceful settlement of disputes without the use of force. But, as the noble Lord, Lord Brockway, pointed out, the nations participating in the Conference are already committed to that course under the Charter of the United Nations. While it may be encouraging to have it stated again, it does not take us very much further forward. Then there is the endorsement of the sovereignty of nation States. Everything depends on how that is interpreted in practice, and one cannot help bearing in mind the fate of Czechoslovakia and Hungary.
Then we come to more specific details such as the warning which is to be given where manoeuvres of troops exceeding a certain size are taking place and within a certain distance of frontiers. That is of course to be warmly welcomed; but so far as the main security problems of Europe are concerned, it is peripheral. The same is true of observers attending manoeuvres from different sides of the Iron Curtain—something else to be welcomed, but not in itself something which goes to the heart of European security problems. It seems to me that agreements on this section are in danger either of being platitudinous, depending entirely on the test of practice, or else though welcome, to be peripheral to the problems of European security.
Lord BROCKWAY: My Lords, may I interrupt? Is the noble Lord aware that only yesterday agreement was reached between the Communist countries and the West on this issue of manoeuvres? The area from the frontier was agreed and the strength of the arms was agreed. This gives another indication of the quite surprising agreement which has been reached in these discussions.
Lord BANKS: My Lords, I am grateful to the noble Lord for his explanation of the position. I was aware of that and welcome it. But I do not think it alters my interpretation, which is that it does not go to the heart of the European security problems, although it is an indication of relaxation of tension and, as such, is warmly to be welcomed. I am not trying in any way to belittle these achievements, but am merely trying to put them into perspective. If they are not put into perspective, there is this danger of platitude on the one hand, and useful, but not fundamental, improvements on the other, which we must welcome as far as they go.
In the economic and scientific section, I believe there has been good progress, although there were the difficulties to which the noble Lord, Lord Brockway, has referred concerning "most favoured nation treatment", reciprocity and so on. However, this is a sphere in which, as I believe the noble Earl, Lord Cowley, has already pointed out, the Russians need help and assistance. All that can be achieved under this heading must clearly help to improve good relations; but I think it has a limited, though not negligible, impact upon the problems of political security.
When we come to the section on freedom of movement, we should congratulate the NATO and EEC nations on the way they have been able to act together in putting their proposals before the Conference. I know that the noble Lord, Lord Goronwy-Roberts, has paid tribute to that in your Lordships' House on a previous occasion. Here, again, there seems to have been some useful progress and one must welcome the reunification of families and intermarriage across frontiers, and so on. I should like some further information, if the noble Lord can give it when he replies, about access to information and exactly how far agreement has gone under that head. Cultural exchanges, again, are always to be welcomed, but they are one of the easiest areas in which to come to some agreement.
It seems to me, trying to get an overall picture, that there is an exposition of good intention, together with a number of useful points of agreement; but one wonders whether this really justifies the title
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of the Conference. Is it not difficult to believe that European security will indeed rest on these decisions, welcome though they may be and important in some respects though they may also be? I should like to ask whether the noble Lord feels there has now been sufficient agreement and achievement to justify the calling of a summit meeting and, if so, when such a meeting is likely to be held.
Finally, there is the question of follow-up. The question of joint institutions between East and West has been mentioned. I wonder whether the Government have absolutely set their faces against that. It is one of the aims of the Russians in their negotiations to secure that, but it seems to me there may be a case for some form of experiment in this direction. An all-European body to guard the inviolability of national sovereignty, for example, might well be worth while. It would be in some ways a safeguard against the Brezhnev doctrine, but the basic conundrum of long-term Russian intentions, which I mentioned at the beginning, is left unresolved. The military imbalance remains. I greatly welcome any progress towards détente and indications of progress towards it in this Conference. I hope that when the Minister replies he will be able to encourage us regarding the extent to which progress has been achieved in this Conference. But I am sure he will agree that the price of liberty for the West continues to be political and military vigilance.
7.45 p.m.
Lord HALE: My Lords, this is for some of us almost an emotional occasion, because my noble friend Lord Brockway has opened a discussion which is very up to date and very à propos, and which advocates those ethical principles with which his name has been associated for 70 years. If there is anything in my own life of which I am particularly proud, it is that I have been in intimate association with him in many spheres and in connection with many political projects. Always there have been the same ethics since his re-election to Westminster, after an interval in 1950. It was with the noble Lord, Lord Brockway, that in Paris shortly after that I had the privilege of making the acquaintance of the noble Lord, Lord Ritchie-Calder, who will be speaking later tonight.

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It may be that we were almost a pamphlet factory, most of us boasting the proud approval of the noble Lord, Lord Soper, with whom, on terrestrial ethical matters, I have never found myself in any disagreement at all except a week or two ago over the Common Market, which is perhaps not quite as ethical as that and about which I could understand a certain special interest. 'Throughout, the noble Lord, Lord Davies of Leek, was with us. Of course, I would not for a moment attempt to involve a representative of the Foreign Office and a very distinguished and courteous Member of Her Majesty's Government who is about to reply, but for his own voluntary revelations as recently as last Monday when he said on British Guiana, "quorum pars parva fui". Indeed I will not attempt to commit the opinions of my noble friend on the Front Bench, except to say that I am quite sure there was much more with which he was in sympathy.
The noble Earl, Lord Cowley, who for a moment has just left the Chamber, always speaks with learning, grace, civility and charm, and I would not wish to introduce a particularly controversial note. But the views he expressed on the Union of Soviet Socialist Republics was very much the opinion of Mr. Foster Dulles. Of course, they have done things with which we disagree. In point of fact, we disagree with a great deal of their philosophy. I have always said that had I been born in British Guiana or in Kenya I should have been a Communist. They were offering hope. The noble Lord who has spoken from the Liberal Benches referred to Czechoslovakia, which was indeed one of the great tragedies of Europe. None of us in this Chamber mourned the death of Jan Masaryk more than those who had some acquaintance with him. It was not the first rape of Czechoslovakia. The gravest rape of Czechoslovakia was in 1938 and 1939, when we were refusing the offers of friendship from the Russian Government.
I was at the Red Square in 1938 and saw the Russian Forces march by, and then had to come back here and read articles about cardboard tanks! One of my first essays in politics was to move a resolution that we should ask
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Sir Stafford Cripps, and offer to pay his expenses—though as a rich man he probably would have refused that offer—to go to Russia on his own, representing the Haldane Society, the Association of Left Wing Lawyers, to try to establish the basis of an agreement to bring back and present to the British people. All these matters seem a little far away from some of the idealism which we desire to express.
I call myself a pacifist, but I have to call myself a pragmatic pacifist because cannot agree to British soldiers going into war unless they are adequately armed. But for that I agree entirely with the noble Lord, Lord Soper. I do not know how you manage the transitional period. It is difficult, and certainly as I have always said I agree that the presence of Polaris missiles on Holy Loch is a menace to the safety of Britain. I did not see the remark of Mr. Schlesinger—I take it from the speakers—but if we are still in a world in which the decision is taken there will be a great temptation in Moscow, if the button is to be pushed there before it is pushed in Washington, for them to say, "As a last resort, to show our determination, and to show that this has reached a pass in which the world may disappear, we will fire our first shots at some large ally of America who has nuclear arms posed against us." It may well be that Britain and the extermination of Britain could be the last effort to prevent a major conflict of the two great Powers.
My Lords, it is to the noble Lord, Lord Ritchie-Calder, that I was indebted some weeks ago for hearing of a rather odd person whom I call Henry Adams who belonged to the Adams Presidential family. In 1906 he produced a theory of history in which he attempted to demonstrate that historic change took place in a form of a retrograde algebraical progression, so that each period of historic change was faster than the next and much briefer than the next. He predicted that around the year 2000 we should have approached a state of chaos, which of course is one of the predictions of the laws of thermodynamics. That political chaos would mean that law had ceased to function, that terrorism and individual violence was rampant, that the religion of mercy and of justice and sympathy had given way to a religion of violence, that justice could not be administered and that

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government had broken down. I admit that the reasons which induced him to make this prophecy—except that he wrote at a time when the speed of transport, invention and, obviously, the speed of change was increasing—escape me. I thought it was rather a cranky book.
But if we look at the world around us now we look at a world in which we have got to agree, a world in which the only hope for mankind is agreement. We are looking at a world in which we must not say any longer, "Can we trust them to carry out their agreement?" We look at a world—and I am perhaps rather more cynical than my noble friend, which may be due to a duodenal ulcer rather than to any diminution in my idealism—in which we have to be idealists and take whatever risks are inherent in that progress.
It is very odd that there is this newspaper attack on Communism, this newspaper misrepresentation of the political Left, which has never been as Left as all that and often not as Left as I would have wanted it. Almost as a tribute to my noble friend Lord Brockway I glanced today through many of the propositions which we embodied in our pamphlets. I thought, "How many mistakes shall we find? How many youthful errors?" I found that the first pamphlet on which my name appeared, The Keep Left pamphlet made its main point on summoning at once a conference of oil producers and oil consumers to arrange for the establishment of commodity prices. The subject of commodity prices is essentially a matter for international agreement, and has been a pregnant cause of economic insufficiency. I found that we advocated a united Europe and the taking of every step towards uniting Europe.
I am not surprised that we advocated an intensive expansion of Commonwealth relations. Perhaps having just visited Canada and being shortly to visit Australia, I had leather more to do with that than most. In Canada I was concerned that here was a great people with immense affection for Britain, with an immense desire for information, yet not a single British magazine or newspaper was being circulated among them. They got no information; they did not know what was happening; they were uninformed about British political views.
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It is one of the oddities of history that a few years later a comparatively unknown Canadian came popping over to Edinburgh and took over the Scotsman and then The Times—indeed, a bunch of papers that spreads all over the world. He was supplemented a little later by the arrival of an Australian editor who took over a chunk of the rest. There are some odd things about politics.
I conclude by repeating my own personal gratitude to my noble friend Lord Brockway—indefatigable, always at the public service; a man who has never served his own ends, who has happily accepted relative poverty throughout his life to devote himself to public service—for this further distinctive contribution to the cause of international understanding.
8.0 p.m.
Baroness GAITSKELL: My Lords, one of the most endearing attributes of my noble friend Lord Brockway is his daily affirmation that hope springs eternal in the human breast. As for my noble friend Lord Soper, I agree with him on one point—that we are all sinners now and for ever more, and that we live in a mad world which has been made madder through science and advanced technology. As I am not a pacifist, I do not wish that to come between us.
We are very grateful to my noble friend Lord Brockway for asking this Unstarred Question, but having listened to him today and having read his pamphlet called A Great Hope for Peace. I am left with mixed emotions. His catalogue of good and bad signs in the world today, which he claims herald a new era of peace, seem to me to cancel each other out. I wish I could look at the international scene through rose tinted spectacles and share the faith of my noble friend which he expresses in the results of the conferences that have taken place in the last few years. I wish I were bewitched and felt the magic in words like "détente" and "co-operation". I remain sceptical about international summitry, although I am all for our getting together in every kind of international jamboree. Usually, I enjoy them enormously: there is social confrontation when these jamborees take place which is the healthiest thing that we can have at the moment.
Despite my noble friend's insistence that his proposals are practical and not

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unrealistic, I remain unconvinced that, though the original aim of European security and co-operation was the dismantling of both NATO and the Warsaw Alliance, this is not the answer to our prayers today. I simply do not accept that proposition. All my experience at the United Nations refutes the solution that both of these bodies have to be dismantled. Let us look at the proposal made at the Helsinki meeting in 1973 to set up three commissions to deal with political, economic and scientific co-operation, the freedom of movement and the freedom of information. My noble friend admits that the discussions on the reduction of forces did not go so well. This is hardly surprising. Can anybody believe that the Soviet Union is really in favour of a relaxation of power over the East European countries in her empire?
I will quote a few words from the pamphlet of my noble friend. He writes:
"Critics of the Soviet Union will welcome the acceptance of respect for human rights and basic freedoms by each State."
He says that this is what the Soviet Union is putting forward. I find this kind of platitudinous declaration absolutely meaningless. Last year I took part in a human rights seminar in Yugoslavia. The Soviet participant kept a very low profile, but when he spoke he flatly denied that there were any abuses of human rights in the Soviet Union. As for freedom in other countries, although Britain has suspended certain human rights in Northern Ireland because of the emergency, we "came clean"; we talked about it. But the Soviet Union does not talk about these matters.
As for freedom of movement and information, I was on the United Nations Human Rights Committee for five years, and we know that the Soviet Union do not allow this. We know that there is no freedom of movement—certainly not out of the Soviet Union, nor into it. My noble friend says that the Russians are not ready for limitless liberty—a charming phrase, my Lords. But it is really a sick joke when we have plenty of evidence that people who do not agree with the Soviet Government's politics are diagnosed as psychotics and treated with painful drugs which make them ill. Therefore, when Mr. Brezhnev speaks of
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"positive trends towards peace and cooperation in Europe", my noble friend regards these words as an important concession to freedom, but the evidence is very slim. Perhaps the most surprising statement in my noble friend's speech was his confession that the conflict between NATO and the Warsaw Alliance will be met not so much by disarmament conferences between military opposites as by actual co-operation between opposing blocs. Here we are back again in the "never-never-land" of wishful thinking. For my part, I would rather put my money on a system of controlled disarmament—agreed arms control.
My noble friend tells us in his pamphlet that our present expenditure on arms in NATO costs a British family of four £5 a week. I should dearly like to know how much the Soviet Union spends on armaments and what it costs a family of four in the Soviet Union. But where I part company with my noble friend is on his proposal to dismantle NATO. I noticed that he did not say this in his speech. He wrote it in his pamphlet. As for dismantling NATO, I think that this would be a most irresponsible and dangerous thing to do at this time. The referendum has just sealed our participation in Europe. The Labour Party is now represented there and by its representatives has added to the democratic Socialists from other countries.
It is vital that we should be part of the Atlantic Alliance. We need the help of America for our security, although I notice that nobody has mentioned this point so far. This does not exclude exchanges of all kinds—economic, cultural and social—with the East European countries which I know my noble friend favours.
To which country can the Western European countries look for their security? Has it ever crossed the mind of my noble friend Lord Brockway that without the help of the United States after 1945 we might now be part of the Soviet Empire? At present, the whole world is going through a turbulent crisis and change. Although still strong, the United States has suffered from the effects of Vietnam and Watergate, but because it can rely on its own raw materials, agriculture and food the chances of the United States overcoming its difficulties are good.

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It has always been a generous country which has been ready to help other countries, although it has done some very dreadful things, too, in its time. This is not the same in Europe where we have been exploiting the products and raw materials of the developing countries to maintain a very high standard of living. The developing countries are putting a stop to this by their new international economic order. So, my Lords, this is not the time for dismantling NATO and quitting the Atlantic Alliance. It is a time for the European democratic countries to be united and stand together in defence of all their freedoms. They must continue with maximum aid to the developing countries, even if this affects their own high standard of living. Never has it been so imperative for the European democratic countries to exercise the greatest wisdom, and to set an example to the whole world in defence of all their traditional freedoms, and I believe it is on them that the responsibility for peace in the world mainly rests.
As I have said, let us get together, East and West Europe and the United States of America. Social confrontation is a desirable and enjoyable activity. Let us both try to learn from the Governments which we do not wish to emulate. We do not wish to emulate their kind of government, they do not wish to emulate ours, but each of us can learn from each other.
8.11 p.m.
Lord RITCHIE-CALDER: My Lords, I am grateful to my noble friend Lord Brockway for lighting candles in our darkness and sharing with us that irrepressible optimism by which he still maintains that reason and compassion will prevail. As a professor of international relations I describe myself as a paid optimist. I would not call Fenner Brockway a paid optimist; I think his optimism is entirely unpaid. It was—and is—my job to look for hopeful ways ahead. When situations look hopeless and the world seems to be passing through the tail of the comet—whether it is Henry Adams' comet or another comet—which blinds men of affairs to the obvious (and I think that is what we have been suffering from for the past 25 years) and bemuses their judgment, which I think is manifest at the present moment, I clutch at Lord Brockway and his faith in reason.
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After that rehearsal for doomsday, the Cuban missile crisis, when the nuclear super-Powers were horn-locked on the edge of a precipice and disengaged at the 11th hour and 59th minute, a statement was made:
"People asked who won; people asked who lost. I say reason won, mankind won."
I used to ask my students who made that statement and invariably the guess was President Kennedy. It was not President Kennedy, it was Chairman Khrushchev. It did not do him personally much good because the hawks in the Kremlin dispossessed him, but I believe that his sentiment was right and that, in its essence, the situation itself was the turning point in the Cold War which put us on the road to the European security Summit we are hopefully discussing tonight.
We look around the world and we find little to comfort us: unreason and man's inhumanity to man prevails in the Middle East, in Northern Ireland, in Africa and considerably in Latin America. Events in India become the more ominous because it, too, is in a state of crisis at the moment and has a capacity to develop and use a nuclear bomb. We have the cleavage in what Dulles (as was pointed out earlier) quite mistakenly regarded as monolithic Communism and the confrontation of the Soviet Union with the People's Republic of China, and if that gives the ghost of Mr. Dulles any satisfaction I should not like to join him where he is.
There is, however, no doubt that the focal point is Europe and the attitude and the example which is set there in the immediate future. In this context, more important than the spelling out of it will be the attitudes because they will reflect what we hope is to generate into a force for the changing of other things beyond Europe. This conference, for good or ill, determines the course of world events. I share the hopes of the noble Lord. Lord Brockway, which derive from the work of the commissions or the baskets and the encouraging accommodations which have been made by all parties. I must say that what I know about Geneva confirms at least what he has said and conforms to the substance of what he has said.
I do not regard the findings of the commission, as was, indeed, suggested

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by the noble Earl, Lord Cowley, as rhetoric or cynical semantics: I regard it as the language of conference. I believe that economic relations, cultural relations, improved communications and a frank—and I repeat, frank—discussion of human rights, and an interpretation of them and how to safeguard them, will extend the meaningful dialogue and produce enduring results. It is a slow process. I know from bitter experience of dozens of international conferences to which the delegates come with deep suspicions of each other's motives and with stereotyped ideas of each other's intentions, very much in the spirit which was reflected by the attitude of the noble Earl, Lord Cowley, to this conference. They find that, whatever their state of mind when they come, they have somehow to synchronise the facts. Sometimes they run away from them, but in the end they also have to rethink their preconceptions. This is a slow process and, as has been said, and I say it again with misgiving, time is not on our side. We have a long educational process, and this one is more impressive than most of the educational processes I have been in for the last five years.
Nevertheless, my Lords, the paramount question is still that of military disposition. I do not think that the SALT talks can ever be more than a coy, tantalising striptease until a European Summit gives the necessary resolution—a resolution in both senses of the word—to military disengagement. I am not going to take issue with my noble friend Lady Gaitskell on what, in fact, is the nature of the object of ultimate security, except to say that we always believed, and thought the purpose of European security talks was eventually—not now, not tomorrow, not the next day—to see to the wasting away of NATO and its mirror image, the Warsaw Pact. That I should hope will be and must be the consummation of an European security resolution.
However, I want to remind your Lordships of some of the frightening facts which are buried behind the words and the attitudes—such frightening facts which by mute acceptance we have contrived to overlook. We talk now, rather as my noble friend has done, with a good deal of confidence—I hope confidence but at least with hope and, some of us, with substantial hope—about what might be
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resolved in areas other than those I am to talk about. Europe at this moment is a nuclear minefield. Apart from the massive retaliation of the strategical bomb, there are 7,500 US tactical nuclear weapons, about 3,500 Soviet tactical nuclear weapons and a limited number of French nuclear weapons.
The first US tactical nuclear weapons were introduced into Europe in 1954, three years before those of the Soviet Union. The object was to offset the numerically superior Soviet ground forces in the European theatre. To deliver tactical and nuclear missiles, the United States and its NATO allies have 2,250 aircraft, missile launchers and nuclear cannons. These weapons carry a combined explosive capability of 460 million tons of TNT, roughly 35,000 times greater than the nuclear weapon which destroyed Hiroshima. That is the American stockpile of nuclear missiles in Europe.
These nuclear weapons are all in NATO States, with the exception of Norway, Denmark and Luxembourg. The heaviest concentration is in West Germany. United States nuclear weapons include four different kinds of surface missiles, and two sizes of artillery shells, 150 millimetre and 203 millimetre. The largest tactical nuclear missile is over 400,000 tons of TNT equivalent or, in one missile, over 30 Hiroshimas. As Senator Stuart Symington said in the Senate last year—and I do not quote the Americans unfairly because I have been living and working with them on these issues for three years, so I quote not in disparagement or in any other sense, but because they at least communicate information and are allowed to—
"The significance of our nuclear weapons stockpiled in Europe alone becomes all too apparent when one realises that the destructive force in TNT equivalent of the nuclear weapons we have currently stockpiled is more than 20 times that of the combined total firepower expended in World War II, in the Korean War and in the Vietnam War".
The doctrine of tactical nuclear weapons is whimsical. The United States Secretary of Defence, Mr. James Schlesinger, whose statement was quoted yesterday—and this underscores what he said then, because it shows his attitude of mind—gave his definition of the doctrine of tactical nuclear strategy as, first, to deter Soviet use of tactical nuclear

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weapons and Warsaw Pact attacks; and, secondly, to provide a nuclear option short of all out-war should deterrence fail and all our conventional forces collapse. That was the doctrine of Mr. Schlesinger. Mr. Morton Halperin, a former Deputy Assistant Secretary of Defence in the United States, put it more sardonically, when he said:
"The NATO doctrine is that we will fight with conventional forces until we are losing; then we will fight with tactical nuclear weapons until we are losing, and then we will blow up the world."
What is a tactical nuclear weapon? I remember at the time of the introduction of tactical nuclear weapons into Europe, having a debate in Canada with a noble and gallant Member of your Lordships' House, whom I will not mention in his absence but who was rather critical in the scene at that time. I asked him that question, and its corollary which is: when does "tactical" become "strategical" and invoke massive retaliation? He replied that it depended on the rules of the game, and said, "You must understand that we are jousting with nuclear weapons". He said that it depends on the rules of the game. If each side was trying to avoid an all-out nuclear war, they would accept certain constraints confined to military targets.
He agreed with me that it was a macabre form of tennis. If the ball was kept within the military lines, that would be tactical; if it went outside, that would be strategical. He agreed that as we went on trying to avoid massive retaliation, which would be total nuclear war, the lines of that particular tennis court would have to be made of elastic. But who would be the accommodating linesman, or the referee? There is no demarcation between tactical and strategical nuclear weapons. Indeed, in my opinion, tactical weapons can be manifestly more dangerous than strategical.
My Lords, we all know about the strategy of massive retaliation with its gobbledy-gook of pre-emptive strike which is not retaliation at all, but aggression—which is what Schlesinger was talking about yesterday. We know that the ultimate decision on the delivery of an atom bomb rests with the Commanderin-Chief of the United States Forces—that is to say, with the President of the United States—or with his opposite num-
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ber in the Kremlin. Whoever he is, and on whichever side he is, he has 15 minutes in which to make up his mind to press the button of the black box which we saw with President Nixon on his visit to the Forbidden City, Peking, and which he took with him when he went to tea with Her Majesty and Mr. Heath at Chequers.
In those fifteen minutes, he has to decide that the enemy has indeed launched salvoes of intercontinental ballistic missiles, and that a counterattack is needed to put the enemy's bases out of action. We know the evidence can be wrong. There have been many conspicuous instances, such as when the early warning system identified a salvo of Soviet rockets heading for the heartlands of the United States. The United States bombers were aimed at Moscow and were recalled just before fail-safe, the point of no return, when it was found that the salvo of missiles was, in fact, a flock of Canada geese. There was another instance when an attack had been launched—it was on its way—before the "missiles" were recognised as the echoes of the radar signals from the distant early warning system itself.
We are now assured that the risks of human error have been removed, and that the whole thing is computerised. We are assured that the President of the United States cannot argue with a computer. The recognition that a mistake—and what a mistake!—can happen is in the existence and maintenance of the "hot line" now routed by communications satellite from Washington to Moscow. In the horrendous ultimate, the "hot line" means that the President or his opposite number phones up and says, "Sorry, old chap, there's a multi-headed missile on its way to vaporise you in 15 minutes. It has no political significance. We did not mean it. It was a technical fault." At least in the theory of the black box there is some recognition of responsibility, but what about tactical nuclear weapons? I remind your Lordships that there are 10,000 or more of these in Europe at this moment. Whatever the business of the double keys and so on, and the meaning of "tactics" in the Schlesinger definition, whatever the drill or discipline, the object of the exercise is to counter enemy moves in the battlefield, however big that may be,

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and that means delegated authority down to whatever is the nuclear battery level.
I would remind your Lordships of the Nixon alert during the Middle East crisis. We know President Nixon did not consult with, but merely informed, his NATO allies. This was a Stage 3 alert, which does not mean a count down; it was the last stage of the alert, and included nuclear units. Those units were on the alert and, I dread to say, trigger happy. Therefore, we have 10,000 weapons of unimaginable destructive power—I repeat the word "unimaginable", because we could not imagine Hiroshima before it happened, and this is Hiroshima many thousandfold—all stockpiled throughout Europe.
Under what security? We know what urban guerrillas are capable of. What if they penetrated any of the nuclear armouries? What would happen anywhere down the line in that dispersed chain of military command? I am not using these merely as illustrative questions. I mean it, because we do not know, and nobody can tell me that he knows. We know what would happen by deliberate decision. There have been a whole series of war games simulating a nuclear battle in Europe. One operation, "Sagebrush", simulated the use of 275 tactical nuclear weapons that ranged in yield from 2,000 to 40,000 tons. According to the official evaluation of that exercise, the simulated destruction was so great that no such thing as a limited nuclear war is possible in such an area; that is to say, in Central Europe.
The former Assistant Secretary of State for Defence, Alain Enthoven, in testimony before the Senate Foreign Relations Committee, quoted a Defence Department report on all the war games conducted in Europe in the 1960s. It stated:
"Even under the most favourable assumptions about restraints and limitations in yields and targets, between 2 and 20 million Europeans would be killed in nuclear tactical war."
It went on:
"…and a high risk of 100 million dead if it was escalated to attacks on cities."
My Lords, while the SALT talks are horse-trading on quantities of missiles and delivery systems—and, my goodness, if you talk about cynicism at conferences, I think from my study of the SALT ones
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that they are the most cynical; and I think my friend Mrs. Alva Myrdal, who was the Chairman of the UN Committee on Disarmament would agree with me—the fact is that there is a nuclear minefield spread over Europe at this moment. There is no guarantee that by mishap or by incident an all-out nuclear war might not be triggered off. Something is wrong—it must be—with a doctrine, which I certainly cannot dignify as a strategy, which if implemented would destroy the countries it was designed to defend. While the Heads of State, whose people are the hostages of this doctrine, are discussing détente, economics, culture and the reduction of armed tension, they should have as a priority in their thinking the present and constant danger of the nuclear minefield, and how to defuse those hundreds of millions of tons of TNT equivalent already deployed in Europe.
8.34 p.m.
Lord DAVIES of LEEK: My Lords, we have had a long day. I am tempted to go into the history of this. First, there is a little booklet I wrote on the possibilities of the destruction of millions of people called, Death Stands at Attention. I wrote it 25 years ago, when people thought we were psychiatric cases because we dared question a nuclear strategy. The conspiracy of silence about the evil effect of nucleonics is one of the world's wonders. I was down in the Pacific Ocean near Tahiti not long after the French were exploding their bombs. The arrogance of Western man in exploding his bombs everywhere except in his own territories is astounding. You get people saying there is no danger in the explosion. I saw the Fiji islanders and the islanders of the Pacific moaning about the poisoning of their food. I do not know whether Occidental man knows what he is doing to Oriental man in his arrogant militaristic tendencies. I do not know all the answers to this. I think mankind is going awry. He is the only animal who tells a lie; he is the only animal who fouls his nest. When you ask me what is the solution to the paranoia, the egotism and the pomposity of religious differences in our own territory in Ireland, I cannot answer it, because it is beyond all reason.
I have travelled all over Vietnam. I tried my best to meet Ho Chi Minh to get a peace agreement. When you see

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children cooked with a napalm bomb, you do not question so much Torquamada. Therefore, we look at these things, some of us, with horror, and it is no good scoffing about it, because mankind is in danger. When the destiny of man depends on a computer being accurate. God help us! Anybody who has had his bank account sent to him wrongly because it is computerised knows the possibilities of mathematical error, and you want only an elementary knowledge of calculus to see how you increase the possibilities. My noble friend Lord Goronwy-Roberts need not get worried, because I am going to speak only about three minutes, and I know he is as much interested in this as we are, and as much for peace.
Lord GORONWY-ROBERTS: My Lords, I would be most delighted if my noble friend took more than three minutes. I know of his long service in the cause of peace. If in any way I indicated the slightest impatience, I ask him to realise that it was most unintended.
Lord DAVIES of LEEK: My Lords, my noble friend is very kind. We have all had a busy day, and I know he has, too. My noble friend Lady Gaitskell and all noble Lords have contributed an essence of truth to this very difficult problem, including the noble Lord on the other side, who I am quite sure, together with the noble Lords sitting opposite, is just as concerned with the problem of mankind and peace as I, happen to be. All I hope is that we can find some answers and that Britain can give a lead. That is why I stayed behind today to support by noble friend Lord Brockway and to thank him for having raised this matter.
May I raise one other small point and then I will sit down, because so much has been covered. I remember Foster Dulles. I remember the beginning of the war in Vietnam. I remember his phrase that we will use "massive retaliation". Sir Winston Churchill and then Sir Anthony Eden—I was over at the Geneva Conference in 1954 after the Battle of Dien Bien Phu, and it was Churchill himself who was frightened of the gasconading nucleonic antics in the speeches of Foster Dulles at this period—steadied the British approach to the whole problem. I consequently hope that at Geneva, with
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common sense and not giving way to everything, and not agreeing or feeling that everything the Russians do or Eastern Europe does is evil, our leaders will, as I hope they always have—and I have had the pleasure of being with some of them, if it was only a discussion on the "Fearless", a summit talk on Rhodesia—try to bring a constructive approach, in the hope that mankind will solve this problem, which has bewitched it since the beginning of creation, of how to prevent major wars, because nuclear war means the end of civilisation.
8.39 p.m.
Lord GORONWY-ROBERTS: My Lords, I know that we are all very grateful to my noble friend Lord Brockway for raising this important subject at this time. The negotiations at the Conference are almost complete and the third stage is likely to be held within a matter of weeks. This is therefore a particularly good moment to take stock and to reflect on the importance of the meetings in Helsinki. I appreciate my noble friend's reminder to the House that as the texts have not been officially published, although he appears to have his own source of fairly accurate information, he will absolve me from any Parliamentary discourtesy if I do not deal with texts which in due course no doubt we shall be examining in some detail in this Chamber.
In view of the reservation expressed about the utility of this Conference from that Bench and by my noble friend Lady Gaitskell and others, perhaps I might indulge very briefly in a description of the historical origin of the Conference we are discussing. It is some time ago that the Soviet Union proposed such a conference—it is not a new idea—but for a variety of reasons the countries of Western Europe and North America regarded that proposal, in its then form, with a good deal of suspicion. As the noble Lord, Lord Banks, reminded us, many people in the Western democracies thought it looked as if such a conference would be used as a substitute for a genuine peace conference, as a means of legitimising the existing territorial divisions in Europe, of promoting conditions for the creation of a Pan-European system of collective security on strictly Soviet terms and, as it were, to set the status quo in Europe firmly in a bed of concrete.

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The countries of Western Europe and North America never rejected the idea of a conference as such, but they did set out requirements and ideas of their own about what it should do and what its purposes should he. We did not, for example, want to create the illusion of security based on paper declarations of good intentions, when the underlying tension created by the overwhelmingly powerful forces of the Warsaw Pact countries remained untouched. Nor were we willing to go to a conference from which North America, the United States, the great democracy of the West, would be excluded, thereby making Western Europe more than ever vulnerable to pressures from the East. That would not have served the causes of peace and of disarmament. Finally, we wished to ensure balance in the work of the conference by providing a twofold aim: co-operation between the peoples as well as countries on the one hand, and the search for security on the other. There can be no détente without security, without confidence: hence the title of the conference, the Conference on Security and Co-operation in Europe, the CSCE.
As noble Lords will recall, in the early part of this decade important changes took place in the political climate in Europe. I come here to two of the points raised by the noble Lord from the Front Bench opposite. The conclusion of the Eastern Treaties between the Federal German Government and the Soviet Union and Poland, and the Quadripartite Agreement on Berlin, very much the work of Willy Brandt, removed problems which in retrospect we must remember were mountainous problems which had bedevilled Europe and European diplomacy since the end of the war.
With these out of the way we could begin to raise our eyes to the wider problems of our Continent, and seek to replace the sterility of confrontation with a new realisation of mutual interests. Agreement was reached that preparations for two East-West conferences could begin: the first for the Conference on Security and Co-operation in Helsinki, and the second on Mutual and Balanced Force Reductions in Vienna. Both sets of preparations produced results by the summer of 1973. The agenda for the
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European Security Conference—the so-called Helsinki Blue Book—is a truly remarkable document. It fully met the Western requirements for a conference of that kind as well as the objectives of the Eastern European countries. The way was therefore clear for the first stage to begin, and at Helsinki in July 1973 the Foreign Ministers of the thirty-five participating States—some Communist, some democracies—met to launch the detailed work which is now reaching its conclusion.
So far so good. But with an agenda covering so many subjects, some of them of acute sensitivity, the discussions could easily have gone the way of so many international discussions over the years. Rigid positions could have been taken up. Some countries might have had second thoughts and might have preferred to stand in the way of agreement rather than content themselves with less than they had hoped to achieve in a partisan way. During the early days of the Conference, when proposals were piling up on the negotiating table from all sides, it was perfectly clear that the gap between the various points of view—national, ideological, special interests, and, above all, deep suspicions and the lack of confidence that anything could be done—would in many cases be extremely hard to bridge. But the negotiations went on, and all concerned were prepared to show, by patience and flexibility, that there was an underlying determination to reach agreement. So progress was made, little by little, spurred on by the knowledge that failure could no longer be accepted. Here I join with my noble friend Lord Ritchie-Calder in the ominous warnings he has uttered once more, as have other Members of the House. This Conference, which does not directly touch the question of thermonuclear disarmament, must prove to be part of the ultimate means of averting from humankind the brooding horror of thermonuclear warfare.
The members of the Conference kept at it. They have been at it for two years, and gradually results have come about. States, large and small, have really had a full and equal voice. I come, therefore, to the first part of my Answer to the Question which the noble Lord, Lord Brockway, has put. The Government see it as an encouraging and hopeful sign

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that such a Conference should successfully have been held, and that, despite all the difficulties, it has been possible to bring matters to a satisfactory conclusion in a manner which has emphasised the full and equal contribution of every State involved.
It has also been a source of satisfaction for the Government to see the positive contribution which has been made by the countries of the European Economic Community and, more widely, by the Atlantic Alliance, which is a democratic alliance. By working together over a period in daily—indeed, almost hourly—contact, we have managed, together with our partners and allies, to secure our main objectives and to arrive at a result which is compatible with our democratic conception of détente.
Far from interfering, as some originally feared, with the cohesion of Western institutions, I believe that this Conference has given those institutions new strength, and I refer not only to our allies in Europe. The active participation in the Conference of the United States and Canada, which we have greatly welcomed, has made clear the extent to which those great and powerful countries regard the peace and security of Europe as being vital to their own national interests and to the peace of the world. Moreover, the Alliance and the Community have shown that, far from being an obstacle to greater understanding among nations, they are a powerful force for peace and co-operation. Here I wish to say that the British delegation to this Conference has played a major role in finding solutions to the most intractable problems.
We were told a few years ago that this country, having relinquished an empire, had not yet found a rôle. It certainly has a role in international affairs, not least at this Conference, which I repeat is part of the tremendous effort which is now going on to master the awesome problems of our age. The British contribution by our representatives at this Conference, which is recognised and appreciated by all the participants, from the East as well as from the West, should equally be recognised in their own country.
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It would not be right for me to comment in detail on the documents which have been drawn up at this Conference, partly as a result of British initiative and suggestion. Detailed comment must await their publication and, indeed, their signature and approval at the third stage in. Helsinki. However, I would draw attention to some matters which I believe are of particular importance. First, a declaration of principles has been drawn up which refers, among other things, to the enjoyment of human rights and to cooperation between States and between individuals in terms which correspond fully to our traditional attitude to these matters. Here I agree with my noble friend Lord Ritchie-Calder, that there is value in clear and cogent declarations of principle of this kind. Of course, principle must be converted into practice; but it is useful, indeed vital, for the world to remind itself of the basic principles of human existence and survival.
The declaration will also recognise that, while existing frontiers in Europe are to be regarded as inviolable—and here I approach another set of questions put by the noble Lord, and put in another way by the noble Lord, Lord Banks—they may be changed. It is possible to change them provided such change takes place in accordance with international law, by peaceful means or through agreement. For East and West to agree on that principle—and I still say that it must be converted into practice—and to come together and accept a fundamental principle of peaceful change and, by implication, abdicate the use of force to achieve such political changes, is no mean achievement.
The second point I wish to put to your Lordships is that, with the agreement reached on confidence-building measures, a start will have been made in attacking the causes of mistrust and tension between States. My noble friend Lord Brockway was right to point out that little progress has been made with the force reduction talks at Vienna, but they are continuing in a businesslike way; and here I join with my noble friend Baroness Gaitskell, who put the matter in a nutshell when she said that what we are after is controlled disarmament. One cannot get it in any other way, and it will not stick if one tries to get it in any other way. Controlled

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disarmament means that everybody joins in to make it a success.
I am not alarmed that progress in Vienna is slow. So long as they keep talking, inch by inch we will get nearer to the process of disarmament, which we all seek, and in that way we will be on the way to the ultimate objective that noble Lords, among them my noble friend Lord Ritchie-Calder, have described as our primary aim, that of nuclear control and disarmament. Nevertheless, although Vienna rather than Helsinki is the locale for force reduction talks, there have been very useful agreements in the military sphere in the CSCE, for example to exchange observers at military manoeuvres and to notify in advance the details and purpose of major military manoeuvres. The Government hope and expect that this factor will go some way to reducing tension and misunderstanding arising from suspicions rather than knowledge of military dispositions—this is certainly something worth getting—and that this will improve the political climate in which the real issues of military security in Europe must now be tackled.
In reply to the substantive question put to me by the noble Earl, Lord Cowley, unless and until there are satisfactory results from the MBFR talks in Vienna, we will not in any way detract from our obligations under the Brussels Treaty. In the economic, commercial, industrial and technological fields a large variety of documents have been drawn up which will provide a basis not only for increased trade, co-operation and exchanges throughout Europe, but also for more effective contact between business representatives in the various countries of Europe, including the Communist States. By establishing common objectives and laying down certain standards of treatment for business representatives, I believe that commercial, industrial and technological exchanges throughout Europe will become for frequent, fruitful and rewarding, and in this way new links, new bonds, not only inter-State but between individuals and organisations, may spread throughout Europe.
My right honourable friend the Prime Minister and his colleagues will in Helsinki be putting their names to a series of documents dealing with the freer circu-
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lation of ideas and the freer movement of people throughout Europe; and this part of the document may well be without precedent. It will offer, we think, a prospect of real and lasting benefit to individuals in the various countries of Europe derived from the process of détente.
Before coming to the House this afternoon I re-read the remarks made by the noble Lord, Lord Home of Hirsel, when as Secretary of State for Foreign and Commonwealth Affairs at Stage 1 of the Conference in Helsinki in July 1973 he said:
"We should be impatient of restrictions. If we do not improve the life of ordinary people at this Conference, we shall be asked—and with justice—what all our fine words and diplomatic phrases are about and have achieved. The principles are valueless without the practice. In the language of Helsinki, Basket I will be empty unless there are plenty of eggs in Basket III".
That is to say that the declaration of principles will be valueless unless the implementation is a fact. I believe that the noble Lord was right to strike that note at that time.
The same note was struck again this afternoon by my noble friend Lord Brockway. But I do not think he will be disappointed. In the field of human contacts, texts have been drawn up for signature at Helsinki which should make it easier for individual citizens of all European countries to move freely throughout Europe, whether for professional or personal reasons, and whether temporarily or, in certain circumstances such as marriage or family reunification, permanently. And in the field of ideas and information, the participating States will commit themselves, in Helsinki, to ensuring that individual men and women in all the countries of Europe will have progressively freer access to spoken, written and broadcast information of all kinds and from all countries. They will also undertake to give each other's journalists the sort of facilities which will allow them freely to pursue their legitimate activity without official interference.
These and other texts in Basket III, providing for instance for an intensification of exchanges in the cultural and educational fields, set the scene for what I

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hope will prove to be a qualitative and permanent change in the situation in Europe as it affects ordinary people. Provided that all these good things come to pass, and that the words accepted at Helsinki are given the breath of life once the Conference is over, their importance will be hard to exaggerate. They will not only help to make Europe a safer and saner place for people to live in, but they may help us on the road to the larger and even more urgent objectives of which my noble friend so graphically reminded us.
This brings me to the question of future activities. This is not an easy one. It is easy to prescribe an institution which would preside over the development or implementation of decisions. But we are concerned with 35 countries, many of which still have reservations about many of the things to which they have agreed. I hope we shall not overload the situation at this stage, but shall give the agreement time to gain strength, substance and confidence. I am in no way disagreeing in principle with my noble friend about the need in due course for institutionalised arrangements, and even bodies to supervise, guide, and maybe to enforce. What I am advising—and I speak not only for Her Majesty's Government in this matter but for a great many other Governments which are perhaps not confined to the West—is that we should have a pause after the signature of these extremely important documents, during which Europe should get down to it and should begin to do the deeds as well as to approve the principles, doing them in its own way without the overlay of a presidial body which might daunt some, and between which and some there might be a running argument as to how things were going. We are in favour of a period—as are the majority of countries concerned—during which the work will go on. Then, possibly in 18 months or two years, we can come together again, assess the position in the light of experience, and perhaps set up machinery if that proves to be the right way of doing it!
Let us be flexible about this. The history of attempts to get international agreement and the implementation of international agreements is strewn with
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the failure d institutionalised provisions. Festina lente—let us hasten slowly and surely, making the 35 countries which will be party to this new and hopeful document feel that they are not under any undue pressure. They are subject to great expectations but they are free to build this up at the pace and in the way that suits them. We are dealing with countries that vary greatly in their experience of the democratic practice. We are dealing with countries both in the West and in the East where there are historical memories and we must not force the psychology of this too fast and too far. However, I repeat that I am not disagreeing in principle with my noble friend that in due course we shall need proper arrangements to see that these arrangements are carried on, strengthened and expanded.
I have spoken too long, but this is a vast subject. I do not want to raise our hopes too high. I and my generation stand at a point when we recall repeated disappointments in this field, when high hopes were entertained and when practice fell so tragically and fatally short of principle. But we must go on trying. That is the essence of the democratic idea. If one is beaten, one must pick oneself up and have another go. I hope that we do not regard the quite extensive and very hopeful measure of agreement that has been achieved in this Conference as in any way an alibi not to concentrate afresh on the terrible dangers of the other dimension that face human kind. I say to noble Lords, particularly to my noble friend who knows so much about the technology of this, that CSCE, MBFR, the United Nations, everything that brings nations together, first in an agreement in principle, secondly in an attempt to convert principle into practice—everything like that—is a movement towards the objective which I know my noble friend and the entire House recognise to be the real objective of all foreign policy and of all diplomacy.

RECESS ELECTIONS BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills with an Amendment, and recommitted to a Committee of the Whole House; Bill to be printed as amended.