§ 2.55 p.m.
§ The Question was as follows:
§ To ask Her Majesty's Government why the British consortium Avrail has withdrawn from bidding for the Venezuelan railway contract.
This is not a matter for which the Government had responsibility 1261 but they had been assisting the company with normal export services. Avrail Limited is a properly constituted commercial company, and its decision to withdraw from bidding for this contract was based on the commercial judgment of its shareholders. I understand that the reasons were a combination of the unusually onerous conditions of contract and the estimate of the cost, which led the company to the decision that it could not make a competitive bid.
§ Lord RHODES
My Lords, does the Minister agree with the statement attributed to the British Ambassador in Venezuela that the consortium pulled out too soon?
My Lords, as I have said, this was a matter of commercial judgment upon which I would not wish to comment. I believe that the remarks made by Mr. Taylor in Venezuela have been misrepresented in the Press. He used the word, "unfortunate", but that related to the general situation arising out of this decision.
§ Lord RHODES
My Lords, in fairness to the consortium, may I ask whether the Minister agrees that the fear of cost escalation due to sterling devaluation was the main reason for withdrawing?
My Lords, I think that a new estimate of costs was made and that was part of the reason for the withdrawal. But, obviously, the value of sterling entered into that.
§ Lord ORR-EWING
My Lords, does the noble Lord agree that in heavy engineering projects of this kind, which may last five or seven years, the rate of inflation is of tremendous importance, as the noble Lord has said? Therefore, is it not of paramount importance that we, on all sides of this House and in another place, should do everything we can to reduce the rate of inflation? If we do not, our competitors all over the world will beat us for heavy capital projects of this nature.
My Lords, it has been stated many times that the Government's view of inflation is as the noble Lord has said; that is, a major objective of our general economic policy.
§ Viscount ECCLES
My Lords, as the President of Venezuela is expected in this country within three weeks, would the Government try to get this consortium together again, and look particularly at the question of the performance bonds, which I think bulk large in the withdrawal from competition?
My Lords, the performance bonds were, indeed, a major factor. As to getting the consortium together again, Her Majesty's Government would be willing to play the same role, if asked by the commercial concerns, on a second occasion. But in relation to this project, since bids have to be in by 6th December I do not think that that is really a practical proposition.
§ Lord POPPLEWELL
My Lords, does my noble friend agree that our industries are finding difficulties in many of these foreign contracts? It is argued that the severe conditions imposed by many would-be customers are rather too harsh for our people to bear. But in this developing world trade other nations are competing, so will my noble friend ask his honourable friend to use his best offices to get industry to have another look at this type of project?—because, if we want to get over our balance of payments difficulties and take our share in world trade, there must be some new appraisals by our industrialists of these foreign orders.
My Lords, the need for us to be competitive is well-known. But in relation to this project, I think I have made it clear that the conditions laid down were quite unusual.