§ 3.14 p.m.
§ Lord ORR-EWINGMy 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 how much of the £950 million Anglo-Soviet exports agreement signed in 1975 after the visit to Moscow of Mr. Wilson and Mr. Callaghan has been drawn on and what interest do these credits bear.
§ Lord WINTERBOTTOMMy Lords, the total value of contracts placed under this agreement to date is £440.6 million. It is not the practice to disclose interest rates publicly as such details are considered confidential to those who are commercially involved.
§ Lord ORR-EWINGMy Lords, is it not disappointing that, despite special credit terms and after three and a half years, the balance of visible trade is such that we buy £780 million from Russia and, last year, Russia bought only £347 million from us, leaving an adverse balance of £400 million. In view of the huge overseas debts that we have round our necks, ought we not to look at whether this special arrangement should continue in its present form?
§ Lord WINTERBOTTOMMy Lords, all of us have been concerned at the 1167 consistent imbalance in our trade with Russia; but, on the other hand, the steps taken by this Government were an attempt to correct this imbalance and are acting with some success. The five-year period has another one and a half years to run and it is believed that certain major contracts may be landed during this period.
§ Lord SHINWELLMy Lords, is it not ludicrous, and, indeed, unwise, to seek to ease the Soviet Union's economic situation while at the same time the Soviet Union is infiltrating into all parts of the world—which in the long run is bound to be detrimental to our interests?
§ Lord WINTERBOTTOMMy Lords, we have a long tradition of trading in many areas with Russia for products which are essential to our own well-being. What we are trying to do is not to ease Russia's position but to ease our own.
§ Lord BARNBYMy Lords, could the noble Lord give any indication of what is the average rate of interest which is being charged to Russia on this whole range of contracts?
§ Lord WINTERBOTTOMNo, my Lords. I said that I could not give that figure.
§ Lord PARGITERMy Lords, would my noble friend say what is the trade imbalance between Britain and Japan? Does it exceed that with Russia?
§ Lord WINTERBOTTOMMy Lords, that is another question; but as a major trading nation we find that on some sides we have a plus and on others a minus.
§ Lord SOAMESMy Lords, would the noble Lord care to tell us what will be the total cost to the British taxpayer if the whole of this line of credit is taken up; in other words, to what extent will the British taxpayer be subsidising the economy of the Soviet Union? Secondly, what initiative are Her Majesty's Government taking vis-à-vis all advanced countries to agree on what credit terms should be offered to the Soviet Union and to other countries of Eastern Europe in order that we do not all cut each other's throats to no avail.
§ Lord WINTERBOTTOMMy Lords, the noble Lord has touched on the core of the matter. For some time there was what is known as an international consensus on credit terms relating to trade with Russia. However, France and Italy chose to ignore these matters and we ceased to be competitive. For this reason, at the ECGD meeting in May this year we agreed to match the credit terms of our competitors. As regards the first point, I do not see that there is any cost to the taxpayer of this country, because if we get the trade we therefore save other social costs which would otherwise be incurred.
§ Lord BROWNMy Lords, is it not a fact that the terms of this buyer credit to Russia are completely consistent with the terms customarily offered over many years to many other countries? Is it not a fact that other countries are in the habit of offering to Russia similar buyer credit to that to which the Question has referred? Is it not the fact that the continued attempts on the part of Members of the Opposition to make this particular buyer credit offer to Russia something very special are not at all sound, in that there is nothing very special about this credit?
§ Lord WINTERBOTTOMMy Lords, I am grateful to my noble friend for stating the position much more clearly than I did.
§ Lord SOAMESMy Lords, I wonder whether the noble Lord would be so good as to inform the House of the answer to the question that I put to him. If he wants the House to take into consideration that there are other elements which we should talk about, and think about as well, so well and good. Surely if this line of credit were taken up compared with existing interest rates over the period of time, it must be known what would be the cost to the taxpayers.
§ Several noble Lords: Answer!
§ Lord WINTERBOTTOMMy Lords, one at a time, please. The whole of this transaction is based upon ECGD guaranteed credits. The actual rate of interest 1169 was agreed in May this year, and it was agreed between Russia and ourselves—or the ECGD Department, which is a technical department of Government—to enable us to compete with our competitors for the Russian business. If we were not getting the business that we have got under this agreement with the Russians, and the business we hope to get, then our imbalance of payments with Russia would be much worse than it is.
§ Lord WIGGMy Lords, would my noble friend be good enough, when supplying the noble Lord, Lord Soames, with the answer, to complete the picture? The noble Lord, Lord Soames, asked what the charge would be to the British taxpayer if this deal goes through in its entirety. Will he also at the same time have an assessment made of the number of jobs that will be lost to British workers, and what it will cost the State in terms of unemployment pay, and see how far they are in balance?
§ Lord WINTERBOTTOMMy Lords, that is what I was trying to say. Since the beginning of 1977, we have supplied to the USSR cigarette making machinery, gas compressor pumps, high density polythene plant, two methanol plants and two tyre factories. Those are substantial products of our high technology industries.
§ Lord WIGGMy Lords, will my noble friend be good enough to include in his reply, for the benefit of noble Lords opposite, a brief study of the law of comparative values, to see that there is an essential understanding of international trade?
§ Lord WINTERBOTTOMMy Lords, that was a complex economic question. I do not feel competent to answer it.
§ Lord ROBBINSMy Lords, while respecting the Minister's remarks about the confidentiality of detailed interest rates, is the Minister prepared to assure the House that the money interest rate actually charged was such as to assure that the real interest rate was not negatived?
§ Lord WINTERBOTTOMMy Lords, that is another question by an economic expert which I am incompetent to answer.
§ Lord GLENKINGLASMy Lords, is the noble Lord aware that while many of us are extremely keen to do business in Russia for work that is profitable to our country and which gives jobs, there is very little evidence—and I am speaking now with some knowledge over the past five or six years—that the Russians have done anything whatever to correct a long-standing balance of payments in their favour? When the former Prime Minister announced this, we hoped that the Russians had changed their tune. There is no real evidence from the figures that the Minister has given that this has happened.
§ Lord WINTERBOTTOMMy Lords, as I tried to say earlier, we are a trading nation approximately in balance to the world as a whole. In some areas we lose; in some areas we gain. This is the way that the world works. I am sorry that I cannot change the world rapidly by even the most favourable credit terms.
§ The LORD PRIVY SEAL (Lord Peart)My Lords, I feel that—
§ Lord PEARTMy Lords, I think that we have had a good "run" on this Question. I sense—
§ Lord PEARTMy Lords, if the noble Baroness will be courteous, I will say to her—
§ Several noble Lords: Order, order!
§ Lord PEARTOrder, please! I shall be delighted to let the noble Baroness have a quick question. That will be the last one.
Baroness WARD of NORTH TYNE-SIDEMy Lords, I wanted to ask the noble Lord whether the Russians could not make their contribution, which they obviously owe on their arrangements, by helping us in being fair regarding our merchant shipping?
§ Lord WINTERBOTTOMMy Lords, I am certain that this is one of the factors taken into account during bilateral negotiations.
§ Lord BROWNMy Lords—
§ Lord PEARTMy Lords, we have been on this Question a long time, and we have a lot of business in front of us. I hope that noble Lords will agree.
§ Several noble Lords: Hear, hear!