§ 8. Mr. Jay
I announced on 27th January the following measures which I hope will help exporters and contribute to a sustained increase in exports. The study of measures to stimulate exports will however be a continuing process. In consultation with the British National Export Council and other organisations concerned the Government will continue to foster ways and means of increasing exports.
Commonwealth Exports Council
The Commonwealth Exports Council has now been formed. The Chairman is Sir William McFadzean, who is also Chairman of the British National Export Council, and the co-ordination of the activities of the two Councils will also be ensured by a large measure of common membership.
In addition to the Committee for Exports to Canada which is already in operation under the chairmanship of Mr. P. C. Allen, a Deputy Chairman of I.C.I., five new Committees are being formed to cover all the other countries of the Commonwealth. (Cyprus and Malta are in the area already covered by the Export Council for Europe). The chairmen of these new Committees have now been appointed. They are:
For Australia—Mr. C. R. Wheeler, C.B.E., Chairman, Associated Electrical Industries Ltd.
For New Zealand—Mr. Alexander Ross, Chairman, United Dominions Trust Ltd.
For Commonwealth countries in Africa—Mr. A. H. Smith, Director, Unilever Ltd.243W
For Commonwealth countries in Asia—Sir Edward Thompson, Chairman, John Thompson Ltd.
For Commonwealth countries in the Caribbean—Mr. J. R. M. Rocke, Vice Chairman, Booker Bros., McConnell & Co. Ltd.
I am most grateful to these gentlemen for their agreement to serve and to Sir William McFadzean for taking on this extra responsibility.
The British National Export Council
The British National Export Council is urgently examining both short-term and long-term measures for increasing exports. The Council believes that it is primarily to established exporting companies that we must look for an immediate improvement, and the chairman of the Council has written to the chairmen or managing directors of over 150 companies asking them to consider exporting an even larger proportion of their output. The response has been most encouraging and it is hoped that this initiative will contribute to a substantial increase in exports in 1965. Many of the companies concerned have proposed various measures to stimulate exports. These proposals are being analysed and studied by the Council.
While many small- and medium-sized firms are actively engaged in exporting, there are also many which do not export at all. To some extent the problem of mobilising their resources is one of organisation and the Government believe that a much greater contribution could be made if the right organisation existed to deal with their special problems. The Government proposes to try to meet this need initially in three ways:
- (a) The Chairman of the British National Export Council, in the letter already referred to, asked major exporters with established export organisations to consider taking on the selling of products of smaller companies that are complementary to but not competitive with then own. Many of them have expressed willingness to co-operate in this way, and arrangements are now being made through the British National Export Council and in consultation with the Board of Trade regional organisation to encourage suitable companies to take advantage of their offer.
- (b) Several export clubs or groups centred on local Chambers of Commerce already exist in various parts of the country and are doing useful work. The British National Export Council will encourage and develop this type of activity in co-operation with the Board of Trade's regional offices.
- (c) The British National Export Council and the Board of Trade are studying with commerce and industry the feasibility of establishing a marketing organisation for the purpose of promoting the export of products of companies which either do not at present export at all or which export only to a limited extent. It is envisaged that in the early stages the organisation will deal with a selected range of products and with certain selected markets which offer the greatest scope for this form of
244 co-operative enterprise. If the organisation proves successful the coverage of markets and products will be progressively extended.
Government Services to Exporters
I am satisfied that the official commercial services available to British exporters both at home and overseas are as comprehensive as any in the world. Although these services are used extensively by a very large number of firms and are highly valued, there is evidence that their nature and scope are not as widely known as they might be, and there are many more firms in industry which could make profitable use of them. In consultation with the Central Office of Information, my Department is preparing a major publicity campaign to start early in the spring. It is hoped that the campaign will result both in a greater general awareness in the country of the vital need to increase exports and, more particularly, in a greater knowledge in industry of the official commercial services.
It is the Government's intention that these services should be continuously improved so as to lend the maximum assistance to British exporters. As a first step, the following two additions will be made to the present facilities.
(i) Trade Missions
In order to encourage British businessmen to be more active in the pursuit of business overseas and in bringing potential buyers to this country, the British National Export Council will introduce immediately a scheme to support both inward and outward trade missions and will consider specific proposals submitted to it for consideration. While missions consisting of small groups representing particular sectors of industry are considered to be the most useful, no sound proposal for a mission with a genuine collective purpose calculated to increase exports will be ruled out. For approved projects the Government will pay up to one half of the basic costs of travel and accommodation. The Government hope that, through Trade Associations and Chambers of Commerce, industry will take full advantage of this scheme and find it valuable.
(ii) Collective Market Research
The British National Export Council will also introduce a scheme to encourage a more extensive use by industry of market research and will consider proposals submitted to it by Trade Associations or Chambers of Commerce for market research projects on behalf of particular sectors of industry. The Council will wish to satisfy itself that particular projects are reasonable and necessary and that the information required cannot readily be obtained through Government services. Where a market research project is approved, the Government will be prepared to contribute up to 50 per cent. of the cost.
Overseas Exhibitions and Fairs
The Government propose substantially to increase expenditure from public funds in 245W support of industrial participation in overseas trade fairs, British Weeks and store promotions in 1965–66. Arrangements are in hand for large-scale British Weeks in Amsterdam and Milan, and the Government have undertaken to support major all-British fairs at Tokyo, Oslo and Moscow. The bulk of the increased expenditure will be devoted to joint ventures with industry at specialised trade fairs, which are generally agreed to be a particularly useful form of export promotion. In all the Government will be concerned during the next twelve months with at least 100 trade promotion events overseas.
The Government will also contribute to the cost of the permanent exhibition centre which is to be set up by the British American Chamber of Commerce in New York. Experience of the centre in New York will enable us to assess the value of permanent exhibitions of this kind as a means of promoting exports.
Overseas Commercial Services
The Government has considered the measures to be taken to deal with the increased demands which will be made on the overseas service, if, as the Government hope, industry makes good use of these new facilities.
The main ways in which the Diplomatic Service can help British exporters are by advising them on local markets for their products, helping them to find agents, reporting home export opportunities of interest to British firms, assisting British businessmen with advice and introductions and helping to publicise British goods. Economic and commercial work of this kind is recognised as a first charge on the resources of the Diplomatic Service. A special message has been sent to the Heads of all overseas posts in the Service, emphasising the importance of commercial work and advising them to be prepared for additional calls to be made on them by British businessmen as a result of the present export drive. They have been asked to take all necessary steps, including where necessary the recruitment of additional local staff, to ensure that such calls are promptly and effectively answered.
The Governmenu have also been examining problems of export finance and as an immediate measure, have decided that the Export Credits Guarantee Department's direct bank guarantees should be made available on a broader basis. These guarantees serve to bring forward, after delivery of the goods, supplementary finance additional to the Exporter's normal overdraft facilities. At present they are available for export contracts in respect of United Kingdom capital goods worth not less than £100,000 involving three years credit or longer. In future any contract for manufactures of all kinds, for not less than £50,000, for which three years credit or longer is approved by E.C.G.D., will be eligible for the facility. The Clearing Banks are similarly extending their arrangements under which the finance advanced under these guarantees may be provided at a fixed rate of 5½%.246W
Further, the Bank of England announced on 27th January new arrangements for the provision of finance for export credits given to overseas buyers under financial guarantees. Till then the shorter part of these credits was provided by the banks at a fixed interest rate of 5½%, and the longer-term part at 6½% by insurance companies and some other City institutions. The Bank of England is now to extend the refinancing facility introduced in February, 1961, so as to enable the banks to lend at a fixed interest rate of 5½% for the whole period of these loans. This will apply to future contracts only. The Government hopes that this development of our financial machinery, will assist exporters in the important sphere of large capital projects and ocean-going ships, where the cost of credit is particularly important.
Taken together, these two changes will substantially widen the field within which exporters can get finance at the fixed rate of 5½% instead of either at fluctuating overdraft rates at the 6½% rate hitherto applied to the longer-term element of export lending, and constitute a major development in our system of export finance. They are being introduced forthwith. There will be continued study of possible further improvements.
I would like to take this opportunity of expressing the Government's appreciation of the efforts made, not only by the banks but by the insurance companies and others to meet our exporters' needs over the past few years.
The Board of Trade and other Government Departments is now arranging meetings with the sections of industry for which they are the sponsoring authorities. Their purpose will be to ensure that full use is made of the new facilities, to explore all practicable methods by which exports may be increased, including the establishment of exports groups where these do not now exist, and to discuss ways and means of financing export promotion measures.
The Department of Economic Affairs and, where they have been established, Economic Development Committees, will be closely associated with these consultations with industry. The terms of reference of the Economic Development Committees include as an important task the preparation of proposals for improving the ability of these industries to compete with imports more effectively at home as well as to promote and expand their exports. The Committees will also investigate the proportion of their industry's output which is now exported, whether this can be increased and whether the burden is carried by too few firms. In setting up new Economic Development Committees in addition to those being formed or in course of formation the Government will give first priority to the needs of exporters.
Details of the export rebate scheme were laid before the House on Tuesday, 19th January by my right hon. Friend the Chancellor of the Exchequer and exporters will be considering the submission of claims in 247W accordance with the instructions which have been issued by H.M. Customs and Excise. It is estimated that about £80 million representing the amounts of certain indirect taxes will be repaid in a full year and the Government are confident that the relief from this substantial burden will act as a real stimulus to industry, especially by encouraging the devotion of greater resources to export ventures and export promotion.