§ 79. Mr. N. Daviesasked the Minister of Supply if he is aware that the delay in delivery of light commercial vans is now comparable in length to that experienced with private cars; and whether he 103W will consider allowing a larger proportion of these vehicles to be sold on the home market.
§ Mr. G. R. StraussThe country's economic position makes it essential that the present rate of supply of commercial vehicles to the home market should be strictly limited.
§ 80. Mr. Gammansasked the Minister of Supply what reply he has sent or proposes to send to the representations made by the Society of Motor Manufacturers and Traders protesting against the cut by 27 per cent. of the allocation of goods and public service vehicles to the home market; and what steps he proposes to take to prevent the increase of costs to the export market and the rise of unemployment feared by the society.
§ Mr. G. R. StraussI presume that the hon. Member is referring to the statement published by the Society of Motor Manufacturers and Traders on 22nd March. I made a statement to the Press on the same day and a copy was sent to the Society. The statement is appended to this answer. There is no evidence at present to suggest that the policy of limiting the supply of commercial vehicles to the home market will lead to increased costs or unemployment.
Following is the statement:
The important truth that the Motor Manufacturers' memorandum neglects is that this country's capital resources are not adequate to meet in full all the demands which are made on them. Each of these demands can be fully justified in isolation but since they compete with one another and cannot all be satisfied, the Government must decide what proportion can be devoted to each. It is for this reason and as an essential part of the Government's anti-inflationary programme, that it has set a limit to investment in commercial vehicles.
When the Government's policy was announced by the Prime Minister in the House of Commons on 24th October last year, he made this specific reference to the motor industry:
"Again, the home market is at present receiving a much larger flow of commercial vehicles than was planned, or than we can afford, and supplies must be diverted to export."
The Government's intention to carry out an anti-inflationary programme received general support; such criticism as was made was to the effect that its proposals did not go far enough. The Government was satisfied, however, that their programme was adequate to 104W meet the needs of the situation if strictly adhered to. They have no intention of abandoning measures that they believe to be necessary if serious inflationary pressure is to be checked.
During the past four years there has been a steady increase in the production of commercial vehicles which is now twice as high as before the war. The rate of supply to the home market has in the past four years been higher than the average rate of supply in the years immediately before the war, and as the S.M.M.T. memorandum brings out, the total number of commercial vehicles on the roads is some 30 per cent greater.
Towards the end of 1949 commercial vehicles were being produced for the home market at an annual rate of 113,000ߞa rate considerably higher than the country could afford. The motor industry has therefore been informed that the rate must be reduced to 73,100 (65,000 goods vehicles and 8,100 passenger service vehicles), by the second half of this year. For this purpose each manufacturer has been given quotas for the home market based on total annual rates of supply of 90,000 in the first half of the year, and 73,100 in the second half.
The returns for January and February show that the industry as a whole is working to this programme. There has been a substantial increase in exports, and home sales are at present within the annual rate of 90,000. If this progress is maintained the industry will be able to reduce supply to the home market to the desired level without reducing total output. The Government, however, attaches such importance to the fulfilment of the Capital Investment Programme that manufacturers have been informed that if they are not able to increase exports sufficiently for the rate of supply to the home market to be reduced, them they must take steps to reduce production.
The Ministry of Supply has had a number of discussions with the industry and the Government's policy has not been decided "arbitrarily" but only after the most careful consideration and after taking full account of the representations that have been made. The Government understand the importance which manufacturers rightly attach to a high rate of output as a means of keeping prices down and of preserving a competitive position abroad. They also fully appreciate the industry's magnificent export achievements They also know that even at the present rata of supply to she home market there are many outstanding orders for commercial vehicles Nevertheless, the production of commercial vehicles could only be increased and supply to the home market at the present rate could only be maintained at a cost of reducing investment in some other sector of the economy where a reduction would be more damaging.
I am glad to read in the Motor Manufacturers' memorandum their reiteration that "the primary concern of the industry is to achieve in the national interest the maximum volume of exports." I am sure that they will co-operate as fully as they always have done with my Ministry to this end.