The domestic credit expansion point is one that the House needs to note with some care. The thing that we should be worrying about—and here I hope that I carry the hon. Member for Heywood and Royton (Mr. Barnett) with me—in the context of domestic credit expansion is what happens to the extra sums that the Chancellor of the Exchequer mops up with the import deposits scheme. It is by no means self-evident that this means that credit is restricted. It depends entirely on what is done with the money. If the effect is to decrease the Government's need to borrow money, it simply means that those who would otherwise have lent to the Government have more to lend to others.
Again, if it simply has the effect that money taken by way of import deposits from some unfortunate importers is handed out to others by way of debt repayment, this is totally cyclical and has no effect on mopping up credit. It simply shunts resources, by no means in an economic and rational way, to those capable of paying a higher price for it. The arguments on the liquidity basis, which the now Paymaster-General advanced so eloquently, are beside the point.
I want to conclude by bringing forward what to me and many of my hon. and right hon. Friends are our definite puzzlement and misgivings about the Government's determination and steely-eyed purpose in keeping on this irrelevant little Bi11. What is the basis for the Chancellor of the Exchequer coming forward with the Bill a second time? We have already shown that although he talked of imports being reduced directly, this has not happened and that, on the contrary, the opposite has been the case. We heard the Chancellor talking originally of keeping the scheme in operation for a limited period, in a context of months, because he specifically said that the earlier months of the scheme were crucial. That has already been stretched to two years.
The Paymaster-General said that the whole scheme was intended to have a temporary effect until the strategy enabled us to come into surplus. I thought that we had now come into surplus. We all noticed how extraordinarily euphoric the Prime Minister was at Question Time on Thursday about the upturn in the export figures. As the Government are bringing forward the Bill a second time, one may ask whether there is a snag. Is there some element of doubt? Is there some gnawing uncertainty about the surplus that we hear being crowed about so much? Can it be that the improvement is illusory after all? Can it be that the substantial margin on the trade account as suggested by the latest three-monthly figures is in reality so accidental, or so confused with over and under recording, or distorted by special factors, that it requires the utterly marginal prop of the import deposits scheme to keep the whole ship afloat?
One is driven to the conclusion that we are much nearer the truth in fearing that the trade figures may not be nearly as good as they look than in thinking that this is simply an elementary precautionary measure. Here we are forced, with some regret, to look at the league table. Many people will have noticed how unwilling the Prime Minister is nowadays to go back to his erstwhile habit of quoting league tables. But the much vaunted increase in the rate of exports of British industry in recent years must be seen in the context of world increases in exports.
For the year 1968 the United Kingdom percentage rate of increase in manufacturing exports of 71½per cent. was exactly half the average for the leading industrial nations of the world and is not a good enough performance. But it provides the only tolerable background against which the Government could hope to get away with a scheme of import deposits. It is only because other countries' exports have been so remarkably buoyant at double our rate that they have, in a sense, overlooked the circumstance of the British import deposits scheme because it has not bitten so firmly on to them. But this is the only circumstance—the circumstance of the huge boom in world exports—in which our import deposits scheme would be tolerable.
If world trade slackens in 1970—and there is some indication that it will—woe betide us. If the United States get inflation under control, if the Germans feel that they need a fair crack of the whip after revaluation, and if circumstances change in the terms of the rate of growth of world exports, others will import, or will have imported, this extremely bad habit—this protectionist habit, as my hon. Friends the Members for Wycombe (Mr. John Hall) and Holland with Boston (Mr. Body) called it—from Britain. It will rapidly be learned by other countries overseas and will be sent back to us with interest.
I suspect that the lack of enthusiasm of the E.F.T.A. Council about discussing this too explicity, to which the Financial Secretary referred, is precisely for this reason. It has learned that this is a useful card to have in the pack, and as soon as the growth in world trade slackens off we shall be paid back in our own coin. This is the moment to drop the Bill.