Orders of the Day — Motor Industry

– in the House of Commons at 12:00 am on 11th February 1970.

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4.12 p.m.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I beg to move, That this House deplores the effect on the motor industry of Her Majesty's Government's present policies. Despite the euphoria induced by the admirable speech of my hon. Friend the Member for Acton (Mr. Kenneth Baker), I emphasise at the start of this debate that we are not addressing ourselves to the subject of general reflation, nor are was asking for special favours for the motor industry.

We are focussing the attention of the House on the implications for the motor industry of the Government's mismanagement of the economy over the last five years, and we have as our text the recently published report of the "Little Neddy", the industrial report by the motor manufacturing E.D.C. This report was prepared by a committee which included two very senior civil servants. Its conclusion is very clear. It is that if the motor industry is to continue to invest, to grow and to export then it can only be on the basis of a healthy home market.

We wish to put two questions to the Minister, to which we should like answers. First, do the Government accept this "Little Neddy" report and its conclusion? Secondly, will they now remove the particular extra burden imposed, alone among all consumer and household durables, on the motor industry, that is, the differentially large down-payment required under the present edition of the hire-purchase regulations.

The "Little Neddy" report sets out the economic background for the motor industry. It is an industry with high investment and, therefore, with high fixed costs, an industry in which the capacity ultilisation, that is, the volume of throughput, is crucial to competitiveness. Big investment is needed in the industry so as to keep up with design, productive capacity, and marketing capacity in this country and all over the world.

If this investment is to be forthcoming, if the risks are to be taken, the House knows and the "Little Neddy" report emphasises, that profits, representing what the report calls "an acceptable return on capital", are absolutely indispensable.

At present, the British motor industry has a record of lower profit, lower return on capital than our main rivals abroad. The motor industries of other countries have a substantially higher return on capital employed, before and after tax, than does the industry in this country. The "Little Neddy" report goes on to explain, as we all know, that the profit from the manufacture and sale of motor cars and motor cycles is higher in the home market than it is overseas. Exports take a share of the fixed investment costs, but they make less profits than home sales, despite the tough competition in the home market, for obvious reasons.

The overseas sale must jump the tariff in most cases; it will have borne shipping costs, and it often involves modifications to match the product to the market. There are then distribution and marketing costs, and in each market there is a fierce fight by the home producer, where such exists, to be sharply competitive.

Because of all this, the report concludes that a strong home demand is essential to provide the capacity utilisation and the profit mix on which the future of the motor industry in this country must depend. The received wisdom until the early 1960s was contrary to all this. It ignored the links, on the one hand, between profit and the home market and, on the other, between return on capital and investment. The received wisdom until the early 1960s was that the motor industry was an ideal industry for the prime regulation of the general home market.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

What does the right hon. Gentleman mean by "received wisdom"? Received from whom?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

Politicians on the whole, and the Treasury behaved as if they believed this. I con testify that during the period 1651 to 1964 the motor industry received about one and one-third changes on average a year in hire purchase and purchase tax; I include the good—downward—changes as well as others.

In the 1960s Ministerial attitudes seemed to change. My right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) invented another instrument to help in managing the economy, the regulator. Secondly, my right hon. Friends the present Leader of the Opposition and the then Chancellor of the Exchequer, my right hon. Friend the Member for Barnet (Mr. Maudling), took quite a different attitude to the expansion of the motor industry and the use of hire-purchase controls in the early 1960s. Therefore, one could say that the received wisdom changed in the last few years of Tory administration, and I can assert that we accept that a healthy home market is essential to the motor industry, though general restraints on the home market, including everything as well as motor cars and motor cycles, may sometimes be necessary.

Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry North

In the interests of accuracy, would the right hon. Gentleman not agree, in quoting from the "Little Neddy" report, that in 1961 purchase tax was increased to 55 per cent.? In other words, the "received wisdom", as he calls it, was reinforced by the Tory Administration.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

Certainly. In fact, I will be more particular. I would say that the change of attitude dated from 1962. I said in the early 1960s, and I am not trying to distort the situation. I would set the date at about 1962 in regard to the change of attitude by my right hon. Friend the Member for Barnet and my right hon. Friend the Leader of the Opposition, who was then at the Board of Trade.

I would not say that a change of attitude, if it results from improved knowledge, is any the less acceptable whenever it comes. We shall welcome any death-bed repentance by right hon. Gentlemen opposite, although we know from their vote on the Ten-Minute Bill, a few minutes ago, that they are unlikely to change their minds.

Since 1964, the Government apparently have reverted to the old attitude. Since 1964, instead of one and one-third changes of hire purchase and purchase tax per year, the motor industry has had no fewer than an average of three changes each year.

Also, during those five years, there have been no fewer than 13 changes in Bank Rate. This is very odd because, in addition to the invention of the regulator by my right hon. and learned Friend the Member for Wirral, the present Administration have taken into much firmer and possibly more sophisticated use, albeit at the behest of the I.M.F., the money supply as a control on general demand in the economy. Despite this, we have the motor industry picked out for special restrictions.

As I have said, the motor industry alone suffers a particularly large down payment requirement under the 1969 Hire Purchase Regulations. While the highest down payment for any other item of goods within the hire-purchase range is 33⅓ per cent., motor cars and their related products have to suffer a 40 per cent. down payment. We would have thought that, long before the present crisis in the industry, the Government would have reduced the 40 per cent. down payment to the highest rate for other goods, 33⅓per cent.

It is very paradoxical. Serving in the Government are such right hon. Gentlemen as the present Minister of Technology, who are explicitly seeking growth industries to encourage. They choose them big, like nuclear power, and small, like Beagle. In both cases, they do not seem to have very beneficial results. The motor industry is an international growth industry which, if given the right treatment, will perform extremely well; yet it has been discriminated against in a way which will wreck our prospects in the mid 1970s.

Whatever the Minister's private views and those of his Department—we can only note that one of his senior officials was on the "Little Neddy"—so far he has evidently not succeeded in changing the Treasury attitude.

Photo of Mr Robert Sheldon Mr Robert Sheldon , Ashton-under-Lyne

The right hon. Gentleman points out that the credit squeeze and hire-purchase restrictions are ruining the home motor car industry. However, the same regulations apply to imported cars, and they seem to be doing extremely well at the moment.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

Does not the hon. Gentleman realise that the buoyant home markets of those foreign cars enable lower costs because of higher throughput? That is the very distinction that makes them the more formidable competitors.

The competitors of our motor industry are not treated in the way that our industry is treated. Owing to Labour's mismanagement, the motor industry is becoming the stunted giant of the big motor league. Our share of world trade in motor products has gone down dramatically in the last five years.

Let us look at the results of Labour mismanagement. The year after Labour came to office, the Government produced their considered judgment of future production prospects in the National Plan. In 1965, on page 107, the Labour Government forecast that production in 1970 would be 2·6 million motor units. It is likely now to be 1·8 million units, or 30 per cent. fewer than the Labour Government predicted in 1965. The National Plan forecast that new home registrations in 1969 would be nearly 1·7 million. The outturn for 1969 was just under 1 million, or a fall of 41 per cent.

That was all under Labour, and all beneath Labour's considered forecast made in the National Plan a year after right hon. and hon. Gentlemen opposite came to office. The outturn for 1969 was not only 41 per cent. less than the National Plan forecast, but 21 per cent. less than our own 1964 figure. Labour has gone steadily downwards in terms of car production and sales in the home market. All these facts more than justify our voting against the Government this evening for their mismanagement of the economy and its consequences on the motor industry.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

Before the right hon. Gentleman leaves that point, it is one argument to talk about figures, but does he argue that a stunted giant can produce cars like the Rover 2000, the XJ6, and the Capri? Let us talk about quality, because that is an important view which is taken outside this country.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I acknowledge that the quality of design and product of our car manufacturers is superb, of course.

During Labour's years, imports have doubled as a proportion of the home market, and there is a possibility that we are on the brink of an import boom. However, it will not be the same sort of import boom as that occurring in Europe, where there has been an elimination of tariffs. This is a boom over tariffs which have only been reduced by the Kennedy Round. In fact, it is the inflation and stagnation produced by this Government's policies and the differing treatments of our car industry and those of our competitors which, together, have given imports their chance.

Let us compare the records for the last five years of our main European competitors. In the United Kingdom, new registrations in the home market, including imports, have fallen 17 per cent. between 1964 and 1969. In France, they have gone up 33 per cent. In West Germany, they have gone up 37 per cent. In Italy, they have gone up 52 per cent. Here is one reason why the greatly increased volume put through the factories enabled these countries to compete with our own products at lower unit costs. Their shares of world trade have risen from high throughput based on buoyant home markets as a result of continuity and the confidence which their Governments have given them.

It is true that our exports have risen since 1964. They are 18 per cent. up in volume, though not so much in value due to devaluation. However, exports are not profitable. They bear a fixed share of overheads, but they do not sustain growth, expansion, risk-taking and investment. We have seen on the tape today the very sad news from Vauxhall that, in a year of record exports, there has been a record loss. That is the point for right hon. and hon. Gentlemen opposite to seize. Exports and profit do not go together in the motor car industry. If the industry is to have a sustained future, it must have a fair home market on which it can make profits.

On top of this disastrous home market, the motor industry, with others, has had to sustain rising prices. It now faces a great increase in steel costs. Industrial relations have deteriorated substantially over the last five years—[Interruption.] In terms of anything measurable, they have deteriorated. Stoppages have risen sharply. A succession of freezes and attempts to impose incomes policies have, just as hon. Gentlemen below the Gangway forecast—with us—soured labour relations and, inevitably, the Prime Minister's capitulation over trade union legislation has made matters worse.

The point for the Government to meet is that the confidence of the industry's leaders in their future prospects is crucial to the investment programme that should lie ahead. Investment decisions have to be made. The "Little Neddy" forecasts the market right up to 1974, based on less unattainable assumptions than those in the National Plan, though they are well above Labour's achievement. However, it emphasises that if the 1973–74 markets at home and overseas are to be met, investment decisions for those years must be taken this year. The "Little Neddy" stresses that, unless the sales and the profit outturn implied by the 1970 prediction in its report are fulfilled, the investment for the mid-1970s for the motor car industry will be jeopardised.

The "Little Neddy" report states that the industry needs new home registrations of about 1,150,000 new units, which includes imports, in 1970 to get the profits to justify the further investment planned. On what has turned out to be an optimistic assumption of 1969 outturn, and on a cautious assumption about growth in consumer spending in real terms of 1·3 per cent. in 1970, the "Little Neddy" hopes that a bracket of new registrations of between 1,125,000 and 1,175,000 new units can be reached in 1970.

But now we have to face facts which have come to light since the "Little Neddy" reported. The 1969 final figure for new home registrations proved even more disappointing than the "Little Neddy" feared. The November, December and January figures of new registrations have proved very disappointing indeed. The only small comfort—I do not know how much comfort it is —is that the January hire-purchase figures shifted upwards a little, though nothing like back to the 1968 level.

So it looks as if the 1970 forecast and, therefore, the 1972–74 investment needs which depend on it, is seriously at risk. Even if consumer spending in the rest of the year grows more than the "Little Neddy" assumed, it is still not likely on its own to suffice without some change in the market conditions in which the motor industry has to operate.

That is why we come back to the Government with the question about the differentially higher down-payment required on motor cars. Why is the industry, which is doing so well abroad, still penalised in the home market by this differentially higher down-payment? It is this and the length of repayment that we would have expected the Government to revise. We very much hope that the Minister of Technology will announce the decision to do so today. There will, after all, be no increase in effective demand if the Government make these changes. There will be no increase in effective demand, because the theory now is that the restraint on money supply puts a control on total expenditure.

If the motor industry has removed from it a restriction that burdens it more than all other household durables, it means that it will be able to compete more effectively with all other household durables and with all consumer expenditure. All we are asking is that the industry should be able to compete fairly with all other expenditure. There is no question of special favour being asked for the industry. All we ask is the removal of special disfavour.

There is no risk of overload in the industry. It has plenty of capacity to cope with more increase in demand than would possibly be induced by a change in the down-payment and the repayment terms. Even if the "Little Neddy" forecast is fulfilled, with exports at the best possible level, the industry will be operating at only 75 per cent. of capacity. So we ask the Government to make the changes today and not wait for the Budget.

The first impact will be on stocks. Motor agents and distributors are desperate. The sustained effect of credit squeezes — [Interruption.] The hon. Gentleman says that they are all broke. It is dangerously near the truth. The whole distributive network serving the motor industry has been strained almost beyond endurance by the vicious effects of the prolonged squeeze and high interest rates and taxes. If the Government intend to make these changes, but delay them until the Budget, the impact on stocks and on production will coincide with a seasonal peak of demand and there will be a danger of squeezing out exports and sucking in imports. That danger can be avoided if the decision is taken now.

There is a seasonality in motor car demand. All the figures seem to show that the first half of the year is crucial. Therefore, it is during the next four months that the 1970 demand, on which the mid-1970s investment depends, will crystallise. If the Government do not operate to expand that demand over the next four months, the 1970 target and future investment will be in jeopardy.

There is no danger to the balance of payments if the Government do as we suggest. The motor industry is a very low consumer of imports. It has a high conversion rate. If it is able to put through a higher volume of cars at home, its export competitiveness will be increased.

The Minister of Technology has a personal responsibility for the industries sponsored by his Department. The motor industry is doing extremely well abroad. But its costs are rising and its sales are falling at home, where stoppages are increasing. We think that the right hon. Gentleman should identify this as a growth industry par excellence. We think that he should encourage it in the same way—though we do not say by the same instruments—that its competitors are encouraged. The extra restrictions should have been lifted earlier.

Because of the Government's mismanagement of the economy and the effects on the motor industry, we shall vote against them tonight. But we hope that the Minister of Technology will have some good news to give us in the speech that he is about to make.

4.36 p.m.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

The right hon. Member for Leeds, North-East (Sir K. Joseph) made a deeply considered speech, which he chose to narrow entirely to the motor industry. Four points emerge from his speech, which I was able to anticipate without seeing it. He claims, first, that the motor industry did better under his colleagues than it has done under this Administration. Secondly, that the motor industry has suffered from being used as a regulator of the economy. Thirdly, that the Government ought now to ease the present hire purchase restric- tions. The right hon. Gentleman's fourth point, which he implied in what he said generally, was that the general level of taxation on the industry was too high.

Since the right hon. Gentleman always says such sad things so sadly, I hope he will not mind if I give some figures, although exchanges of statistics in this kind of debate are bound to be selective and to that extent unsatisfactory. Taking the effect of all this on the number of cars in use and the use made of cars, a slightly different picture emerges. I am talking about the home market.

In 1964, 37 per cent. of households in the country had regular use of cars. That covers ownership and use through a firm. In 1969, it was not 37 per cent., but 51 to 52 per cent. The number of cars in use in 1964 was 8·4 million. By 1967, it was 10·6 million. The increase in the first three years of this Administration in cars in use in this country was 2·2 million, compared with 2·3 million for the last three years of the previous Conservative Administration. Indeed, anybody observing the scene can see that, despite all the gloom which the right hon. Gentleman and his hon. Friends spread, there has been a substantial increase in the number of cars used in the community, and that the average mileage driven by the average motorist is greater.

Photo of Mr Michael Heseltine Mr Michael Heseltine , Tavistock

Does the Minister agree that, as we know that sales of new cars have gone down, his argument must mean that people have been hanging on to their cars longer than they would have done?

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

I am quoting the total number of cars in use. I will come to other figures later.

I will try to bring into the debate the latest figures which have been published by my Department. First, car production. United Kingdom manufacturers produced 1,717,000 cars in the 53 weeks of 1969—an average of 32,398 a week, compared with 35,238 in 1964. That is a reduction over the 1964 period. Production for export was at a new record of 824,000. That is slightly higher on a weekly average basis than in 1968, and it is 17 per cent. above the 1964 figure. Production for the home market was about 893,000, a weekly average of 16,845, and 23 per cent. below the 1964 peak.

Turning to commercial vehicle production, production in the 53 weeks of 1969 totalled 465,700, a weekly average of about 12 per cent. above 1968 and the weekly average production for export rose by 26 per cent. to a new peak, 6 per cent. above the previous peak of 1966. Production for the home market—and I am still speaking of commercial vehicles—was 3 per cent. above 1968.

If one looks at exports specifically, as recorded in the Overseas Trade Accounts, exports of cars and commercial vehicles reached new records in 1969. Cars totalled 772,000, 14 per cent. up on 1968 and 13 per cent. up on 1964 and commercial vehicles just over 181,000, 28 per cent. up on 1968 and 9 per cent. up on 1964. It is true—and the figures which we have published to bring the E.D.C. figures up to date reveal this—that there has been a reduction in the home market since 1964 and a substantial increase in exports.

The right hon. Gentleman the Member for Leeds, North-East managed to go through the whole of his speech without making any reference whatever to the balance of payments position which the Opposition left in 1964 and the balance of payments position at the turn of the year. When the right hon. Gentleman said that he wanted to narrow the debate to a consideration of the motor industry, the reason for that was quite obvious. It was a speech, like all the others—we had it last week on unemployment—prepared in Central Office for circulation to Conservative candidates up and down the country. In the statistics which the right hon. Gentleman presented to the House —this is what destroys the seriousness of his speech—he took no account of the economic background against which the state of the motor industry has to be seen.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

Let me just finish this.

Let me just remind the right hon. Gentleman that in 1964 there was a deficit of more than £700 million and that we are now running at a rate of surplus of around £500 million a year, which has involved a massive switch of resources from home to export. To pick one industry—and this is the main point —and speak about its development during this period without any regard whatever either to the general framework of economic policy or the background against which the industry have to operate, is simply not to make a serious speech.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The right hon. Gentleman has not noted that the figures I took, by which I have been judging Labour's performance, came from the Government's own National Plan forecast, prepared in 1965, a year after they had examined the books.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

Whatever the National Plan may have said, the facts remain that when the right hon. Gentleman and his right hon. and hon. Friends left office they left us with a situation which required us to take measures to produce a massive shift in resources. I can only say to the right hon. Gentleman that it really was no comfort to the motor industry in 1964 to have a booming home market, because those running that industry knew of the mounting deficit and that whichever party was returned to office at the end of 1964 would have to take the measures which were taken at that time.

The real damage—this is the point—done to the motor industry is damage which is done when large-scale measures have to be taken to deal with an overseas deficit. The restriction on the home market which we have had to impose—and that is why the figures which I gave show a smaller production for the home market—stem directly from the measures which the Government have taken to strengthen the economy as a whole. The strongest ground for renewed optimism in the motor industry today lies in the very fact that the overall economic strength which the industry now sees returned offers a better prospect for steady growth in future than in 1964 when the industry could see the signs of impending restraints as clearly as could anyone else.

The second point of real substance made by the right hon. Gentleman was that the motor industry argues—he lent his voice to it and the E.D.C. report deals with the issue—that the industry has suffered from being used as a regulator of the economy as a whole. This is the nub of the complaint. It is not a new problem. The right hon. Gentleman fairly recognised—and if he had not said it I should have pointed it out—that during the period when he and his right hon. Friends were in office there were many variations up and down both in the purchase tax and the hire purchase environment in which the motor industry had to exist.

The right hon. Gentleman attributes the dawn of wisdom in the Conservative Government to 1962, a date picked out of a hat, which corresponds with his entry into the Cabinet and it may be that he had some part to play in it. But the problem did not change. It is true that in 1962 the previous Government moved towards relaxations which were obviously welcome to the industry, but the interpretation which I put on the changes made in 1962 and the return to wisdom was that a General Election was coming and that the relaxations were timed to correspond with a 1963 election. That is a view which is widely shared. Anyone who doubts it can see that the date on which restrictions were placed by the previous Conservative Government always came shortly after they had been returned to power, as they were in 1960.

The real position is that, if the return of wisdom to the Conservative Party on how to handle the motor industry came in 1962–63, that was also the period in which we began to run into very serious general difficulties which we experienced in terms of our balance of payments. There may well be criticism—and I do not want to avoid it—of the use that may be made of the regulatory mechanism by Governments, but the fact is that changes in the regulator and in hire purchase restrictions are instruments which any Government of any party is bound to require in their armoury.

From the point of view of the motor industry, seen in isolation, there is everything to be said for getting as even a growth as possible and avoiding sharp fluctuations. The reasons which were given fairly by the right hon. Gentleman are that as it becomes more capital intensive and re-equips with more expensive tools and becomes more automated, the unit costs depend more upon capacity utilisation than on almost any other single factor, and this, in its turn, depends on trying to create a steady demand from both home and export customers.

If capacity utilisation fails, costs will tend to rise and, consequently, there will be a lower return on investment which may discourage further expansion. No- body disputes that it would be desirable —if this is possible—to avoid changes which have the effect of producing sudden fluctuations in demand. This is not exactly the same thing as saying that one should maintain the same hire-purchase levels and the same purchase tax levels at all times.

Indeed, suggestions were made by one of the major firms to the Government two or three years ago that we might well adopt deliberate seasonal variations in hire purchase to help to even out the seasonal fluctuations in demand which normally occur during the year, to provide a steadier capacity utilisation and reduce the risk of unbalance between overtime in the summer and short-time working in the winter. It was with a view to evening out the demand that the Ministry of Transport altered the date of operation of the registration letter to try to prevent the bunching which had developed out of what was a perfectly innocent administrative practice in numbering motor vehicles. But the objective, if the House is to have a serious debate on the industry, must be for steadier growth, and this does not necessarily mean that one would not have to have some variations in Government policy on tax and hire purchase.

From the point of view of the Government, the problem is one of economic management and the need of any Chancellor to have at his disposal both the regulator and hire purchase. To forgo either of these instruments of economic policy—I shall come to credit policy in a moment—in respect of the motor industry alone would create serious difficulties and anomalies which the industry itself recognises, just as the Government recognise the difficulties which will affect the industry if they are used in such a way as to subject it to sharp disturbances. The relevance of this will emerge when we consider the E.D.C. report.

This matter has been fully discussed between the industry, my own Department and the Treasury over a long time. We have the National Advisory Council on the motor manufacturing industry, which the Leader of the Opposition used to chair when he was at the Board of Trade and which has now come to me. There has been a working party bringing the industry and the Treasury together to consider the industry's case. In respect of the individual use of the measures which I have described, there has been the best one can have in the way of consultation, namely, that the Minister and the industry keep in the closest possible contact over the whole period so that, although one cannot avoid the budgetary secrecy which surrounds any change in hire purchase or purchase tax, at least the industry has been able, on a monthly basis, either through the S.M.M.T. or through individual manufacturers, to keep us acquainted with its latest view and forecasts so that these can be taken into account when Government decisions have to be made.

Out of these various developments, we had the setting up of the E.D.C. for the motor industry, which brings together both sides of the industry, together with independent and official members, including some officials from my Department, under the chairmanship of Sir Hugh Tett. The report to which the right hon. Gentleman referred emerged from that E.D.C. As the House knows, it was done as part of an exercise following the publication of the Green Paper last year on the national economic prospect up to 1972 and the industrial implications following from it. Lord Rootes set up a group within it to look at capacity, investment, manpower and exports, and I pay tribute to the work which he has done.

The main argument in the report—this is central to the debate—is that the industry must have a large and stable home market in order to provide confidence and to generate enough profit to carry out the investment and research and development necessary to support high export sales. The main recommendation is that consideration should be given to the possibility of an understanding between the Government and the industry to establish a framework within which the industry can go forward confidently with plans to invest and to intensify its efforts in export markets.

This understanding, described in the report, which has come to be known as the concordat, has been discussed at least in the Press. The Government have considered the proposal very carefully. It is obvious to the House, particularly to those hon. Members who follow the prospects of the industry, that such a proposal—a proposal for an understand- ing or a concordat—raises major questions of public policy, including the problem of whether it is right or possible to bargain specifically with a particular industry in respect of the use of general instruments of demand management.

It is obvious, also, that the Government cannot under-write particular levels of production in particular industries, especially as these levels of production may be affected by a number of factors at home or in export markets, and where in any case the experience of particular firms which are competing with one another may vary widely according to the success of certain models in particular markets, changes in the pattern of world trade, or even the introduction of regulations on safety which may affect car exports. There was, for example, a reduction some years ago following the American safety regulations.

There are problems, also, which we cannot blink at, arising from the fact that three of the firms concerned in the United Kingdom are American companies which are increasingly planning their operations on a worldwide basis.

If we are really to identify the exact relationship between the size of the home market and export performance, a very important relationship, more work needs to be done. I intend to invite the main manufacturers to hold more detailed discussions over the next few months to look at the relationship between home and export sales on a more specific basis and to explore with them the possibilities which have been opened up by the E.D.C. report.

When the right hon. Gentleman says that there is some fixed relationship, he will be required to deal with some of the successes of our competitor firms abroad, where, for example, Volkswagen has a high proportion going to export all the time. I hope that he will not give the general impression that exports are by definition, and must remain, unprofitable; otherwise, he will be cutting the ground from under the feet of those in the industry, the Government and the community who look to the industry to be competitive in exports and are satisfied to see that it is.

Photo of Mr Donald Chapman Mr Donald Chapman , Birmingham, Northfield

I hope that my right hon. Friend will not be inflexible. Indeed, I hope that he will give a pledge of flexibility on the idea of a concordat. After all, the philosophy in industry which my right hon. Friend is trying to develop is one of partnership between his Ministry and the industry. Can we not take that partnership into the phase of understanding with an industry like this?

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

I hope that what I said —I prepared the words with care—will be taken as about the best evidence of flexibility one could find, namely, that, despite the formidable difficulties regarding a formal concordat, we intend to discuss with the manufacturers individually the relationship which there may he between home and export sales and the extent to which it will be possible to meet the main point which arises. I need hardly say that I hope that, during the talks, we shall make real progress.

Quite apart from the fact that the industry now knows that its case is being seriously studied in great detail by the Government, there are other factors pointing in the direction of improved prospects. The main one inspiring confidence is, as I have already said, greater confidence in the prospects for the economy. This means that, although we are still, obviously, looking for continuing growth of exports, the switch in resources which we have had to achieve has substantially taken place and provided a foundation on which we can build.

I may add—to this extent, I comment on what the right hon. Gentleman said—that the Government have looked increasingly to the control of credit as a partial alternative to the older instruments which the industry regarded as discriminating against it and which may not, therefore, have to play such a large part in the future.

More specifically, there has been a growth in consumer demand. The right hon. Gentleman referred to the more promising hire-purchase figures in January. If past experience is any guide, a period of restraint does produce its own recovery, quite apart from the seasonal factors which are now beginning to operate to help the industry.

The forecast in the E.D.C. report suggests that, even the lower bracket of recovery this year, with no changed assumptions, would provide a substantial increase in production of 10 per cent. over 1969 and a small improvement on the 1964 record year. Exports, as the House knows, totalled £1,010 million in 1969, that is, a 13 per cent. increase over 1968, and the E.D.C. report forecasts a 5 per cent. increase in export volume during this year.

So much for the problem of how to handle flexibly and in a spirit of mutual understanding the problems raised by the E.D.C. report. I come next to the question whether there should now be a relaxation on the home market.

Last summer, the S.M.M.T. called on the Chancellor and myself to urge some relaxation, and the Motor Agents' Association came to see me in October to ask for special relief on hire-purchase restrictions on used vehicles. They referred to the problems, which are real, faced by the motor agents, and argued that used cars had no import content and represented no claim on current real resources. However, it was not really possible to contemplate having separate hire-purchase rates for new and used cars; nor was it thought right to make a more general relaxation.

Questions of relaxation and decisions in this area fall to my right hon. Friend the Chancellor, not to me. But, for the reasons which I have given, and in the light of the forecasts which I have been able to give the House, I am not prepared to recommend at this moment a further relaxation to the Chancellor. The prospects for this year are promising, and I shall be holding the talks which I have described with the firms in the summer.

I come now to another issue to which the right hon. Gentleman referred, that is, industrial relations, and I shall speak of it here not as my right hon. Friend the First Secretary of State would, in terms of her responsibilities, but in terms of the effect on industrial policy through the loss of production, the effect on exports, and the reputation of the industry among its customers.

There are three American international companies operating in this country. I think that I am right in saying that we are the only country outside the United States which has the three American motor car giants established in it. Obviously, we welcome their presence, because they bring technology and management and provide employment and contribute formidably to the export performance of the industry as a whole. But since each of these companies increasingly plans its own investment, production and marketing strategy on a global basis the motor industry in Britain today operates in far more of an international environment than any motor industry in any other country.

The rationalisation of design, engine and components supply and even export effort takes place across national frontiers—in some cases, as if they did not exist. This means that what happens here in terms of industrial relations and return on capital is taken into account by these companies in planning where and when their next capacity expansion should take place. To say this is simply to report a self-evident fact, but it is a fact which must be taken into account by everyone who works in or has anything to do with the motor industry. It means, for example, that continual unofficial stoppages could have a significant effect on the prospects for future job opportunity and living standards which may not be apparent to those concerned only with a narrow issue on a short-term basis.

Photo of Mr Stan Orme Mr Stan Orme , Salford West

Does not my right hon. Friend realise that industrial conditions and wages also go across frontiers and that there is a national Ford strike in Ghent, Belgium, at present on the issue of parity as negotiations are taking place in this country? Therefore, it is not one way. The car workers in all countries will demand better wages and conditions.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

My hon. Friend should not read into what I said more than a statement of fact. The fact is—and this will apply in many industries in future and not just in the motor industry—that when industry organises production, exports and capital investment on an international basis, whatever happens affects everybody else. This is a fact which must be taken into account. It also raises questions for the Government. Whereas there is a strong overlap of interests with national companies operating entirely or principally on a United Kingdom basis, this is not exactly the same in the case of international companies, only part of whose activities are based here.

Photo of Mr John Mendelson Mr John Mendelson , Penistone

My right hon. Friend will remember that in 1962 and 1963, when some of these deals were concluded, the present Prime Minister laid it down as the policy, at any rate of the Labour Party, that there must be no removal of control of ordering and employment if this country was to agree to those sales. Are we not committed to adhere strictly to that policy now that we are in Government?

Photo of Mr Norman Atkinson Mr Norman Atkinson , Tottenham

Would my right hon. Friend allow me to add—

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

If my speeches are punctuated by interventions, I shall not be able to develop my argument. I look forward to hearing what my hon. Friends have to say, because the questions raised in this exchange are absolutely crucial and it is of considerable importance that we should study them together because they are part of the reality of the development of the motor industry. It was for exactly this reason that the Government, with the help of the Industrial Reorganisation Corporation, played a very significant part in bringing about the merger between Leyland and B.M.H.

The right hon. Member for Leeds, North-East was very critical of the I.R.C. and the role of the Government. But I wonder whether, even in the light of his speech today, he would seriously argue that it would have been wise for the Government to have kept totally out of that problem—and a very complex problem it was—when the British motor industry was facing three of the big American-owned companies. The previous Government had authorised the entire equity of one of the British companies to be acquired from abroad; and another company, Rootes, had been linked to the point where the production planning was done world-wide even before the final acquisition. We had to deal with that situation, and we arranged that the I.R.C. should play some part in the final operation. I do not want to be critical of the right hon. Gentleman —it would not be fair—but it would be a little helpful if he would come out of his lair and comment more directly on the problem of how the Government are to safeguard the interests of the nation in dealing with matters of the kind which occur in respect of the motor industry.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

I think that the House will tire of me if I do not come to an end shortly.

Photo of Mr Eric Heffer Mr Eric Heffer , Liverpool, Walton

But this is the most important point of my right hon. Friend's speech. He wonders how we are to safeguard the interests of our nation. The point is that design work and other work has been transferred from places like Halewood to Germany. It appears that we have absolutely no control over this matter. This is serious from the point of view of employment opportunities for our people. It has also been said by the workers concerned that dies have been transferred. Grants have been made in the development areas and yet there has been this transfer to Germany. We must have an answer on this question.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

My hon. Friend has prevented me from getting to the passage at which I deal with that point. I am not unaware of it. The overlap of interest with the international companies is very much less clear. Let us put it in proportion.

The international companies have a heavy investment in this country, and they want to develop and defend that investment. The issue is not about the existing investment but the extent to which we can attract further investment and further job opportunity in this country. We must have, and I am now beginning, a series of discussions in depth with the international companies about their operations in the United Kingdom so as to arrive at a better understanding of the respective interests of the companies and the Government.

This sort of dialogue, covering a very large number of the issues which my hon. Friends have raised, with the international companies, particularly as they get larger, will, in my opinion, be a proper and necessary function of Government. In parallel with them, we should have a series of dialogues, which have also begun, with the trade unions to bring them into the area of industrial policy so as to achieve a broader understanding between the unions and the Government about the development of some of the issues which have been the subject of discussion.

Photo of Mr Norman Atkinson Mr Norman Atkinson , Tottenham

Will my right hon. Friend seek an assurance from the international companies that their boards of directors will become British in accordance with the assurances given by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) some years ago when he informed the House that in future all international companies would have British boards of directors and British control?

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

I shall he having very deep discussions with the companies, but I cannot give undertakings of the kind for which my hon. Friend asks. He will, however, understand that I want to have these discussions because of the importance of the issues raised.

As last week, when we discussed unemployment, the real issues of interest have emerged, as I suspected that they would, from my hon. Friends. Before I finish, I must refer to three things which were not said by the right hon. Member for Leeds, North-East. First, it would be interesting to know whether the right hon. Gentleman and the Conservative Party are pledged to a reduction in the present level of taxation on the motor industry. They have just voted for a Bill which proposed to reduce taxation. We want a clear answer from the Opposition spokesman who winds up whether they are in favour of, and whether they pledge, an overall cut in the level of taxation on the motor industry.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The right hon. Gentleman will find that I never mentioned any such thing.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

Of course the right hon. Gentleman did not refer to it. The last thing he wants anyone to ask him a question about is what his intentions are. Am I limited in what I say about the industry to what he said in his speech? Every motorist wants to know what there is behind the regular political attack on taxation—and the promise by the right hon. Gentleman and his right hon. Friends to cut taxation—in the motor area.

I read and hear that there is to be a shift from direct to indirect taxation. Indirect taxation means putting more tax on goods. Is the motor industry to be the recipient of this shift of emphasis from direct to indirect taxation? Thirdly, I ask the right hon. Gentleman if he and his colleagues would abolish investment grants? If they were replaced by investment allowances we calculate that it would be as expensive, if not more expensive. So without investment grants the motor industry would have about £33 million a year more to pay and this would find its way into higher prices for motor cars on the streets. If the House is to debate the industry seriously we have to have answers to these questions.

I pass over entirely what would happen at Bathgate, Lynwood, Haleswood and Ellesmore Port if regional employment premiums were phased out. Let us have a clear answer. Is there to be a reduction in the tax on the motor industry? Are we to see the motor industry the recipient of the shift of emphasis from direct to indirect taxation, and thirdly, is the motor industry to lose money which it now receives either from investment grants or in other ways?

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

I can answer the right hon. Gentleman's last question categorically. We are categorically pledged to get differential investment incentives for the development areas.

Photo of Mr Tony Benn Mr Tony Benn , Bristol South East

That is not very meaningful. If investment grants were abolished, how could the incentives be produced? That question has never been satisfactorily answered. When the real answer emerges I do not believe that anyone who works in the industry as an employee or manager, or the public at large, will find much attraction in what the right hon. Gentleman advocated—that we should begin to break down the fabric of consultation built up among the Government, international companies and the trade unions, and leave the big companies to follow their competive instincts where-ever they may lead, imposing legislation of a restrictive kind on the trade unions to keep them under statutory control.

I do not believe that what the right hon. Gentleman has said today had any solid, positive content. I hope that for that reason the House will reject the Motion.

5.14 p.m.

Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield

At the risk of not carrying my hon. Friends with me this afternoon, I must tell the House that I have in the past been something of an admirer of the work of the Minister. Of course he has made many mistakes and brought in too many Socialist policies, but what I have admired is the spirit of determination with which he has attacked his job and the fact that he is obviously dedicated to the success of the industries with which he is associated.

Therefore, I am all the more disappointed this afternoon that when dealing with one of our great exporting industries, one of the industries within his clutch which could do the most for his Department and the Government, he came forward with a speech which was extremely disappointing and completely negative in regard to any new proposals to help the industry.

Let me deal first with the immediate question as to whether there should be a relaxation of the differential purchase tax, which is higher in the motorcar industry than in other industries. This is a plea put forward by the industry and it is a relatively modest one. This afternoon the right hon. Gentleman turned it down. I am surprised that he has done so, because he is a very clever man. He knows the argument about volume production and reducing unit costs as much as anyone in this House. He knows the stimulus which he could give the industry by this kind of relaxation at this time. Yet he has not done it.

He knows also that by not doing it now he is preventing the spring trading expansion of the industry. In effect he is losing the industry a year in its progress. This is a view seriously held by the leaders of the industry—the people he has consulted—and it is a serious case. This afternoon he has not done any of these things. On the contrary, he has used his brilliant sense of advocacy to blind us with science. It was delightful to hear from him that there are slightly more cars in the country than there were when the Government came to office and that there is a little more car use. So there should be; the argument is not about whether there are more, but how much more there should be. We are dealing with a great growth industry and the argument is not whether the industry will expand, but whether it will expand slowly or quickly and make a great contribution to the economy of the country.

He has done none of these things today when I believe in his heart he would like to have done them. What is the explanation? The explanation is quite simple. The doctrine of Cabinet responsibility is at work and this afternoon he was not, psychologically, addressing the House as the Minister of Technology but as a member of the Labour Party pre-election Budget planning committee. We all know that there are "goodies" to be distributed from the £1,000 million surplus we heard about earlier. The question of when they are to be distributed will not be decided by the Minister.

He said that it will be decided by the Chancellor, but I wonder whether it will be decided by the Chancellor or by the Prime Minister. There will be a relaxation, as everyone knows, and this in itself is choking demand for cars in thousands of homes. Everyone knows this. The Government of course have the legal power to prepare their election programme very carefully, but in effect they are sacrificing the important interests of the car industry to their pre-election planning. The purchase tax will not go down until the Prime Minister's Gallup Poll ratings go up. So it is a bad lookout for the industry.

I turn to the serious point made by the right hon. Gentleman about the "Neddy" report. I believe the word he used was "concordat". I am seeking a little more concordat on both sides of the House and I shall not stress the controversial aspects of what I say. I think the "Neddy" report tremendously important. I am glad to see the right hon. Gentleman nodding his head in agreement. My memory about this industry is fairly long. We have heard overtones and undertones in this debate to the effect that the industry has never been very well treated by Governments. I am not excluding any party in this matter.

Fundamentally, the reason is that there was too much in Whitehall of the old 19th century approach to industry. Whitehall was looking on people 100 miles north of Earls Court who lived amid the noise of machinery, who had oil on their hands and who liked to make profits and high wages in the Midlands. This was something which a certain type of official did not understand. He did not trust what the industry was saying. This attitude has persisted. It has always been difficult for Ministers to do what I think, and what I believe the Minister truly believes, should be done for the industry. The "Little Neddy" report makes a complete break. The industry's case about volume production and low unit costs has been investigated by a committee of tremendous standing. Sir Hugh Tett is a leader in the greatest industry in the world. He was educated at the Harvard Business School and knows the whole approach to modern business methods. This was a very influential Committee which consisted of many leading figures in the industry, on both the management and trade union side, officials from the right hon. Gentlemen's Department, who obviously helped and took part in all the work, and two leading economists—one from Oxford and the other, I am glad to see, from Cambridge: in fact, he is the Chairman of the Faculty Board of Economics and Politics at Cambridge University.

In essence, all these independent people who have given their work and time to this job in the national interest have decided that basically the industry's case about needing volume production to get low unit costs as the spearhead for the attack on road markets is correct. My belief is that this should lead to a changed attitude to the industry by Governments, irrespective of party.

I do not want to be critical at this point, but I was a little surprised that the right hon. Gentleman could not go further than he did about the "Neddy" report. He made rather too much of the constitutional issues which he thought might arise. Naturally I do not know the details of his conversations. It may be that the demands have been too arithmetical.

The most important paragraph in the report—paragraph 15.04—says this: An understanding is needed between industry and government whereby the industry should be assured of a steadily expanding home base from which to obtain a proper rate of return and should therefore be enabled and encouraged to invest in improved and additional capacity; at the same time it should undertake to do its utmost to meet the balance of payments objective and to realise the full potential of export markets. Everybody here would be in favour of that. The Government should subscribe to that as a general rule which will later govern their fiscal and other types of policy with regard to the industry, and the industry should be determined to go full out for exports.

We understand that the Government must control the economy, but it is difficult to understand why it is necessary to control the economy by putting heavier loads on the motor industry than on other industries. I do not want to make this a partisan point, although the dates are rather suspicious. This is the only great country with a great motor industry which has been declining from 1964 up to the present. The motor industry in every other great country has expanded, but ours has declined.

Photo of Mr Gwilym Roberts Mr Gwilym Roberts , Bedfordshire South

This is not true of the United States, where in 1969 an enormous fall in production occurred, much greater than occurred here.

Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield

I am talking about the period from 1964 to 1969. With regard to all our big European competitors what I have said is correct.

The Minister of Technology said that exports have improved—we are pleased about that—and that home sales have declined. Actual production has declined, which makes the situation more difficult from the point of view of volume in relation to unit sales. The point about the industry which anybody knows who has tried to study it, as I have because of my Midland interest, is that it is a cyclical industry. It always catches rather more of a cold than the economy in which it operates. The industry must live with this fact, is prepared to live with it, and knows how to live with it. However, it is hard that an extra stab in the back should come from the Government at a very critical time.

I hope that out of the "Neddy" report, perhaps even helped a little by the debate and by the Minister's attitude, will come a change of attitude by Government towards the industry and that the Government will help it as much as they can. At least the Government should not continue to undermine the industry's efforts by wrongly based fiscal measures.

5.25 p.m.

Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry North

I am glad the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) removed himself from the narrow partisan, sectarian attitude adopted by the right hon. Member for Leeds, North-East (Sir K. Joseph). For all of us who are Members for Midland constituencies or for constituencies where the motor industry is central to the local economy, this is a matter, not only of burning constituency interest, but also of national interest. I am glad that my right hon. Friend the Minister of Technology pointed out to the right hon. Member for Leeds, North-East that overriding national considerations have to be taken into account.

I agree with the right hon. Member for Sutton Coldfield that the central argument today must be the relation of the home market to the export market. We must all closely consider whether it is necessary to have a large home market capable, through the scale of its outlet, of producing the unit cost to enable us both to compete in export markets and to have a thriving home market.

My right hon. Friend said that he would discuss precisely this point with the motor manufacturers and with what he called "concordat". That was a somewhat infelicitous title because, as I remember, historically the original concordat was between the Emperor Napoleon and His Holiness the Pope. I do not know in which category my right hon. Friend puts himself or in which category he puts the motor manufacturers. From my personal knowledge of the motor manufacturers, I would certainly not accord to them the quality of "their holiness". Over the 25 years which I I have known them closely in Coventry they have pursued a policy of unenlightened self-interest.

I remember vividly the battles they had with Sir Stafford Cripps immediately after the war when he was trying to direct them into export markets. They fought back vigorously. The right hon. Member for Sutton Coldfield may remember the famous dinner of the Society of Motor Manufacturers and Traders at which Sir Stafford, who was urging the motor manufacturers in the national interest to move into export trade, was loudly booed.

In those days Sir Stafford had the physical opportunity of withdrawing steel supplies from the motor manufacturers. That was a rather crude method, but one which was inevitable in the circumstances, for directing the motor manufacturers into the export markets.

In the years that followed there were continual arguments between the industry and Members of Parliament, the Labour Government and Labour supporters, because the industry was reluctant to go into the export market unless it had particularly favourable conditions on the home market. Pressures were applied initially by means of the steel squeeze and then by the purchase tax squeeze and the credit squeeze. Those were successful in directing the motor manufacturers to sell in the export market.

I pay a tribute to them on account of that. They did so brilliantly and effectively. Rootes was one of the pacemakers. The way in which Rootes charged into the French and United States markets reflects credit on the manufacturers and on their salesmen and all who were concerned in ensuring that exports rose.

This method, and the method subsequently encouraged by Tory Chancellors of the Exchequer, has proved extremely successful in turning the attention of manufacturers to export markets. The ultimate result has been that in 1969 the exports of motor manufacturers rose to the record level of about £900 million, and for that the manufacturers, managements and workers are to be congratulated.

However, the moment has come when we must re-examine the whole situation. While my right hon. Friend announces his future intention of assessing the relationship between cost per unit production in the home and export markets, there is no reason to believe that if the home market were now liberated, at least to some extent, from the present squeeze, that would not only result in a re-inflation of the domestic economy but in a continuing expansion of the export market. I do not believe that today these things are mutually incompatible.

I recall Lord Stokes saying, in effect, "Let us give the motor manufacturers a chance to accept the principle—which they no longer resist—that they should maintain a high export performance and, at the same time, maximise their domestic production." We have already heard of the decline in the home market and that decline is not unrelated to the industrial unrest which is taking place in the motor industry. Why do workers go on strike? When one listens to the almost ritualistic bashing over the head of motor workers for engaging in industrial disputes one might think that they are guilty of some original sin which inevitably leads them to quarrel with their managements and disrupt the economy.

From my experience in Coventry—I am sure that this has been the experience of my hon. Friends who represent similar constituencies—nothing could be further from the truth. Anybody who has had a close association with workers in the motor industry will know that workers do not go no strike for fun but because they have genuine grievances. These may arise from a multitude of causes—perhaps from a lack of communication between management and labour—but in the vast majority of cases, even assuming that there may be a few anarchic trouble-makers, there are deep reasons for workers going on strike.

If one looks at the structure of the motor industry, one sees why it happens. In a piecework industry where every piece of work must be argued over, even if the result is successful, disputes will arise and these may lead to strike action. Let us get away once and for all from the doctrine—it has been elevated into a sort of higher mythology—that motor workers have been guilty of engaging in disputes for their own sake.

Reference has been made on many occasions to the question of overseas managements entering the British motor industry. Some hon. Members will recall that I have strongly resisted such moves. I did so when there was a question of an American take-over by Chrysler. I regretted it, despite the new technology which that company might have brought into our industry. Accepting that there is this new type of management in the British industry today, I still think it important that these Americans should adapt themselves to the needs and conditions of the British scene.

After all, it is not enough for them just to come in and say, "We will impose our methods and styles on the workers in the British industry." There must be a coming and going of ideas and proper debate and discussion so that many of the disputes about which we hear can be eliminated.

The time has come when the Chancellor of the Exchequer and the Minister of Technology should apply themselves to the immediate question of reducing the level of purchase tax and to an easing of credit restrictions. We are all aware that there is uncertainty in the motor industry. This in itself is a cause of industrial disputes. Workers who have security of tenure feel that they can look forward to a period of prosperity and stability. As soon as there is an element of insecurity in their work, on the factory floor, people's tempers become frayed, workers become irritated and agitated, and that is when they begin to talk of strike action.

I quote a few statistics to show what has happened in recent years not necessarily in criticism of my right hon. Friend, but to underline the point made by the right hon. Member for Sutton Coldfield about the motor industry being the pacemaker of all industry, not just national but worldwide.

The British motor industry absorbs about 10 per cent. of our national producers. It has a relatively high conversion factor and this, to a large extent, determines the nature of the economy. This is also true of comparable motor industries and of what has happened in France, Germany and Italy where, since 1960, annual output for the home market has gone up by 9 per cent, per annum. In Japan, which has become a serious competitor in the international motor market, output since 1960 for the home market has multiplied by 10 times. In that period our domestic production for the home market has declined.

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

Would not the hon. Gentleman agree that the main reason for the substantial increase in Japanese motor production has been the considerable Government assistance being given to the industry there, which is on a scale unparalleled anywhere in the world?

Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry North

That is undoubtedly true, though conditions in Japan are different from those here. Certainly I would not wish to encourage Government assistance to a degree such as the Japanese have given their motor industry. However, there is a difference between encouraging an industry and manacling it. If an industry is capable of expansion in the national interest and is capable of helping the export drive and expanding the domestic economy, then the Government should remove the restrictions which are at present shackling that industry.

One of the most sinister statistics of recent times in the motor industry has been the dramatic rise in the importation of foreign cars. I wish to make it clear —I am sure that I speak on behalf of a number of my hon. Friends in expressing this view—that when we object to the importation of foreign cars, we do so not out of xenophobia or because we are opposed to those countries thriving and prospering, which we want them to do.

The fact remains, however, that if foreign cars are able to come in under our tariff barrier at prices and in circumstances which make it impossible for our domestic industry to compete, then one is frustrating the whole principle of money control at home to discourage people from buying on the home market.

The statistic I refer to is that imports of foreign motor cars have doubled in the last few years; indeed, since 1964. This is an accelerating process and unless we do something to lower the level of purchase tax to make it more possible for British buyers to buy British cars, the importation of foreign cars will continue to increase at the rate of arithmetical progression which it has done so far.

Photo of Mr Gwilym Roberts Mr Gwilym Roberts , Bedfordshire South

While I agree with my hon. Friend's remarks about the need to ease hire-purchase restrictions, he will agree that foreign cars are able to mount our taxation barriers and so overcome the H.P. barriers which British manufacturers face. Would he agree that the answer lies in the fact that there is much longer batch production on most models of foreign car?

Photo of Mr Maurice Edelman Mr Maurice Edelman , Coventry North

I am obliged to my hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts). I imagine that he is helping me. If I follow him correctly, he is. He is saying that some of these foreign cars have behind them, certainly in Germany, France, Italy and the United States, far longer production lines because they have larger domestic markets and their unit costs are cheaper.

The motor industry will face many new and difficult challenges which have not yet been heard about in this debate—the question of pollution of the atmosphere from exhausts, for example, which is not an airy-fairy danger but very real. President Nixon, in his instructions to Government Departments in the United States, has urged them to turn away as far as possible from the internal combustion engine and go over to alternative methods of transport.

Our industry will face great competition, not only in simple terms of unit output, but also in terms of design and adaptation to the decade of the 1970s. I say to my right hon. Friends the Minister of Technology and the Chancellor of the Exchequer that they should give the motor manufacturers and, through them, the workers in the industry, and, through those workers, the nation as a whole, a chance to use the British motor industry to its best national advantage. I believe that, if motor taxation is reduced, if purchase tax is brought down and if credit restrictions are, if not ended, at least made less onerous, then Britain once again can become the motor industry champion of the world.

5.41 p.m.

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

We have just heard an extremely balanced, informative and invaluable speech from the hon. Member for Coventry, North (Mr. Edelman). I do not think that there is much in the arguments he advanced which any fair minded hon. Member could disagree with.

In listening to the speech of the Minister of Technology, I was disappointed in that, while he was able to present a number of interesting statistics, he was unable to give any positive encouragement to the motor industry as a whole; to promise any relaxation in the taxation burden which is crippling that industry, or to give any undertaking that he would do anything to assist the industry by making representations to the Chancellor of the Exchequer about hire purchase down-payments. Therefore, I come back to the point where the right hon. Member for Leeds, North-East (Sir K. Joseph) left the debate—that, unless there is going to be a major encouragement to the industry over the next few months, the current year will be a bleak one with unhappy prospects and a year which may, indeed, result in further stagnation of employment and home sales.

I do not think that it can be reasonably supposed that this industry can have the measure of expansion upon which its continued export performance is dependent unless there is a very much wider market available to it in this country. Indeed, the whole burden of the speech of the hon. Member for Coventry, North was to that effect and I do not disagree with a sentence he uttered in that regard. It is recognised at last and too late by most hon. Members on both sides of the House that a large home market is essential if we are to maintain prices at a level which will enable this industry and others to increase their exports.

I have received, as many hon. Members must have done, telegrams today from representatives of the retailers. The one I received just before the debate from the Chairman of the Cornwall Division of the Motor Agents' Association set out the case succinctly and accurately. The telegram says: Members of this division of the Motor Agents Association representing 303 motor traders wish to place on record their grave concern at the appalling state of affairs in the retail motor industry. They urge you during today's Parliamentary proceedings to enthusiastically support measures for immediate relief from intolerable burdens imposed on their businesses by the present credit restrictions and tax impositions on new and used car trading. Since 1964 there have been 9 changes in credit control, 3 increases in purchase tax, 5 increases in petrol duty, 2 increases in vehicle licence fees. Since its inception in 1966 non-recoverable S.E.T. has been increased by 92 per cent. Members are increasingly resentful at being continually used as the main economic regulator with such serious effects on their livelihood. Your reactions to this request will be observed with interest by all our national membership of 20,000 businesses. I am not fond of being lobbied in advance of a debate, but I recognise that the retail motor car business is going through a very difficult period indeed. I do not believe that a responsible association like the one whose telegram I have just read would use these methods unless it was desperate about the problems it was facing. It is a fact, as anyone knows who has discussed this matter with retailers, that the decline in sales is causing unemployment and the dangers of closure of a number of businesses which have previously served the public well.

I am sorry that the references made so far in the debate to the contribution which the American motor car industry has made in this country have been rather critical. I am sorry that they have been critical, because it must be accepted that, while almost every major advance in motor technology originated in this country, the developments of those advances have taken place overseas and almost exclusively in the United States. By bringing their technology and sophisticated methods of production to this country, I am confident that General Motors, Chrysler and other overseas manufacturers have been able to help our export drive in a way which would otherwise have been missed.

Photo of Mr Albert Booth Mr Albert Booth , Barrow-in-Furness

In the interests of a balanced debate, would the hon. Gentleman set against the point he has just made the ample evidence that Ford is transferring a considerable amount of design, manufacturing capacity and know-how from this country to Germany?

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

I accept the point. I purposely omitted the name of Ford from the overseas manufacturers whose subsidiaries I listed. But, while accepting that Ford has made this switch, and while also regretting it, I have no doubt, as I am sure the hon. Gentleman the Member for Barrow-in-Furness (Mr. Booth) has no doubt, that the Ford Motor Company of Great Britain has made a major contribution to our exports and has assisted people of smaller incomes to buy cars which they would not otherwise have been able to buy. Ford is still among the first in the small, cheap car range.

Looking to the future, we cannot discuss the Motion without considering the effects upon the motor industry of British membership of the Common Market. I cannot here speak for my party because, as hon. Members appreciate, I am opposed to British membership of the Common Market, so what I say I say as a back bencher. But I am convinced that, faced with the kind of competition which the British motor car manufacturers will find exists in the Common Market countries, a reduction of tariff barriers between ourselves and the Six if we should obtain membership can only result in a hideous increase in the number of imported vehicles from France, Italy and Germany while there will be no comparable increase in the exports of British cars to the Continent.

For example, I know of no reason why German motor car owners should switch from Mercedes or Volkswagens to Bentleys or Rovers or the Morris 1100. I know of no good reason why Frenchmen who drive Citroens should decide to buy Vauxhalls. I know of no reason why Italians who drive Fiats should be inclined to buy Austins. With the habit firmly established in the E.E.C. countries of buying home-produced vehicles, the British manufacturers are likely to find very tough competition. In the light of yesterday's White Paper, I imagine that many manufacturers are having second thoughts about the wisdom of Britain's application to join the Common Market.

Photo of Mr Keith Speed Mr Keith Speed , Meriden

I appreciate the hon. Gentleman's argument, but is it not precisely within the Community and E.F.T.A. that the greatest expansion of exports has taken place and is not that why companies like Leylands are putting considerable investments into Belgium for C.K.D. components?

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

I accept that there is considerable investment by British manufacturers in E.E.C. countries, but I suspect that the reason is that they fear the competition I have mentioned. They fear that the British industry will not be able to compete with the manufacturers already in the E.E.C. countries unless they are there themselves. The hon. Member has unwittingly supported my argument.

I should like to pay tribute to this great industry. It has contributed more to our export drive in real terms than probably any other industry in the country. It has been a sustained effort which has paid enormous dividends for the benefit of the nation as a whole.

Many criticisms can be levelled at the industry. It is true that on many occasions it has failed to provide after-sales service abroad in a way which would have enabled its exports to be increased still further, but many of the problems of the past have been overcome. It would be very unfair if the debate closed without a tribute to the brains behind this industry, not only for the advances which it has made in recent years, but for the advances which it has made in spite of being used as a sort of Government economic shuttlecock, a fact which has been mentioned by hon. Members on both sides of the House.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

The hon. Gentleman has made a criticism which I have heard for many years and which is not fair to the motor industry. It is that the industry has failed to provide after-sales service in foreign markets. That has not been its failure. It has been the result of the system of franchise and concessions between manufacturers and distributors in other countries. Overseas distributors have refused to break down their system of market franchise and have thus frustrated our industry from providing service stations abroad.

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

The hon. Member is not correct. I am sorry to have to say that, because I have great respect for him. If he had studied, as I have studied constantly for 15 years, the record of three major British manufacturers in the United States, he would have discovered—

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

It could be so in Europe. I accept what the hon. Gentleman says in respect of Europe. I was referring to the United States, where the record until the last three or four years has been deplorable, and it has undoubtely hindered the export programme.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Mr. Bence indicated assent.

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

I see that the hon. Gentleman and I now agree. He was referring to Europe and I was thinking of the United States market.

I cannot underline strongly enough the comment of other hon. Members that it is essential that when the Budget is presented the Chancellor makes a reduction in the absurdly high rate of the down payment on motor cars. I appreciate why these restrictions were imposed. I appreciate that it was the duty of the Government to use any means at their disposal to correct the adverse position of our balance of payments, and I recognise the Government's achievements in the last months in correcting that position, and one therefore cannot criticize their methods.

But now that we have a surplus, now that we are moving into an era of new prosperity in terms of the balance of trade and currency reserves, there can be no excuse for penalising this industry and hindering its export performance by reducing its home market and at the same time putting a tremendous burden on retailers whose livelihoods depend on their ability to sell on the hire-purchase system. There must be a reduction in the down payment and it must be brought into line with the down payments for other goods.

Finally, I can do no better than commend to the House the article which appeared in the Daily Express this week and which was written by no less a person than the hon. Member for Coventry, North. In one of the most succinct and yet searching articles I have read for a long time, he set out the basic arguments in favour of the case which he made himself today for assisting this industry. It is an article which should be read by every right hon. and hon. Member.

5.56 p.m.

Photo of Mr Will Howie Mr Will Howie , Luton

I was interested to notice that when the hon. Member for Bodmin (Mr. Bessell) read his telegram there was a sort of rustle along the benches as we all got out our copies. So far as I could make out, the only difference between mine and his was that whereas his represented 300 mine represented 562. That means that an even greater number of people are watching my reactions with, as they say, the greater interest. We shall see what happens in due course. I am terrified!

The right hon. Member for Leeds, North-East (Sir K. Joseph) referred to the composition of the committee which produced the E.D.C. report. His colleague, the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd), did the same. The first remarked upon the number of civil servants who were on the committee and the second on the number of economists, drawing attention to the fact that the chairman was a Cambridge economist, a fact which seemed to give him considerable satisfaction.

It is worth noting that in the very nature of things about half of the committee was representative of the motor industry. Although the chairman was a Cambridge economist, and that is qualification enough for anything, he is also the Chairman of Rootes Motors. For this reason, because of the large representation of the motor manufacturing industry on the committee, it is not surprising that the report reproduces arguments which many of us have heard many times from the S.M.M.T. I am not reflecting any discredit on the society for that. The general argument is that in order to sustain its export effort the industry requires a large and buoyant home market. The point has been made by the S.M.M.T. many times, and it was made in the E.D.C. report of August 1968.

There is obviously something in the argument. Part of our problem is to find out how much, to attempt to quantity it as the word now is. Almost in the same month as the E.D.C. report came out, the mechanical engineering E.D.C. brought out a report which did not support the argument as a general argument for the mechanical engineering industry. There is to be seen some dispute between the two.

But the question which arises—and a number of times when with my colleagues I have had lunch with representatives of the S.M.M.T. I have asked for their view —is what is the optimum proportion of production for the home market and production for the export market. As of now, I have not had a reply to that question. I understand that it is a difficult question, and I did not expect a reply. I am therefore pleased to see that my right hon. Friend the Minister of Technology has set out to discuss this very question with the motor manufacturing industry. I think that the industry's argument would have been very much stronger if that question had been investigated and answered some time earlier.

In round figures, at the moment the proportion of exports is about 40 per cent. of total production. In some cases it is higher, and no doubt in some cases it is lower, but I wonder how that compares with other industries. Perhaps I might give the House two examples by way of comparison. George Kent's in Luton, manufacturers of water meters, exports about 80 per cent. of the firm's total production. Johnnie Walker, well- known distillers, export about 83 per cent. to 84 per cent. of the total production, a very high proportion indeed. The circumstances of those two cases which have a high export proportion compared with total production are not perhaps immediately applicable to the motor industry, they are not directly similar, but one must remember that Bedford Trucks last year managed to export 65 per cent. of the total production.

An interesting article in The Times of Monday of this week showed that Volkswagen export about two-thirds of the total production, and, as the article says: The private, export-led boom of Volkswagen has raised West Germany's biggest motor manufacturer to the status of the world's leading car exporter. … The export gains have been achieved to some extent at the expense of Volkswagen's home market.

Photo of Mr Gwilym Roberts Mr Gwilym Roberts , Bedfordshire South

Does not the example of Volkswagen show exactly what is wrong with British industry, in the sense that there are too many manufacturers rather than too few? The success of Volkswagen is the result of the small number of modifications that are necessary and the way in which the company is able to give one vehicle such a long run. If we had the standardisation which is so evident in Volkswagen, we could achieve low unit costs.

Photo of Mr Will Howie Mr Will Howie , Luton

My hon. Friend has something there, but I do not wish to pursue that technical argument too far at the moment, and I shall therefore do no more than register qualified agreement with my hon. Friend and neighbour in Luton.

Reverting to Volkswagen, the thing to bear in mind is that the company has deliberately restricted its home market. The restriction has not been imposed on the company, the company has adopted the restriction from choice, and this choice has been open to our motor industry as well. Volkswagen export about two-thirds of its production.

Perhaps in passing I might here take up a point raised by the hon. Member for Bodmin (Mr. Bessell), who moved from a Front Bench to a back bench role during his speech. In the article to which I have just referred one finds the argument that on the whole the Common Market has been something of a disappointment for Volkswagen. The Motion refers to the Government's policies, and I think that when we talk about the Common Market both we and the motor manufacturing industry would do well to look at the reaction of Volkswagen to the Common Market, remembering that that company is in the Common Market, and presumably knows what it is talking about.

I said that there had been an earlier E.D.C. report on the motor manufacturing industry. That was about 18 months ago, and what is interesting is that the new report takes up many of the points made in the earlier report and uses the same central argument about the ratio between the home market and the export market.

There is, however, one very important and significant difference between the two reports, and that is the attitude towards exports. My hon. Friend the Member for Coventry, North (Mr. Edelman) reminded us of the difficulties which Sir Stafford Cripps had when he forced the motor industry, for the first time, to take up exporting as part of its economic function. Paragraph 15(4) of the E.D.C. report, which was referred to earlier, spoke about an understanding between the Government and the industry about maintaining the export drive. At the beginning of last December Lord Stokes, speaking not for the industry, but for his firm, gave a public undertaking to the Government that, were the restrictions on the industry removed, his firm would maintain its level of exports, and I am happy to tell the House that, in an exchange of correspondence between myself and Vauxhall Motors, the Chairman of Vauxhall, Mr. Hegland, earlier this year gave a similar undertaking for that firm.

That is a significant change in the attitude of the industry towards exports. It is now, for the first time, saying that it will maintain its level of exports regardless of whether the home market is relaxed in its favour. The Government should accept these undertakings as given in good faith, and should proceed to this concordat which has been referred to once or twice.

As I entered the Chamber I was handed a copy of the Luton Evening Post, which is quite a good Lord Thomson paper, though I must admit that it has one or two fairly obvious blind spots. It features the figures published by Vauxhall Motors today, which were referred to by the right hon. Member for Leeds, North-East. Vauxhalls report a loss of £2 million this year, as opposed to a profit last year of £5¼ million.

Photo of Mr Harry Gourlay Mr Harry Gourlay , Kirkcaldy District of Burghs

Order. The hon. Member for Bedfordshire, South (Mr. Gwilym Roberts) must not read newspapers in the Chamber.

Photo of Mr Will Howie Mr Will Howie , Luton

As I was saying, Vauxhalls made a loss this year of £2 million, compared with a profit last year of £5¼ million. This is regrettable, but we must, in fairness, remember that we are talking about a turnover of £180 million. The difference between a profit of £5¼ million and a loss of £2 million against that kind of turnover is not so terrible, though obviously we want industry to make profits, and not losses. The important thing, however, is that those figures are based on a record export of 120,000 vehicles, the highest ever achieved by the firm.

Photo of Mr Gwilym Roberts Mr Gwilym Roberts , Bedfordshire South

Do those figures include the profits made by exports through some of the overseas agencies in Europe? It is important to distinguish between profits in the British sphere and profits made by some of the overseas agencies in Europe.

Photo of Mr Will Howie Mr Will Howie , Luton

That is true, but as yet I have had an opportunity to look only at the gross figures published in the newspaper to which I referred.

This is an important matter in terms of the international company which has been mentioned in this debate, because one of the key factors in the international company is not merely its position in the balance of payments, but the internal balance of payments position of the firm itself, because we know that the internal pricing arrangements of an international company can have important effects on what its profits are, and particularly where they come from.

The loss by Vauxhalls has been variously described today as being due to the restrictions on the market, to increased costs, and to labour troubles. Looking at Vauxhalls over the last year, I think that labour problems were the most important single factor. The firm suffered from a number of stoppages, some of them in its own factories, and some due to disputes of various kinds in the factories of component manufacturers, leading to lay-offs and a substantial loss of production. It is from that loss of production that the loss of profits has sprung, rather than from economic restraints. Last November, when there were labour problems in the industry, I asked the Secretary of State to set up an inquiry into its wage structure. It is generally agreed that the earnings structure in motor manufacture is chaotic. It varies from firm to firm and each firm often has a wide range of different methods of determining the earnings of its workers.

Photo of Mr Peter Bessell Mr Peter Bessell , Bodmin

The hon. Member is making an important point. The dispute in Vauxhall's this last year is of particular significance and supports his argument, because the previous history of Vauxhall has been disappointing when related to that of other motor manufacturers.

Photo of Mr Will Howie Mr Will Howie , Luton

That is so, although some argue that the previous period of peace in Vauxhall's was one result of the relatively low earnings in that firm. I do not wish to be diverted into a complicated study of that matter, although the point is a serious one and I certainly take it.

Some parity is required. In Luton, it is not merely a question of parity with the Midlands, which is the popular parrot cry, but with Rootes in Dunstable, where Midlands rates of pay already apply. So some wage demands can be expected in that area. It was because of the differences in earnings in firms very close to each other that I asked for this inquiry, and I repeat that request. It would be a suitable subject for the first job done by the combined Prices and Incomes Board and Monopolies Commission when it shortly comes into existence.

This is not purely a matter of the workers being bloody-minded and riotous. Industrial relations are a two-sided affair and it would be generally agreed that the wage increase from £50,000 or so a year to £60,000 or so which the Chairman of Vauxhalls gave himself earlier did not help to smooth industrial relations in that firm. I do not know whether he gave it himself: perhaps General Motors gave it to him. But that sort of increase does not help.

The most disappointing characteristic of the industry is its failure to hold off foreign competition. This has increased virtually every year since 1961, when the figure was between 3 per cent. and 4 per cent. It is now between 8 and 9 per cent. This has been put down to a number of factors, but it has been said that these imports jump over tariff barriers and meet the same kind of hire purchase limitations which our own manufacturers do. But, more important, in that period we have devalued, which puts a further tariff, effectively, against these imports.

Yet, despite devaluation, the proportion of our market which foreign manufacturers take has continued to rise. This has nothing to do with the state of the economy. It shows a lack of aggression in the motor industry.

Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield

There is a worldwide tendency for motor car imports to increase in all countries, as they have very much in the United States. There is a certain prestige in having a motor car made by certain firms. But is the hon. Gentleman really being fair to the industry when he says that it shows a lack of aggression—first of all, because this is a world-wide tendency and second because the industry has been deprived of the volume which would enable it to have lower unit costs, which would enable it to be more aggressive? That is our point—that the aggression has been taken out of the industry by Government penalisation.

Photo of Mr Will Howie Mr Will Howie , Luton

I do not want to be unfair. I accept much of what the right hon. Gentleman says, but he will remember that the total production of Volkswagen, one of the most successful exporters in the world, is built up mainly on exports. That firm does not depend on a mass home market. This stands his argument on its head.

But there is no doubt that the industry is suffering from a lack of confidence, which is affecting it in many ways. It makes its industrial relations worse. It is making it, I repeat, less aggressive in meeting competition at home, although it is fighting very hard in foreign markets. On the whole, the industry exaggerates the effect of the hire purchase restrictions upon its total product, but even so, it now needs a real shot in the arm.

A great deal of the trouble in the industry is the fault of the industry and not of the Government, but it is more likely that the Government can rescue it than that it can rescue itself. The latter would be better, but I do not think that it is possible at the moment. So, although I have many doubts about the industry, I think that the Government should relax as early as possible some of the limitations which are placed on it.

6.17 p.m.

Photo of Mr Keith Speed Mr Keith Speed , Meriden

The hon. Member for Luton (Mr. Howie) said that the industry needs a shot in the arm from the Government. After the deplorable speech of the Minister this afternoon, the only shot it is likely to get is one of morphine. The right hon. Gentleman seems to be living in a completely different world from my constituents, many of whom are engaged in the motor industry or in the motor accessory industry. Indeed, probably more people in my constituency are engaged, directly or indirectly, in this industry than in any other constituency.

Photo of Mr Gwilym Roberts Mr Gwilym Roberts , Bedfordshire South

May I correct the hon. Gentleman? The Cambridge Economic Survey, I believe, many years ago showed that South Bedfordshire had a higher proportion than any other constituency.

Photo of Mr Keith Speed Mr Keith Speed , Meriden

That may have been so, but as my constituency is growing at a rate of 20,000 new electors every year I suspect that I have overtaken the hon. Member.

There are the twin problems of production and profitability and there are the problems of industrial relations. I am interested to see how hon. Members opposite have slightly changed their tune. Whenever we question the Secretary of State for Employment and Productivity, we are told how terrible it is that millions of days are lost through sickness and how the trivial number of strikes is of no consequence. Yet could any hon. Member tell me of any motor factory which has been closed because of sickness? Such is the interdependence and inter-relationship of this industry that a small number of people can come out on strike, official or unofficial, and cause many thousands of workpeople to be laid off.

I agree that this is not one-sided. Certainly management has a responsibility. I live in Coventry, and in some of my evening papers, like the Coventry Telegraph and the Birmingham Evening Mail, I see advertisements instructing motor workers to go back to work, after a stoppage perhaps, some of which are couched in terms more reminiscent of the barrack room or barrack square than of dealings with civilised people. There is undoubtedly a problem of communication within the industry. Nevertheless, this industry, and the Government, too, I believe, must be resolved not to run away from the problem. The Government ran away last June. The next Conservative Government will not run away from the problem. The industry is in a crisis. Let us make no mistake about that. It is no good talking about consultations and concord acts and so on. What the industry needs is action, and action now.

It is a valid criticism that a few years back the British motor industry did seem to be more production oriented than market oriented. This is a technical way, perhaps, of voicing many of the criticisms which have been made about the industry this afternoon. I do not believe that it is a valid criticism today. Our major companies have now got marketing right and can compete with any motor industry in any part of the world if given the same conditions on which to compete as are given to their main competitors.

What worries me very much is that since 1964 we have been overtaken by France, Italy and Japan in the motor car manufacturers' league table. We were pretty well equal in 1964 with Germany, but now Germany has shot away ahead, with America leading the world. These are facts which hon. Members know, no matter what their political views.

I believe that our marketing people in the motor industry can take on competition. They can tackle Mercedes, Volkswagen, B.M.W., Fiat, Renault, Toyota, Honda—whoever it may be—but not if they have one arm tied behind the back by the Government with artificial restraints on the home market.

Photo of Mr Will Howie Mr Will Howie , Luton

Would the hon. Member meet the argument that Volkswagen has based its success on exports rather than on a very great home market?

Photo of Mr Keith Speed Mr Keith Speed , Meriden

It is certainly based on exports, but it has built up an export market with a thriving home market as well. Home market sales have been a springboard on which to mount export sales. It has a bigger market than, for example, that of Ford's in this country, and it is without the artificial restraints such as hire purchase restrictions and so on which the Government here impose on our industry.

I must mention the motor cycle industry, because it is an important part of the home motor industry and, apart from my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who made the opening speech this afternoon, no one has mentioned the motor cycle industry today. People have been talking about exports. The motor cycle industry has been exporting over 80 per cent. of its production over the last few years, although it is also hit by the same restrictions on hire purchase and increases in purchase tax, making its home market extremely difficult to maintain and, therefore, exports profitability. For example in 1964 motor cycles over 50 c.c., with 25 per cent. purchase tax and 20 per cent. deposit on a three-year period for payment, the average monthly sales were 8,344. Today, with 33⅓ per cent. deposit and two years to pay, and 36⅔ per cent. tax, the average monthly sales have slumped from 8,300 to 3,200. This, perhaps, gives some idea of the industry's difficulties.

Take British home trade deliveries—and deliveries to the home market are profitable lines to enable us to sell in America, Africa, Europe. Motor cycle home trade deliveries declined last year by 39 per cent. compared with the 1968 figure. That gives a measure of the size of the problem which the motor cycle industry is facing in just the same way as the car industry is facing a problem. In all the remarks which I am making this afternoon, like my right hon. Friend, it will be understood, I hope, that I am speaking of the motor cycle industry as being linked with the motor car industry.

I believe that the Minister did not understand the whole marketing concept. I have been engaged in marketing. I believe that the motor cycle industry has now got its marketing right, but it cannot carry out a marketing exercise unless there is a clear and stable home market and it has a clear idea of what that is to be. If home production schedules have to shoot up and down because of Government actions it is extremely difficult if not impossible to get the costing of programmes right. I ask right hon. and hon. Gentlemen opposite to appreciate that marketing now is a very sophisticated exercise indeed, and if we are to have the blunt instrument of this Government's measures clobbering it the whole time it is not going to work well. It does not help British Leyland or Rootes or Ford or anybody, who have constantly to fight a battle for exports, if they cannot get right their production schedules, costing for tools, and so on, all down the line, because of Government action.

What the industry needs is a reasonable home market so that the cash flow is assured—for research and development, for new tools, for new models, new investment, expansion of factories, in order to compete in the international market. In exports we have done wonderfully well. Let no one deny or make any mistake about that, but how much longer can we go on in these circumstances?

On my desk this morning arrived this quotation from Mr. Allen Sheppard, a director of Rootes newly formed export supply and parts division. He says: Although we expect to improve on our 1969 performance this year, long-term export growth depends upon Government action to encourage a satisfactory market for new cars in Britain. The motor industry relies on the home market for the level of profits needed to provide investment. Only by heavy investment in new products and manufacturing plants can the industry hope to remain competitive overseas. I am sure that with the British motor car industry and motor cycle industry this Government have not only wanted the golden eggs to come out of the motor industry, but they have wanted the foie gras as well, and whereas the golden eggs for the balance of payments are all very well, if they take the foie gras they kill the goose which lays the golden eggs. So now is the time to look very closely at the whole situation of the British motor industry and to ask ourselves if we are not now making a terrible mistake, not only for now but for the early and mid-1970s. If there is not now the investment taking place, which is very much needed so that we can compete successfully on an international basis by 1973 or 1974, which may be the time we shall be entering the European Economic Community.

I am extremely worried for this great industry, not only on behalf of my constituents, many of whom work in it, and in components manufacturing, and not only on behalf of the companies, though they are important, too, but on behalf of the national interest, because, as was once said, "What is good for General Motors is good for the United States", we also are now in a position when we can say that what is good for whisky is good for Scotland and what is good for the motor industry is good for Britain. It is up to the Government to meet the challenge and to take action and to take action quickly. The facts have been published. Everybody in the industry knows that action has got to be taken and taken quickly, and if action is not taken, then in the very near future, I believe, the Government will start bitterly to regret the day when, really, they sold the British motor industry down the river.

6.29 p.m.

Photo of Mr Michael Heseltine Mr Michael Heseltine , Tavistock

I listened with great interest to the Minister's speech, in which he succeeded in dividing the speech of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) into four parts. He went on to deliver a carefully prepared rebuttal of each of the four parts, and I rather suspect he came to the House, listened to my right hon. Friend, and then conveniently fitted his rebuttal to those four divisions. There was a good deal in his speech about consultations, but there was very little about action to come from any of the things he was saying.

He remarked that my right hon. Friend had said that the motor industry had done better under the Conservatives, and he appeared to question this, but he went on to produce figures which demonstrated quite clearly that the motor industry had done better under the Conservatives, and I quite agree with that. The fact is that there are only two criteria which one can apply over a period of years to decide which Government have done better by any particular industry. One liooks at the record—one looks at the record of the last six years of the Conservative Administration and compares it with the six years of the present Administration—and one sees whether there has been any pattern in world trade which would affect one's judgment about any change which may have emerged.

The fact is that in the six years from 1958 to 1964 Britain's car output grew by 43·7 per cent., while the gross national product grew by 24·5 per cent. In other words, the motor industry was growing far faster than the national output. Since this Government came into power, there has been a reduction of 8·1 per cent. in the output of the motor industry, whilst the G.N.P. has grown by 9·4 per cent. to the end of 1968. That in itself, over a six year period, is a pretty conclusive argument.

The only way in which the Government could hope to escape from attack would be by seeing what has happened in Europe. I regret to tell the Minister what he must already know, that there is no luck for him in this argument. The European manufacturers have succeeded, not in being responsible for a drop in the last six years, but for a growth, and the growth which existed in this country under the Conservative Administration has continued in all the equivalent European manufacturing countries.

The Minister's second argument was about how necessary it was to use the regulator, and he mentioned the mammoth problems of government in controlling the domestic economy. We accept, if a little cynically, the Government's conversion to the view that some sort of domestic economy management is necessary. The old days of vilification of the stop-go economy have gone, and the respect with which the Government now treat the regulator, demand management and all the latest phrases that have come to replace what was once so unpopular, is a welcome sign of the Government's conversion to the facts of economic life.

It was particularly interesting that the Minister went on to say that the real malaise started in 1962–63, and that from that moment on anybody who could see what was coming should have been able to forecast with a fair degree of accuracy the difficulties which would arise in the late 1960s. That is a coherent argument. All I ask is, why what is clear to the Minister now was not clear to the Prime Minister who hawked his loquacious tongue round the country in 1963–64 promising a new dawn of growth. What was so apparent about 1962–63 escaped the Prime Minister's notice.

Was it that the Prime Minister did not understand the facts, or did he deliberately put a gloss on the facts for public consumption rather than for consumption by economists and the industry? The answer is to be found in the speech made by the Prime Minister in Luton, the home of Vauxhall, on 6th October, 1964. The Prime Minister talked about the balance of payments problems, and he even analysed the figures. He made it perfectly clear that he was fully aware of the difficulties in the balance of payments situation, but he still went on talking about growth. The only other memorable thing about that speech was the vilification and abuse which the Prime Minister heaped upon the then Prime Minister for not getting his figures right. It is extraordinary that a Goveriment that produced only a few months later a National Plan, which had to be scrapped within a short period, should now be trying to justify what they completely misunderstood, or misled the people about, in 1963.

May I now deal with the third aspect of the Minister's speech which was for me, and I suspect for the industry, the most terrifying part. He was talking about the cogently argued case put forward by my right hon. Friend the Member for Leeds, North-East about the relationship between the overseas markets and the home market. A N.E.D.C. report went into this in great detail. Anyone who has the first idea about the economics of large-scale production understands the argument. Distinguished civil servants served on the Committee which considered this, as did politicians, and many people from the industry gave a great deal of time to the preparation of the Report. But what does the Minister say? He comes to the House this afternoon and refers to a continuing dialogue which he is to set up with the manufacturing companies. Then he will have a fabric of consultation with the companies which, he believes, are American-owned and therefore using their powers from a non-nationalist point of view for Britain. It seems to me that a continuing dialogue will also have to take place with the Minister's hon. Friends behind him, who are more interested in the political and emotive issues of American ownership than in the motor industry itself, and who departed from the Chamber the moment this issue had been ventilated.

That leads me to the fourth point dealt with by the Minister which was whether there should be a general relaxation of the home market. We have heard many references to the telegrams which have been sent from the Motor Agents Association. One hon. Member received a telegram from 230 motor agents, the hon. Member for Luton (Mr. Howie) received a telegram from 550 motor agents, whereas I have a telegram from 1,500 motor agents. But even if a telegram had been received only from one motor agent, the lesson would be the same. The arguments would be accurate and would pinpoint the real dilemma of the industry. There is nothing new in this telegram. I suppose, if people have battered on the doors long enough, they feel something might give in. The motor agents went to see the Minister in November last year and received an answer from the Paymaster-General, in which he said: However, the prospects for the economy generally are of buoyant demand which rules out for the time being any relaxation of the present restrictions. That statement could have been written on any day in any month in any year since October 1964, and it would have been wrong on every occasion when the Government made it.

It is extraodinary how complacent the Government are in hiding behind a series of promises and consultations and the promise of further consultations when, as my hon. Friend the Member for Meriden (Mr. Speed) rightly pointed out, what is wanted is action.

The Minister did not deal with my right hon. Friend's precise request. We are not asking that the motor industry should be given any specific assurance or privilege, but that it should be given exactly the same treatment in regard to the hire purchase initial deposit as any other industry which supplies goods on hire purchase. My right hon. Friend spelt out that it would have no implications on overall demand and no adverse effect on the balance of payments. All the Minister did was to make a rhetorical statement demanding assurances about what a Conservative Government would do in the event of its being responsible for the taxation policies in this country, and putting three specific questions to the Opposition. I will not go over them again, but I think the Minister will agree that I have been totally fair. He wanted to know what our attitude would be about helping the motor industry with specific taxation cuts. My right hon. Friend gave our answer. If the Minister is asking whether there will be a particular change in Tory taxation policy, I have to tell him that this is not a debate about the general effect of taxation. This is a debate on the motor industry. The only thing I can assure him of is that we will not promise at the next General Election that there will be no increase in taxation and, having been elected, increase the overall yield of taxation by £3,000 million a year.

May I look for a moment at some of the appalling by-products that have followed from the Government's taxation policy, which is the other side of the treatment received by the motor industry? It is one thing to deal with car companies and components companies, and another to consider the ordinary man or woman who aspires to purchase a motor car. If I were sitting on the benches opposite, the example which I am about to give would send a chill of apprehension down my spine. It clearly demonstrates that, since the Government were elected, the standard of living of the people has not stood still but actually dropped. My hon. Friend the Member for Worcester (Mr. Peter Walker) has demonstrated how this affects the purchaser of a new home, and I will show how it affects the purchaser of a new car.

If in 1964 the average industrial earner wanted to spend £1,000 on a new car, after paying tax on his income and assuming that he put aside 10 per cent. of that income each week, he would have to wait two years four and a quarter months before being able to save up the initial deposit of £200. Today the same average industrial earner would have to wait for three years and nine months to save the down-payment on a new car —in other words, one year and five months longer.

I wish to move to another aspect of this massive increase in taxation on the road user in the last six years, which has had the effect of taking £1,000 million in tax from those who use the roads. I am delighted to see the Chancellor of the Exchequer present, and I put this point seriously to him. When he increases taxation on the motor user, as he does with such monotonous regularity, what calculation does he make of the effect, not on the pleasure of the ordinary man and woman in the use of the motor car, but directly on industrial costs. My own calculation, for which I make no particular claim, is that something like 60 per cent. of every pound of extra taxation on the road user goes straight back on industrial costs. It may be that the Government have another calculation, and I hope that they have. If they have not made such a calculation, it reflects in an appalling way upon them in that they do not know the effect in industrial costs every time they increase these taxes. I hope they will be able to give us their calculation. I rely for my figures on the British Petroleum Survey.

To sum up the over-all position, we believe that the motor industry has been extremely badly treated by this Government's financial policies. We believe that its economy has grown far slower under this Government than under Conservative Governments and that the rate of growth in the motor industry has reached a negative position. The Government have attacked not only the industry, but also the ordinary men and women who have come to regard the car as one of the most desirable acquisitions they can make, after a home. The culminating effect has been to impose an intolerable burden on this industry which has great growth potential. For this reason we shall vote with great conviction on this Motion.

6.42 p.m.

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

We have had a vigorous, plain-man's speech from the hon. Member for Tavistock (Mr. Michael Heseltine)—in post-Selsdon Park style, what is called a robust speech. I am only sorry that he did not address himself, with the thoroughness of which I know he is capable, to the problems of the industry, but relied instead on what was an entertaining speech, more appropriate perhaps to stumping the country than to a debate in this House. At the end of his speech he struck a note that has been notably lacking in earlier contributions to the debate.

When the right hon. Member for Leeds, North-East (Sir K. Joseph) opened the debate, there were precisely six hon. Gentleman on his side of the House, apart from those on the Front Bench. During the course of his speech this rose dramatically to a total of eleven. So that there was no large and vociferous following for this important Motion put down in the names of the right hon. Gentleman the Leader of the Opposition and his right hon. and hon. Friends.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

There is in the country.

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

In the course of the debate we had one or two thoughtful and interesting cross-bench contributions. I found the speech by the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) an engaging, amiable and thoughtful speech of which the whole House took note, but it was not a fierce attack on the policies of Her Majesty's Government, nor did it suggest that the motor industry was in a state of crisis.

Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield

The Minister of State said that I did not attack Government policies. I would remind him that I started my speech by charging the Government specifically with sacrificing the important interests of the industry to their own electoral preparations. If he does not regard that as an attack, I wonder what he does regard as such?

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

I am sorry if I hurt the right hon. Gentleman's feelings, but his manner was so gentle that I did not see the force of what he may have been saying. The plain fact is that the subject we are now debating is a serious and important one, if that subject is the future of the motor industry. In the short time I have available I shall not enter unnecessarily into polemics, but will seek to look at the industry and its problems and consider seriously the most thoughtful and constructive approach to them.

The industry's case, as put in the House today, rests largely on the "Little Neddy" Report to which reference has already been made. The report makes three points. First, it mentions the need for confidence in home demand projections, and especially those for the current year 1970; secondly the need for steady growth in the home market; and thirdly the relationship between the home and export markets.

So far as the present outlook is concerned, the immediate future is not half as gloomy as some right hon. and hon. Gentlemen opposite have suggested. It would be fair to say that had this debate taken place a month ago there might have been more support both within and outside this Chamber for the line they have taken. Within the last few weeks the industry has recognised that sales are starting to pick up, as they are expected to do towards the end of this month, and in general the industry is looking to some growth in the market in 1970.

There is a substantial link between consumer expenditure and new car registrations at home. Some unofficial forecasts, such as that of the National Institute last November, gave rates of growth of consumer expenditure in 1970 of just below 2 per cent. This may have been the figure underlying the industry's more pessimistic assumptions. But most independent observers would now see 2 per cent. as too low for 1970. Thus my answer to the question, "Will the E.D.C.'s forecast and requirement of new home registrations of 1,125,000 to 1,175,000 be obtained in 1970?" is that there is a good chance that it will, at least at the lower end of the range. If it is reached—and this is spelt out in the report—there is every reason for the industry to be confident about its investment prospects in the period up to 1974.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

The Minister makes that statement, although the E.D.C. assumption about the effect on car registration of 1·3 per cent. growth in real consumer spending power was built on to a 1969 outturn expectation which has proved to be far too optimistic.

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

I am saying that many observers believe that the growth in consumer expenditure this year will be sufficient to enable this target to be reached at least at the lower end of the range. But we are talking about forecasts. I am not seeking to be dogmatic. I am seeking to redress the balance of the pessimistic view which has been put forward by some hon. Gentlemen opposite. As regards steadiness of growth, it is true that the industry has suffered from considerable fluctuations in hire purchase and purchase tax, but I will deal later with some of the interesting suggestions made by the right hon. Member for Leeds, North-East.

There is a good deal that could be said about the third point which was made about the relationship between home and export sales. There is no iron law about this relationship. Although it may be argued that home demand has consequences for export sales, there is no clear indication of the direct ratio of the two. As the "Little Neddy" points out in paragraph H 15 (a) When combined home and export demand (at economic prices) is below effective capacity, variations in home demand within the limits of effective capacity clearly have no influence on the export situation. This is borne out by the fact that, since devaluation, when new registrations have not increased at home—as has been pointed out today, they fell last year—our exports have risen by about 45 per cent. over a period of two years. So the relationship between the two is much more complex than is sometimes suggested by the industry.

I was interested by the comments of my hon. Friend the Member for Luton (Mr. Howie) in referring to the ratio not having been proven. It is true, as he said, that exports and proportions vary between different car producing countries and between different firms, as well as at different times, as I have tried to show. So there is an issue to be explored further. But it would be wrong for the Government or anyone else to assume a direct relationship which has not been proven and to say that, unless the home market is buoyant, we shall not get a proportionate growth in exports.

The key to all that we have said today—and this lies behind the remarks of right hon. and hon. Gentlemen opposite as well—is that the motor industry is an integral and growing sector of the national economy. Its position and prospects cannot sensibly be viewed in isolation from general economic trends. However much the hon. Member for Tavistock may ridicule such sophisticated thoughts, the central task of economic management in this country since 1964 has been to convert a balance of payments deficit of record proportions into a large surplus. Such a strategy, one which has not been challenged and was not challenged in our debate on public expenditure three weeks ago, was bound to bear heavily on the motor industry, not simply because cars are an important constituent of consumers' expenditure but because, as in all other countries at an advanced stage of industrial and social development, the urge to car ownership is growing at an explosive rate.

Photo of Mr Michael Heseltine Mr Michael Heseltine , Tavistock

If it is such a sophisticated thought, what were the Government doing between 1964 and 1968?

Photo of Mr William Rodgers Mr William Rodgers , Stockton-on-Tees

The hon. Gentleman betrays his lack of sophistication in not following the argument. I have been saying that there has been a clear strategy about the transfer of resources which has not been challenged in this House and was not challenged in the public expenditure debate, at the end of which there was no vote. In those circumstances, no alternative strategy having been produced by the Opposition, it was inevitable that the motor industry should find conditions more difficult than otherwise would have been the case.

As we know, the emphasis in demand management will now change away from promoting a large-scale transfer of resources to the balance of payments towards ensuring that the transfer already accomplished is maintained. One implication of this is that, in the years immediately ahead, there should be room for some increase in personal consumption after the tight restraint of the last two years. That is an increase in which the motor industry ought fully to share. In the simplest terms, if the motor industry feels that it has suffered during a difficult period for the economy, especially for the balance of payments, surely it can look forward in 1970 to a home market which, without special stimulus, will be considerably more buoyant.

As my right hon. Friend said earlier today, any Chancellor needs to have at his disposal both the regulator and hire purchase. He cannot surrender these basic instruments of economic policy in relation to the motor industry or any other. But I agree with the right hon. Member for Leeds, North-East that, looking at the past, it is possible to say that all Governments have tended to rely too much on the motor industry for demand management.

The right hon. Gentleman chose 1962 as the cut-off year. He drew attention to the fact that there was relative stability thereafter, overlapping both the end of his party's period in office and the beginning of ours. He pushed aside the period before 1962, because he knows that that was marked by a very high level of purchase tax on cars and many changes in hire-purchase regulations. There were six in less than ten years. So if I say fairly that this is a matter which has to be looked at, I am trying to make a certain degree of common cause with the right hon. Gentleman.

When he argues that the tight control of money supply makes possible a reduction in the deposit or the repayment period, he fails to recognise that, although there might be a switching effect in the long run, almost certainly there would be a net increase in consumption in the short run. It is also the case that, whereas the right hon. Gentleman suggested that this might be a course to follow, he did not suggest candidates for those who would be the victims of the switch to the motor industry. So, in the terms of what I have said about demand management, in the long run there is some prospect in this, but not in the short run.

Reflecting on this history, I am sure that the industry will have noted the recent developments, also referred to by my right hon. Friend, in the use of monetary policy as an instrument of demand management. This has a general application, wider than that suggested by the right hon. Member for Leeds, North-East, and reduces the need for discriminatory measures affecting particular industries.

A lot of the speculation and talk today has been misguided. Whatever present difficulties there may be, the industry has seen a period of growth which has been reflected in the rapid increase in motor car ownership. There is no point in speculating on what might have been. The facts are there. More and more people are able to enjoy motoring, and we can rejoice in that.

Certainly if we consider the employment position, there is no state of crisis at the present time. Generally, the industry's employment position is good. One need only ask any region of the country what industries it would most like to attract. Always in the answer is the motor industry, because it provides high and continuous employment and offers prospects which some other industries do not. My present information is that, with the exception of some factories in the Midlands, at the end of January, ten days ago, virtually all major plants were recruiting, and there was no substantial short time working. This was especially so in areas of relatively higher unemployment in Scotland and on Merseyside.

This is an important and vital industry. It is right that we should have debated its future. It is right, too, that we should consider, in conjunction with the industry, the nature of our future relations and how best we may be able to help them. But it is quite wrong and damaging to the industry and all those working in it to imply that it is in a state of crisis.

The Opposition have not made their case. I ask the House to reject the Motion.

Photo of Mr John Page Mr John Page , Harrow West

Mr. John Page (Harrow, West) rose

Photo of Mr Ian Orr-Ewing Mr Ian Orr-Ewing , Hendon North

On a point of order, Mr. Deputy Speaker. Is the debate being closed? It is not yet Seven o'clock, and my hon. Friend the Member for Harrow, West (Mr. John Page) wishes to intervene.

6.59 p.m.

Photo of Mr John Page Mr John Page , Harrow West

I am grateful to be called at this late hour.

The Opposition realise the absolute emptiness of the answer which has been given by the Minister of State. He made no attempt to answer any of the real questions which we have asked. I hope that my right hon. and hon. Friends will troop into the Lobby to show their disgust.

Question put,That this House deplores the effect on the motor industry of Her Majesty's Government's present policies:—

The House divided: Ayes 232, Noes 295.

Division No. 62.]AYES[7.0 p.m.
Alison, Michael (Barkston Ash)Grant, AnthonyMunro-Lucas-Tooth, Sir Hugh
Allason, James (Hemel Hempstead)Grieve, PercyMurton, Oscar
Amery, Rt. Hn. JulianGriffiths, Eldon (Bury St. Edmunds)Neave, Airey
Archer, Jeffrey (Louth)Hall, John (Wycombe)Nicholls, Sir Harmar
Astor, JohnHall-Davis, A. G. F.Noble, Rt. Hn. Michael
Atkins, Humphrey (M't'n & M'd'n)Hamilton, Lord (Fermanagh)Nott, John
Awdry, DanielHamilton, Michael (Salisbury)Onslow, Cranley
Baker, Kenneth (Acton)Harris, Reader (Heston)Orr, Capt. L. P. S.
Baker, W. H. K. (Banff)Harrison, Brian (Maldon)Orr-Ewing, Sir Ian
Balniel, LordHarrison, Col. Sir Harwood (Eye)Osborn, John (Hallam)
Barber, Rt. Hn. AnthonyHarvey, Sir Arthur VerePage, Graham (Crosby)
Belt, RonaldHarvie Anderson, MissPage, John (Harrow, W.)
Bennett, Sir Frederic (Torquay)Hastings, StephenPardoe, John
Berry, Hn. AnthonyHawkins, PaulPearson, Sir Frank (Clitheroe)
Bessell, PeterHay, JohnPeel, John
Biffen,JohnHeald, Rt. Hon. Sir LionelPeyton, John
Biggs-Davison, JohnHeath, Rt. Hn. EdwardPike, Miss Mervyn
Birch, Rt. Hn. NigelHeseltine, MichaelPink, R. Bonner
Black, Sir CyrilHiggins, Terence L.Pounder, Rafton
Blaker, PeterHiley, JosephPowell, Rt. Hn. J. Enoch
Boardman, Tom (Leicester, S.W.)Hogg, Rt. Hn. QuintinPrice, David (Eastleigh)
Body, RichardHolland, PhilipPym, Francis
Bossom, Sir CliveHordern, PeterQuennell, Miss J. M.
Boyd-Carpenter, Rt. Hn. JohnHornby, RichardRamsden, Rt. Hn. James
Boyle, Rt. Hn. Sir EdwardHowell, David (Guildford)Rawlinson, Rt. Hn. Sir Peter
Braine, BernardHunt, JohnRees-Davies, W. R.
Brewis, JohnHutchison, Michael ClarkRhys Williams, Sir Brandon
Brinton, Sir TattonIremonger, T. L.Ridley, Hn. Nicholas
Bromley-Davenport, Lt.-Col. Sir WalterIrvine, Bryant Godman (Rye)Ridsdale, Julian
Brown, Sir Edward (Bath)Jennings, J. C. (Burton)Robson Brown, Sir William
Bruce-Cardyne, J.Johnson Smith, G. (E. Grinstead)Rodgers, Sir John (Sevenoaks)
Bryan, PaulJones, Arthur (Northants, S.)Rossi, Hugh (Hornsey)
Buchanan-Smith, Alick(Angus, N&M)Jopling, MichaelRoyle, Anthony
Buck, Antony (Colchester)Joseph, Rt. Hn. Sir KeithRussell, Sir Ronald
Bullus, Sir EricKaberry, Sir DonaldSt. John-Stevas, Norman
Burden, F. A.Kerby, Capt. HenrySandys, Rt. Hn. D.
Campbell, B. (Oldham, W.)Kershaw, AnthonyScott, Nicholas
Campbell, Gordon (Moray & Nairn)Kimball, MarcusScott-Hopkins, James
Carlisle, MarkKirk, PeterSharpies, Richard
Shaw, Michael (Sc'b'gh & Whitby)
Carr, Rt. Hn. RobertKitson, TimothySilvester, Frederick
Chichester-Clark, R.Knight, Mrs. JillSinclair, Sir George
Clark, HenryLancaster, Col. C. G.Smith, Dudley (W'wick & L'mington)
Clegg, WalterLane, DavidSmith, John (London & W'minster)
Cooke, RobertLangford-Holt, Sir JohnSpeed, Keith
Corfield, F. V.Lawler, WallaceStainton, Keith
Costain, A. P.Legge-Bourke, Sir HarrySteel, David (Roxburgh)
Craddock, Sir Beresford (Spelthorne)Lewis, Kenneth (Rutland)Stodart, Anthony
Crouch, DavidLloyd,Rt.Hn. Geoffrey (Sut'nC'dfield)Stoddart-Scott, Col. Sir M.
Crowder, F. P.Lloyd, Ian (P'tsm'th, Langstone)Summers, Sir Spencer
Cunningham, Sir KnoxLongden, GilbertTapsell, Peter
Currie, G. B. H.Lubbock, EricTaylor, Sir Charles (Eastbourne)
Dalkeith, Earl ofMcAdden, Sir StephenTaylor,Edward M.(G'gow,Cathcart)
Dance, JamesMacArthur, IanTaylor, Frank (Moss Side)
Dean, PaulMackenzie, Alasdair(Ross&Crom'ty)Temple, John M.
Deedes, Rt. Hn. W. F. (Ashford)Maclean, Sir FitzroyThatcher, Mrs. Margaret
Digby, Simon WingfieldMacleod, Rt. Hn. IainThorpe, Rt. Hn. Jeremy
Dodds-Parker, DouglasMcMaster, StanleyTilney, John
Doughty, CharlesMacmillan, Maurice (Farnham)Turton, Rt. Hn. R. H.
Drayson, G. B.McNair-Wilson, Michaelvan Straubenzee, W. R.
du Cann, Rt. Hn. EdwardMcNair-Wilson, Patrick (New Forest)Vaugnan-Morgan, Rt. Hn. Sir John
Eden, Sir JohnMaddan, MartinWaddington, David
Elliot, Capt. Walter (Carshalton)Marten, NeilWainwright, Richard (Colne Valley)
Emery, PeterMaude, AngusWalker, Peter (Worcester)
Errington, Sir EricMaudling, Rt. Hn. ReginaldWalker-Smith, Rt. Hn. Sir Derek
Eyre, ReginaldMawby, RayWall, Patrick
Farr, JohnMaxwell-Hystop, R. J.Walters, Dennis
Fisher, NigelMills, Peter (Torrington)ward, Christopher (Swindon)
Fletcher-Cooke, CharlesMills, Stratton (Belfast, N.)Ward, Dame Irene
Fortescue, TimMiscampbell, NormanWeatherill, Bernard
Fry, PeterMitchell, David (Basingstoke)Wells, John (Maidstone)
Galbraith, Hn. T. G.Monro, HectorWhitelaw, Rt. Hn. William
Gibson-Watt, DavidMontgomery, FergusWiggin, A. W.
Glover, Sir DouglasMorgan-Giles, Rear-Adm.Williams, Donald (Dudley)
Goodhew, VictorMorrison, Charles (Devizes)Wilson, Geoffrey (Truro)
Gower, RaymondMott-Radclyffe, Sir CharlesWinstanley, Dr. M. P.
Wood, Rt. Hn. RichardWright, EsmondTELLERS FOR THE AYES:
Woodnutt, MarkWylie, N. R.Mr. R. W. Elliott and
Worsley, MarcusYounger, Hn. GeorgeMr. Jasper More.
NOES
Abse, LeoEadie, AlexLedger, Ron
Albu, AustenEdelman, MauriceLee, Rt. Hn. Frederick (Newton)
Allaun, Frank (Salford, E.)Edwards, Robert (Bilston)Lee, Rt. Hn. Jennie (Cannock)
Alldritt, WalterEdwards, William (Merioneth)Lee, John (Reading)
Allen, ScholefieldEllis, JohnLestor, Miss Joan
Anderson, DonaldEnglish, MichaelLever, Rt. Hn. Harold (Cheetham)
Archer, Peter (R'wley Regis & Tipt'n)Ennals, DavidLewis, Arthur (W. Ham, N.)
Ashley, JackEvans, Albert (Islington, S,W.)Lomas, Kenneth
Ashton, Joe (Bassetlaw)Evans, Fred (Caerphilly)Loughlin, Charles
Atkins, Ronald (Preston, N.)Fernyhough, E.Lyon, Alexander W. (York)
Atkinson, Norman (Tottenham)Finch, HaroldLyons, Edward (Bradford, E.)
Bagier, Gordon A. T.Fitch, Alan (Wigan)Mabon, Dr. J. Dickson
Barnes, MichaelFletcher, Rt.Hn.Sir Eric(lslington,E.)McBride, Neil
Barnett, JoelFletcher, Raymond (Ilkeston)McCann, John
Baxter, WilliamFletcher, Ted (Darlington)MacColl, James
Beaney, AlanFoley, MauriceMacdonald, A. H.
Bence, CyrilFoot, Rt. Hn. Sir Dingle (Ipswich)McElhone, Frank
Benn, Rt. Hn. Anthony WedgwoodFoot, Michael (Ebbw Vale)McGuire, Michael
Bennett, James (G'gow, Bridgeton)Ford, BenMackenzie, Gregor (Rutherglen)
Bidwell, SydneyForrester, JohnMackie, John
Bishop, E. S.Fowler, GerryMackintosh, John P.
Blackburn, F.Freeson, ReginaldMaclennan, Robert
Blenkinsop, ArthurGalpern, Sir MyerMacMillan, Malcolm (Western Isles)
Boardman, H. (Leigh)Gardner, TonyMcMillan, Tom (Glasgow, C.)
Booth, AlbertGinsburg, DavidMacPherson, Malcolm
Boston, TerenceGolding, JohnMahon, Peter (Preston, S.)
Bottomley, Rt. Hn. ArthurGordon Walker, Rt. Hn. P. C.Mahon, Simon (Bootle)
Boyden, JamesGray, Dr. Hugh (Yarmouth)Mallalieu, E. L. (Brigg)
Bradley, TomGreenwood, Rt. Hn. AnthonyManuel, Archie
Brooks, EdwinGregory, ArnoldMapp, Charles
Broughton, Sir AlfredGrey, Charles (Durham)Marko, Kenneth
Brown, Rt. Hn. George (Belper)Griffiths, Eddie (Brightside)Marquand, David
Brown, Hugh D. (G'gow, Provan)Griffiths, Will (Exchange)Marsh, Rt. Hn. Richard
Brown, Bob(N'c'tle-upon-Tyne,W.)Gunter, Rt. Hn. R. J.Mason, Rt. Hn. Roy
Brown, R. W. (Shoreditch & F'bury)Hamilton, James (Bothwell)Mayhew, Christopher
Buchan, NormanHamling, WilliamMellish, RT. Hn. Robert
Buchanan, Richard (G'gow, Sp'burn)Hannan, WilliamMendelson, John
Butler, Herbert (Hackney, C.)Harper, JosephMikardo, Ian
Butler, Mrs. Joyce (Wood Green)Harrison, Walter (Wakefield)Millan, Bruce
Callaghan, Rt. Hn. JamesHaseldine, NormanMiller, Dr. M. S.
Cant, R. B.Hattersley, RoyMilne, Edward (Blyth)
Carmichael, NeilHazell, BertMitchell, R. C. (S'th'pton, Test)
Carter-Jones, LewisHealey, Rt. Hn. DenisMorgan, Elystan (Cardiganshire)
Castle, Rt. Hn. BarbaraHeffer, Eric S.Morris, Alfred (Wythenshawe)
Chapman, DonaldHenig, StanleyMorris, Charles R. (Openshaw)
Coe, DenisHerbison, Rt. Hn. MargaretMorris, John (Aberavon)
Coleman, DonaldHilton, W. S.Moyle, Roland
Concannon, J. D.Hobden, DennisMulley, Rt. Hn. Frederick
Conlan, BernardHorner, JohnMurray, Albert
Corbet, Mrs. FredaHoughton, Rt. Hn. DouglasNewens, Stan
Craddock, George (Bradford, S.)Howell, Denis (Small Heath)Norwood, Christopher
Crawshaw, RichardHowie, W.Oakes, Gordon
Cronin, JohnHoy, Rt. Hn. JamesOgden, Eric
Crosland, Rt. Hn. AnthonyHughes, Rt. Hn. Cledwyn (Anglesey)O'Halloran, Michael
Crossman, Rt. Hn. RichardHughes, Hector (Aberdeen, N.)O'Malley, Brian
Dalyell TamHughes, Roy (Newport)Oram, Bert
Darling, Rt. Hn. GeorgeHunter, AdamOrbach, Maurice
Davidson, Arthur (Accrington)Hynd, JohnOrme, Stanley
Davies, E. Hudson (Conway)Irvine, Rt. Hn. Sir ArthurOswald, Thomas
Davies, G. Elfed (Rhondda, E.)Jackson, Colin (B'h'se & Spenb'gh)Owen, Dr. David (Plymouth, S'tn)
Davies, Dr. Ernest (Stretford)Janner, Sir BarnettPadley, Walter
Davies, Rt. Hn. Harold (Leek)Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)Page, Derek (King's Lynn)
Davies, Ifor (Gower)Jenkins, Rt. Hn. Roy (Stechford)Paget, R. T.
Davies, S. O. (Merthyr)Johnson, Carol (Lewisham, S.)Palmer, Arthur
de Freitas, Rt. Hn. Sir GeoffreyJohnson, James (K'ston-on-Hull, W.)Panned, Rt. Hn. Charles
Delargy, HughJones, Dan (Burnley)Park, Trevor
Dell, Rt. Hn. EdmundJones, Rt. Hn. Sir Elwyn(W.Ham,S.)Parkyn, Brian (Bedford)
Dempsey, JamesJones, J. Idwal (Wrexham)Pearson, Arthur (Pontypridd)
Dewar, DonaldJones, T. Alec (Rhondda, West)Peart, Rt. Hn. Fred
Dickens, JamesKelley, RichardPentland, Norman
Dobson, RayKenyon, CliffordPerry, Ernest G. (Battersea, S.)
Doig, PeterKerr, Mrs. Anne (R'ter & Chatham)Perry, George H. (Nottingham, S.)
Driberg, TomKerr, Dr. David (W'worth, Central)Prentice, Rt. Hn. Reg
Dunn, James A.Kerr, Russell (Feltham)Price, Thomas (Westhoughton)
Dunnett, JackLatham, ArthurPrice, William (Rugby)
Dunwoody, Mrs. Gwyneth (Exeter)Lawson, GeorgeProbert, Arthur
Dunwoody, Dr. John (F'th & C'b'e)Leadbitter, TedPursey, Cmdr. Harry
Rankin, JohnSlater, JosephWeitzman, David
Rees, MerlynSmall, WilliamWellbeloved, James
Richard, IvorSnow, JulianWells, William (Walsall, N.)
Roberts, Albert (Normanton)Spriggs, LeslieWhitaker, Ben
Roberts, Rt. Hn. GoronwySteele, Thomas (Dunbartonshire, W.)White, Mrs. Eirene
Roberts, Gwilym (Bedfordshire, S.)Stewart, Rt. Hn. MichaelWhitlock, William
Robertson, John (Paisley)Storehouse, Rt. Hn. JohnWilkins, W. A.
Robinson, Rt.Hn.Kenneth(St.P'c'as)Strauss, Rt. Hn. G. R.Willey, Rt. Hn. Frederick
Rodgers, William (Stockton)Summerskill, Hn. Dr. ShirleyWilliams, Alan (Swansea, W.)
Rogers, George (Kensington, N.)Taverne, DickWilliams, Alan Lee (Hornchurch)
Rose, PaulThomas, Rt. Hn. GeorgeWilliams, Clifford (Abertillery)
Ross, Rt. Hn. WilliamThomson, Rt. Hn. GeorgeWilliams, Mrs. Shirley (Hitchin)
Rowlands, E.Thornton, ErnestWillis, Rt. Hn. George
Ryan, JohnTommy, FrankWilson, Rt. Hn. Harold (Huyton)
Shaw, Arnold (Ilford, S.)Tuck, RaphaelWinnick, David
Sheldon, RobertUrwin, T. W.Woodburn, Rt. Hn. A.
Shinwell, Rt. Hn. E.Varley, Eric G.Woof, Robert
Shore, Rt. Hn. Peter (Stepney)Wainwright, Edwin (Dearne Valley)Wyatt, Woodrow
Short, Mrs. Renée(W'hampton,N.E.)Walden, Brian (All Saints)
Silkin, Rt. Hn. John (Deptford)Walker, Harold (Doncaster)TELLERS FOR THE NOES:
Silkin, Hn. S. C. (Dulwich)Wallace, GeorgeMr. Ioan L. Evans and
Silverman, JuliusWatkins, David (Consett)Mr. Ernest Armstrong.
Skeffington, ArthurWatkins, Tudor (Brecon & Radnor)