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Export Credit Guarantees

Volume 938: debated on Monday 7 November 1977

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asked the Secretary of State for Trade how many applications for export credit guarantee have recently been refused for failing to comply with the Government's pay policy.


asked the Secretary of State for Trade whether he will make a statement on his decision, under Section 2 of the Export Guarantees Act 1975, to refuse export credit guarantee support to James Mackie and Sons Limited of Belfast.

The Government have made it clear on a number of occasions that compliance with the Government's guidelines on pay may be a factor in the consideration of applications for export credit support under Section 2 of the Export Guarantees Act 1975. After careful consideration, and following prior advice to Mackie's, I decided not to offer cover in respect of two applications.

Did not the Secretary of State make quite improper use of his generally accepted power in the case of Mackie's, while in similar circumstances no subsequent action was taken against the Ford Motor Company for breaching the pay guidelines? What assurances may British industry have that this kind of arbitrary step will not be repeated?

I do not accept that this was an improper use of Section 2 of the Act, which permits me to make a judgment of the national interest in respect of particular guarantees asked for. It has been made clear that this is one action that the Government may take if, in their judgment, the national interest is imperilled by particular pay settlements.

Will the right hon. Gentleman now answer my hon. Friend's question? What did Mackie's do wrong that the Ford Motor Company did not do wrong?

As far as I know, Ford made no application to me under Section 2 of the Export Guarantees Act. In any case, as I think the hon. Gentleman will agree, there is a difference between a settlement at 12 per cent. and a settlement at 22 per cent.

Is it not true that there is no law which gives the Government any authority to make trade unionists or employers obey their wishes in this connection? Is it not the case that punitive action is being taken against some and not against others, when we know that for the last two years everything that the Government have done in respect of wages and incomes has been proved wrong? Why should they penalise people now?

My hon. Friend says that there is no law. There is a law—Section 2 of the Export Guarantees Act.

Is not this the most disgraceful use of the Government's discretion? Is the only policy that the Government follow that of "Might is right "? Is it really the case that the Government will use their discretion against the interests of companies and of the country only where the company is small or medium-sized but that where a larger company or institution, either in the public or in the private sector, is involved the Government will turn a blind eye to a breach of their so-called pay rules?

The Government are doing everything they can to ensure that their pay guidelines are successful, and they will continue so to do. I notice that the Opposition have been complaining recently about the lack of support given by the then Opposition to the difficult circumstances in the late 1973–74 period. I suggest to the hon. Member for St. Ives (Mr. Nott) that he considers whether it is up to him now to support the Gov- ernment maintaining their counter-inflation policy.

Is it not a fact that the Government have simply used perfectly legal sanctions to support the pay policy? Anyone in the House who cares to see the rate of inflation brought down should support the Government in using whatever sanctions are available. Will the Secretary of State confirm that any firm that is able to afford to pay its employees more than the 10 per cent. guidelines does not need my money or that of the British taxpayer to bail out its exports?

The hon. Gentleman is right in saying that this was a perfectly proper use of legal powers of the Secretary of State for Trade under Section 2 of the Export Guarantees Act.

Why does my right hon. Friend stand by the criterion, as seemingly he does, that it is right to bully firms into not paying wage increases of a very minor kind similar to those in Northern Ireland but to refuse to bully firms which are putting up prices to the tune of 15 per cent. and 18 per cent. even now? Why do the Government refuse to take action against, say, the Chairman of Wedgwood, whose salary has increased from £75,000 in 1975 to £113,000 this year, at a time when the rest of the work force has been under an incomes policy? Why does he tackle it in that fashion?

It is perfectly right for the Government to use what powers they have to secure the success of their 10 per cent. guidelines. If they do not achieve that success, the rate of inflation, instead of going down, will go up, contrary to the interests of the country. As for prices, that is a matter for my right hon. Friend the Secretary of State for Prices and Consumer Protection.

If the Secretary of State and the Government wish to publish legislation to control the pay norm, that is a matter for the House of Commons. But the Government's discretion under Section 2 of the Export Guarantees Act 1975 was never intended to be used as a sanction in this case. If the Government wish to have sanctions, why do they not come to the House for them in the proper manner instead of abusing their authority and discretion in this way?

There is no question of abuse of authority in this case. Section 2 of the Export Guarantees Act permits the Secretary of State for Trade to make a judgment of the national interest. It seems perfectly clear that a judgment of the national interest includes the inflationary effects of certain settlements. It was my consideration of that, among other aspects of this matter, that led me to my conclusion.