§ LOUD MARLEY rose to ask His Majesty's Government what steps are being taken to improve the statistical in- 886 formation upon which the calculation of the annual balance of trade of the United Kingdom is based; and to move for Papers. The noble Lord said: My Lords, a few days ago we carried through a measure of the most far reaching importance, the Import Duties Act, and the principal reason given by Government spokesmen for its passage was that it was for the purpose of correcting the adverse balance of trade. From the Government Benches the noble Viscount the Lord Privy Seal pointed out that the figures under discussion were largely conjectural and were, in fact, a fallacy. My object in putting down this Question was to attempt to draw attention to the errors contained in those figures and to secure from the Government a statement that they were really going into the question of making the figures more accurate, so that if further legislation is based on them we may be sure it is based on something accurate and not something which is conjectural and a fallacy.
I desire to ask upon what information the figures are based. The noble and learned Viscount who leads the House—we are sorry to understand that the noble and learned Viscount is away because he is not well and the House will wish him an early return to health—said rather complacently in the course of the debate on the Import Duties Act:
The Board of Trade figures are compiled with the greatest impartiality by people who have made a lifelong study of the problem and who at least are more likely to be right than anyone else we can invite to form an estimate.
Nobody would question the impartiality of those who advise the Board of Trade but the Board of Trade themselves admit that their figures are inaccurate. They themselves constantly invite others outside the Board of Trade and the Civil Service to advise them, and constantly use the advice of private persons outside for correcting their figures. In the Board of Trade Journal for February 18 we are told that the Board went to Sir Robert Kindersley, who is a director of the Bank of England, and used his calculations for the purpose of effecting heavy alterations in the estimates the Board of Trade had previously put forward. Similarly, Sir Robert Kindersley and the Board of Trade used calculations published in the Economist and in another publication,
the Economic Journal, so that the Board of Trade do not apparently agree with the Leader of the House that they have within their own ranks the best possible advice. In point of fact there are no fewer than eight bodies or individuals who are advising the Board of Trade or whose advice might well be sought by the Board of Trade for the purpose of ensuring accuracy.
§ I have noted the publication of the figures in the Board of Trade Journal. The statistical tables of British and foreign trade in another Government publication disagree with the figures in the Board of Trade Journal. The Macmillan Committee again found differing figures, and then the various banks have gone into the matter themselves and criticised severely the figures used by the Board of Trade and suggested alternative plans for ensuring greater accuracy. There are fifty members of your Lordships' House who are directors of the great banks and they no doubt will support the banks in their criticism.
§ I venture to stress one item in the balance of payment figures which illustrates the inaccuracy to which I am drawing attention. I refer to the question of income from oversea investments. The Board of Trade in 1926, 1927 and 1928 estimated the income from oversea investments at £270,000,000. In 1929, owing to Sir Robert Kindersley's examination of the figures, they increased that to £285,000,000 for each of the previous three years, and they also put down £285,000,000 as the figure they estimated for 1929. In 1930, however, Sir Robert Kindersley again examined these figures and came to a different conclusion. In that year the Board of Trade put all the figures back again to £270,000,000. It is trying when you go from £270,000,000 to £285,000,000, and then two, three or four years later go back to £270,000,000. But that was not all, because in 1931 Sir Robert Kindersley, assisted by the Economist and the Economic Journal, again altered his figures to £250,000,000, and again the Board of Trade followed suit and put the figures back to £250,000,000 for the four previous years. That is an error of £35,000,000, upon which we are basing legislation of the most far-reaching and fundamental importance to the country. The element of flux in the Board of Trade figures is really 888 serious, and I do suggest that there might be an attempt at far greater accuracy, by using means which in fact are available.
§ In 1931 the Board of Trade estimate was £165,000,000 for this item of income from oversea investments. Let me point out the effect of this error, which is only one error in one item of nine or ten items included in the calculations, all of which are susceptible to errors of similar magnitude. The effect of these changes was that an estimated favourable trade balance in 1926 of £9,000,000 was turned into an estimated adverse trade balance of £26,000,000. In 1927 a favourable balance of £114,000,000 becomes a favourable balance of only £79,000,000. In 1928 a favourable balance of £152,000,000 becomes a favourable balance of only £117,000,000, and in 1930 a favourable balance of £40,000,000, we are now (old, may be a favourable balance of only £25,000,000. Heaven knows what the balance is going to be this year if the error is of the same magnitude. In 1926 there was no anxiety in the country and no call for tariffs because we had an un-favourable and adverse balance of £26,000,000. There was no panic, because we were not told by the Board of Trade anything about it. We seemed to go on quite well without worrying about an adverse balance, which we are now told was £26,000,000.
§ With regard to 1931, I would remind the House that even between the issue of the figures by the Board of Trade on February 18, and the date when the noble Viscount the Leader of the House made his speech on February 29, an error had already crept in of £38,000,000, because the noble Viscount told us that the adverse balance was £113,000,000, whereas the Board of Trade figures on February 18 gave the adverse balance as £75,000,000. All this requires some explanation of how these enormous variations of figures come about. The Board of Trade of course admits that its figures are liable to error, and in the Board of Trade Journal for February 18 they say: "Doubtless the figures for 1931 will be revised in due course," as was done in previous years. That is really not good enough, because if we can have more accurate figures it is no good sitting back and saying that the figures will doubtless be revised. If they are going to be used 889 for legislation of the type introduced by the Government in the last few weeks, we are justified in asking whether the figures can be improved, and I would remind the House that outside critics of the figures, such as the great banks, are definitely of opinion that an immense measure of opinion is possible and easily ootainable.
Lloyds Bank Review for March, 1932, in an article not subject to any statement of non-responsibility on behalf of the bank—in other words an article for which the bank accepts full responsibility—reminds us that the adverse balance of trade "provided the occasion for the introduction of the tariff," and points out the difficulties of balance calculations. By an ingenious examination of the figures it pointed out that part at least of the revenue from tariffs would in effect be provided by British exporters. That surely requires examination and answer by the Board of Trade, because if it is accurate it is a most serious defect in the measure which has been put on the Statute Book based on the figures of the balance of trade. The Review goes on to say that this fact will prevent the help expected to our trade balance, and then uses these words:
it is therefore incumbent upon the Government and its advisers to keep a keen and continual watch on the trend of our oversea trade with the specific object of seeing if the tariff is on balance proving a help or a hindrance to the rectification of the adverse trade balance.
Thus, after passing this legislation we have Lloyds Bank asking whether this is going to be a help or a hindrance to our adverse trade balance.
§ LORD MARLEY
If we have to wait two years before we know that it is not good enough. We should have the figures before then on which to base our legislation and modify our legislation, because the Tariff Commission is going to modify this tariff in order to put right an adverse balance the amount of which they are quite incapable of calculating. Again, in February, Lloyds Bank pointed out that "the situation is eminently unsatisfactory in its uncertainty." That is what must be so worrying to those who have the good of the country at heart and who desire that legislation 890 should be of a type to improve matters and not make them worse.
The Bank Review uses these words:The figures show the need for frank and whole-hearted co-operation by all the persons possessing the required information so that the public and the Government may be put in possession of the data necessary to show us where we stand and to guide us to a sound policy.That is what every member of this House must desire for the purpose of securing adequate legislation.
Similarly, the Midland Bank, one of the most broadminded of all banks, the Chairman of which is Mr. McKenna, points out, that even the gold and merchandise statistics are liable to hopeless inaccuracy. I entirely agree with an observation which I heard fall from Lord Banbury, that we ought to nationalise the banks, and I hope that he will come and sit on this side of the House as soon as possible. The Midland Bank goes on to use these words:We mention these points"—the inaccuracy of the figures—not because they, among others of a similar kind, can readily be taken into account—they cannot—but to suggest the error of accepting import and export statistics as final in this matter.And they go on to say:It is clear on this point alone that arguments based upon tens of millions in our balance of payments are very insecurely founded.That is what we want an answer upon—how is it that the Government is founding its legislation on such insecure foundations? The Midland Bank finally says that the point demonstrates "how important it is to avoid any argument or action based upon the superficial exactitude of the figures" of the balance of payments.
If I alone were expressing this opinion it would, of course, be perfectly worthless, but I am fortified by the Report of the Macmillan Committee on this subject. That Committee has pointed out, after months of examination of the whole question of the balance of payments, that the figures are inexact, and have been frequently heavily revised after publication. They go on to say:It is evident that there is so much guesswork in these figures as to render them liable to an unduly wide margin of inevitable error. It is only a matter of taking sufficient pains"—891 and I emphasise this point in the Report—to make the figures reasonably accurate, and it is thoroughly worth while to make them accurate.The Macmillan Committee then go on to explain how they can be made accurate. They suggest, for example, the collection of figures of foreign bills and balances, the collection of figures with regard to sinking funds, foreign loans, and other matters. I hesitate to mention the word "Russia" because noble Lords opposite usually lose all sense of proportion when Russia is mentioned, and talk about slave labour or nationalisation of women, or world plots, or the crushing out of religion, or matters of that kind. Nevertheless, if we have anything to learn from Russia we would surely be well advised to learn it, and Russia has established a system of balance of payments, based, I know, on rigid control of exports and imports, which at least might provide us with lessons either of what to copy or, as many noble Lords opposite would say, what to avoid. Certainly the noble Viscount, Lord Brentford, would benefit by an examination of facts and figures. I noticed in a letter to The Times that he claimed that we had had an adverse balance for many years of £100,000,000 a year.
I have attempted to show that the figures in the past have been inaccurate and unreliable. I have tried to support my demand for better figures by the statements of the great banks and by statements in the findings of the Macmillan Committee. I have tried to point out that greater accuracy is possible, and I very much hope that the noble Lord who is to reply for the Government will entirely agree with me in this matter, and will be able to assure your Lordships' House that the Government is going to put in order that department of the Board of Trade which deals with these matters, and secure that it has the fullest possible information available. I beg to move.
§ LOED TEMPLEMORE
My Lords, it falls to me as representing the Board of Trade in your Lordships' House to reply to the very interesting but somewhat intricate question raised by the noble Lord opposite. I should have wished on this occasion—and the view will be shared by 892 your Lordships' House—that my right hon. friend the President of the Board of Trade or the Parliamentary Secretary could have been a member of this House, because they would have been able, with their direct contact with these matters and their experience in the world of trade and business, to answer this Question, which is no easy one, far better than, I am afraid, I can hope to do. However, I need not say that I have been supplied, as is usual, by the very competent officials of the Board of Trade with what I consider a very complete answer to the noble Lord's Question, and if I should at all fail in answering his Question he must put it down, to my exposition and not to any shortcomings of theirs.
I must thank the noble Lord for sending me a note in which he mentioned the points which he was going to raise. This afternoon he brought forward many figures which he said were inaccurate, which had been produced during the last six or seven years. I must ask him to excuse me from dealing with them because I really am not prepared to do so. I propose to confine myself to the matters to which I thought he would confine his own remarks, and to the terms of his Notice, namely,To ask His Majesty's Government what steps are being taken to improve the statistical information upon which the calculation of the annual balance of trade of the United Kingdom is based; and to move for Papers.In preparing what has now become an annual estimate of the balance of credits and debits in transactions between the United Kingdom and other countries the Board of Trade has for many years made use of results reached by private investigators, in addition to relevant official data—namely, visible trade returns and Government transactions. One of the difficulties of this annual estimate—and it is the same whatever Government is in power—is that, even though at a later date important information regarding debits and credits may be made available, the material actually available at the moment always relates to years other than the most recent of those regarding which an estimate is to be made. For instance, if you wished to make an estimate for 1932, probably the nearest year upon which you could do so is either 1928 or 1929. It has therefore been neces- 893 sary to revise the figures of previous estimates prior to making a new estimate for the latest year.
The annual articles in the Board of Trade Journal, in which these estimates appear have for some time contained definite indications that the material available as a basis for the estimates was insufficient and somewhat untrustworthy. The necessity for new investigations has been stressed on numerous occasions, and the Board of Trade has been glad to welcome investigations made by competent persons and organisations. I should like to name three such investigations. First of all, a certain number of years ago the Chamber of Shipping undertook an important inquiry providing valuable material to test the soundness of estimates of the gross revenue derived from abroad from the services of the British mercantile marine, and I understand that, in response to an invitation, the, Chamber has invited certain of its members to supply some more information from the records of their personal experience. Secondly, we have investigations by the gentleman who was mentioned by my noble friend. I rather gather that he in some way found fault with the Board of Trade for consulting him—I do not think he really meant that—I mean, Sir Robert Kindersley. He investigated the question of the very important revenues derived from investment abroad of capital owned by British residents. The results were made public by him in a series of articles in the Economist, and I dare say some of your Lordships read them. The last article I think appeared in September, 1931. They have been very useful to the Board to effect adjustments of the estimates which were made before the results were available. I am glad to say that it is understood that Sir Robert Kindersley is engaged in still more of these researches and investigations, and the Board hope very much that he will continue to publish these articles, which are of the very greatest service. Thirdly, the Board have heard—this, I think, may be news to the noble Lord—with much satisfaction that the Bank of England proposes to conduct investigations into a most important group of payments—namely, commissions for various services, largely financial, together with short interest and cognate payments.
894 I mention these instances to show that the Board of Trade welcome help from persons and organisations in order that they may be assisted in framing as accurate estimates as possible. I should like to add that I am informed that since the crisis of last August the co-operation and liaison between the Board and business organisations in the City of London and elsewhere has been exceedingly close, and my right hon. friend the President hopes that this co-operation may be very largely extended and continued in future to the mutual advantage of both parties. My noble friend referred to the Macmillan Report. He said in his note to me, if he will not mind my quoting a private note, that he was going to ask me a question which he did not ask—whether the proposals of the Macmillan Committee for greater accuracy were going to be carried out. He probably intended to ask me that?
§ LOED TEMPLEMORE
Frankly, my Lords, while paying tribute to the value of this; Report, His Majesty's Government takes the view that some of the recommendations in the paragraphs to which I think the noble Lord referred, on pages 178 to 180, would be very difficult to enforce. The noble Lord read one extract from this Report; and I should like to read another. It says on page 180:In particular the amount of the receipts in respect of sinking funds on existing foreign loans …. should be regularly and precisely ascertained from the banks and issuing houses concerned. Foreign holdings in British companies, as to which the Economist has made some most interesting sample inquiries, should be ascertained in detail … .and so on. "Should be ascertained"—exactly. We should like them to be; but there is no compulsion about it. You must depend on their good will. We ask these houses and businesses to furnish the information. A great many of them do but some do not. No doubt in the well-ordered Socialist State, to which I dare say the noble Lord looks forward in, I hope, the distant future, when we are regulated from birth to death, these things will be compulsory and all will be for the best in the best of all Socialist worlds. But I must confess that I think that date is rather far off, and until that time we must depend to a considerable 895 extent on the good will of banks and other houses and the willingness of firms to help us.
I may add that the possibility of instituting inquiries, which, without imposing serious inconvenience on any of those concerned, may provide information more reliable than at present, is under consideration in the Department. It is a question of trying to help trade and we, at all events, consider that at a time when directors and boards and secretaries of companies are engaged in trying in many cases just to keep their concerns above water, it would be a fatal policy to worry them unnecessarily by asking for long and, perhaps, intricate reports to a Government Department. It is impossible to obtain an exact statement of the balance of payment in any year considering how many important items have to be estimated. The attempts to go into these matters in much greater detail are hampered of course by the need to avoid undue interference with the freedom of business operations and excessive demands for detailed returns in regard to the extent of those operations. The Board of Trade are only too glad to take advantage of useful ideas suggested by their critics. The noble Lord made out that this branch of the operations of the Board of Trade was, I think, exceedingly faulty in its work. On behalf of His Majesty's Government I cannot agree with that opinion and I think that, in view of the many improvements systematically introduced into the framing of these estimates, the Board of Trade may fairly claim that they can now provide figures as reliable as can reasonably be expected by practical people for practical purposes.
The noble Lord asked for Papers. The only Papers I have are the estimates of the balance of trade in the Board of Trade Journals which are available in the library and can be sent to any noble Lord who requires to have them. I am afraid I have no other Papers that I could lay. I have attempted to answer the noble Lord's questions as far as I can. Finally, I would say, as the House knows and I think no one will deny, that this Government came into being to take urgent and early action in the direction of two important matters—to reduce the really appalling figures of unemployment and to correct the serious 896 adverse balance of trade. I think I may claim on behalf of His Majesty's Government that we have not been idle at all events during the four and a half months that we have been in office. But we are only at the beginning. Other measures must be taken. Adjustments and alterations will no doubt be necessary in the tariff which we have imposed. For all that we must have the best and most accurate information available and I know that my right hon. friend and the Board will welcome any suggestions from the noble Lord, from any member of your Lordships' House or from anybody who likes to send them in order that the great object which we have in view may be carried out—namely, putting the unemployed men back to work and the trade and commerce of this country back into the position which it ought to hold.
§ LORD MARLEY
My Lords, I think the noble Lord who replied for the Government made the very best of an extraordinarily bad case. He has not attempted to deal with the claim I put forward that the Government had been legislating on admittedly inaccurate and unreliable figures. It appears that while the Board of Trade is to be given certain additional facilities and advice after the event by Sir Robert Kindersley, and advice on certain figures selected by the Bank of England, again after the event, no steps have been taken to provide that these advisers shall be actually consulting with the Board of Trade during the compilation of the figures.
§ LORD TEMPLEMORE
If the noble Lord will excuse me, I said that the Board of Trade were willing and anxious to consult with anybody. The whole idea is that these individuals and institutions shall be consulted more and more. I thought I made it clear that consultation was very close and would be closer.
§ LORD MARLEY
I understood the noble Lord to say that he hoped Sir Robert Kindersley would continue to publish his figures in the Economist and that the Board of Trade would then take them into account. My point was that these figures should be taken into account long before they are published in the Economist, and Sir Robert Kindersley should not merely examine such figures as he chooses but he should be definitely en- 897 gaged with the Board of Trade in examining the figures that the Government required. As the noble Lord pointed out, these are all private organisations, and they cannot be coerced.
The noble Lord asks for suggestions. I venture to suggest that the public ownership and control of the banks would ensure that the banks provided the information which they alone are capable of collecting, and that that information should then be available for the Government for the use of the new legislation which the noble Lord has foreshadowed. It seems to me that if we are only to have the alterations suggested by the noble Lord in providing new information for the Board of Trade, we shall continue to have inaccurate figures upon which to lay the foundations of new legislation, and the result of that of course must be serious errors in the legislative proposals of the Government. The effect will be that which we have already seen in four arid a half months of National Government—namely, an increase in unemployment figures, and a worsening of the alleged adverse balance of trade. It appears that the problem before the noble Lord is whether he will have Socialism or muddle, and he has suggested that he wants muddle. Well, I do not think it is good enough, and I believe that an increasing number of people are going to realise that it is only by national planning, by the national collection of information required for the national good—in other words, by the application of Socialism in our great public affairs—that we can secure that there is an adequate supply of accurate information.
I want to correct a statement which the noble Lord, no doubt unwittingly, made, that I was blaming the Board of Trade. I am not. I know that the officials of the Board of Trade are doing the very best they can with the inadequate help that the Government is giving. It is the Government I blame for not providing for the Board of Trade additional advice in various directions in order that their figures may be accurate. The noble Lord made no reply to the question I put with regard to the figures furnished by the noble and learned Viscount who leads the House (Viscount Hailsham)—figures showing an enormous variation in the course of a few days, a variation from £113,000,000 alleged adverse balance of 898 trade on the 18th February to £75,000,000 a few days later, or vice versa. We know the explanation was that the noble and learned Viscount had misread the figures supplied by the Board of Trade, and had made, in addition to that, an error of £2,000,000 in his actual reading. It is serious that these inaccurate calculations should be relied upon by the Government, and I personally do not feel it is at all satisfactory that no further steps are being taken. I do not propose to press my Motion for Papers, because I realise that the noble Lord has no Papers he can lay, and that is one of the reasons why I am complaining against the Government.
§ Motion for Papers, by leave, withdrawn.