House of Commons Hansard Debates for 22 Jun 1990

Mr. Redwood : Not quite.

Mr. Gow : My hon. Friend should have been.

My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) fashioned the policy of abolishing exchange controls in conjunction with the Prime Minister. They were supported by my hon. Friend the Minister although he was not an hon. Member at the time.

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I have never believed in exchange controls. I believe in the free movement of people, goods and capital. Exchange controls were imposed in 1939 when war broke out. It was left to a Conservative Government to dismantle exchange controls, and although the Labour party predicted that there would be a great flight of capital, a direct consequence of their abolition is that the United Kingdom now has one of the largest holdings of overseas assets. The fact that Britain now has massive assets overseas has contributed greatly to our exports and to our trade. That is why my hon. Friend the Member for Nuneaton tabled the motion.

The statement of my right hon. Friend the Prime Minister after the Madrid summit was of far-reaching consequence. She said : "As my right hon. Friend the Chancellor of the Exchequer"-- my right hon. Friend the Member for Blaby (Mr. Lawson)

"has made clear, stages 2 and 3 of the Delors report would involve a massive transfer of sovereignty which I do not believe would be acceptable to the House."

How much I agree.

Mr. Grylls : My hon. Friend has put his finger on a very important point. I entirely agree with him.

Mr. Gow : The Prime Minister went on :

"They"--

that is, stages 2 and 3-- "would also mean, in practice, the creation of a federal Europe."

That must be music to the ears of some of my hon. Friends.

Mr. Richard Shepherd : To one or two of our hon. Friends.

Mr. Gow : It would not be music to them all. If my right hon. Friend the Member for Old Bexley and Sidcup were here, I do not think that he would be applauding quite as much as my hon. Friends who are here-- [Interruption.] I thought that my hon. Friend the Treasurer wanted to intervene, but obviously I was wrong.

My right hon. Friend the Prime Minister continued :

"The Government support the objective of closer monetary co-operation, but will work for solutions which leave crucial economic decisions in our own hands."--[ Official Report, 29 June 1989 ; Vol. 155, c. 1109.]

Mr. Andrew Mitchell : Does my hon. Friend agree that the remarkable speech the other night by my right hon. Friend the Chancellor of the Exchequer follows that statement by the Prime Minister? It is a remarkably constructive and helpful contribution to the development of the EC and of Europe more widely.

Mr. Gow : I agree. I make it plain to my hon. Friend the Member for Nuneaton that there is a consistency of policy all the way through from the Madrid summit to the speech of my right hon. Friend the Chancellor earlier this month.

We may note the absence of any representative from the Liberal party. The Labour party is, of course, well represented.

Mr. Don Dixon (Jarrow) : Hear, hear.

Mr. Gow : I agree with the hon. Gentleman. What has happened to the Liberal party? The Liberal party often

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claims to be deeply interested in industrial matters and in exports, but when the House holds an important debate, there is not a single Liberal Member here.

Mr. Cash : Does my hon. Friend recall that the great Liberals of the 19th century such as Cobden and Bright were the apostles of free trade? Where are all those great Liberals now? What contribution have the present Liberals made to the great and weighty matters to which my hon. Friend refers?

Mr. Gow : My hon. Friend makes an excellent point. I give an undertaking to my hon. Friend. When the next Liberal Member enters the Chamber, I will instantly give way to him.

Mr. Andrew Mitchell : I must point out to my hon. Friend that the popularity of the Liberal party has sunk so low in the opinion polls that the party is considering employing the services of Jacques Cousteau to see whether anything can be done to resuscitate it. Is my hon. Friend aware that the reason why no Liberal Member is here is that Liberal Members are engaged in a futile but brave attempt to save their seats at the next election?

Mr. Gow : My hon. Friend has given an explanation for the absence of any representative of the once-mighty Liberal party, but the representatives of the Labour party and my hon. Friends believe that if one is a Member of Parliament, a responsibility that should have priority is attendance in this place. Labour Members and my hon. Friends are demonstrating this morning that they believe that this place has an important role.

I began my speech on exports and imports. Tourists are one form of import, which one might think is a bad thing. However, we may have been blinded into thinking that it is wicked to be an importer and that it is virtuous to be an exporter. The Department of Trade and Industry and the Central Statistical Office are involved in those matters. I hope that my hon. Friend the Minister will tell us which Minister is responsible for the Central Statistical Office. A Central Statistical Office document published last month is supposed to be all about exports ; that is why I have it in my hand. The document appeared on 23 May and another one has probably been issued this morning. I hope that my hon. Friend the Minister has the figures with him, because he knows the figures long before we do. If he has not, we shall have to wait until we can go to the tape. But at least I have last month's statistics.

In trying to measure our exports and imports, we have been rather blinded by statistics. Let me ask my hon. Friend the Minister this : what would happen to the human story if we ceased to keep any of these statistics? Would the world come to an end? I find in this document, compiled at enormous expense, every category, real or imagined--some unreal and unimagined--of exports and imports. For what purpose are the figures compiled? Why does it help us to know that "estimates of invisibles are based on a variety of sources, mostly inquiries of those engaging in the various transactions"? It is absolute gobbledegook.

My hon. Friend the Minister may think that I am reading from Lewis Carroll, but I am not. I am reading from a publication produced by Her Majesty's Government and paid for by the Minister's poor constituents.

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Mr. Soames : Is my hon. Friend aware that my right hon. Friend the Chancellor, for whom he and I both have a high regard, shares his concern about the quality of our statistics and the cost of counting them? One of the many imaginative programmes that the Chancellor has put in hand--even before his excellent speech on the future of the hard ecu--is the complete reform of the gathering, consideration and publication of all Government statistics. Does not my hon. Friend agree that that is a far-sighted and important step, which should have been taken many years ago?

Mr. Gow : Of course I share my hon. Friend's admiration for the Chancellor of the Exchequer. But apparently the Chancellor is not going quite as far as I want him to go. He proposes the reform of the statistics ; I propose the abolition of the statistics. Would the world come to an end if we failed to gather these statistics? Moreover, the statistics are always wrong.

Mr. Richard Shepherd : Will my hon. Friend give way?

Mr. Gow : I shall give way to my hon. Friend but I hope that he is not going to tell me that all statistics are right and necessary.

Mr. Shepherd : I would not presume to tell my hon. Friend any such thing. He is on to an important point. But the abolition of statistics can create the most speculative of markets. The mood of markets can be translated into imagined flows across the exchanges, and that can have consequential effects on our standard of living, the retail price index and so on.

The criticism of the accuracy or otherwise, of the statistics which now run through our economic life is severe. The inaccuracies that have been recorded and the correction of items in subequent months have been reflected in sterling's external value and that, in turn, has had repercussions for our inflation rate. That is why I would support my hon. Friend if he maintained that, rather than abolishing statistics, we should have accurate ones.

Mr. Gow : I think that we should commit to the permanent records of this place the entry and instant departure of the Liberal Democrats' spokesman of financial affairs, who used to be the Chief Whip. Imagine being Chief Whip of the Liberal party ; what a task that would be.

What I would say to my hon. Friend the Member for Crawley and my hon. Friend the Member for Aldridge and Brownhills, if there is an "and"--

Mr. Richard Shepherd : We have a hyphen.

Mr. Gow : Oh, I see : it is like Beaumont-Dark.

What I was saying when I was interrupted by the transient presence of the Liberal Democrats was that, unless one had read the Central Statistical Office document, one would not believe what was in it. I shall give you, Mr. Deputy Speaker, a copy ; you may like to frame it for your study. These are the words fashioned, by somebody in the office of my hon. Friend the Minister, on the subject of invisibles.

"These are usually sample inquiries, and are variously held on quarterly, annual or periodic bases. For some components, data for recent periods are therefore incomplete and subject to significant estimation errors."

Out of their own mouths, the statistics are condemned.

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My hon. Friend the Member for Nuneaton made an excellent speech. The House and, I hope, the nation, are grateful to him for having initiated the debate, and it is with mounting impatience that Mr. Deputy Speaker and I await the Minister's reply.

11.56 am

Ms. Joyce Quin (Gateshead, East) : I welcome this debate on exports, although at times during the unusual speech of the hon. Member for Eastbourne (Mr. Gow), I was not entirely certain that that was the subject that we were discussing. I congratulate the hon. Member for Nuneaton (Mr. Stevens) on his good fortune in being able to initiate the debate, because it concerns an important matter which, despite the low attendance, is dear to the hearts of many hon. Members on both sides of the House.

The motion is somewhat curious. Reading it, one would certainly never guess that we have one of the largest balance of payments deficits in our history ; that does not emerge from the motion at all.

The motion welcomes

"the contribution made by the continued growth of the volume of exports over the last ten years".

It does not mention the fact that, sadly, the annual growth rate of our volume of exports--3.5 per cent. in the 1979-89 period--was the lowest of any EEC country and also lower than that of Japan or the United States. That is a great pity and to be deplored.

I agree with the hon. Member for Nuneaton that it is important for British business and British exports to be guaranteed the same level of support as is given in other countries. We would all at least say that we agree with that and that there should be a level playing field in terms of support for exports.

Many hon. Members have stressed that trading is vital to our economic health, but unfortunately, over the past 10 years, our record has been little short of disastrous. Between 1979 and 1986, our share of world trade fell by 15 per cent.--a larger fall than that experienced by any other industrial country. In 1988, our current account trade deficit reached £14.5 billion. That was larger than the total of all the United Kingdom's deficits over the previous 40 years. Then, 1988 was followed by the record deficit year of 1989, when the figure reached more than £19 billion. Presumably the total combined deficit of 1988 and 1989 was larger than all the previous United Kingdom's deficits in recorded history. We should bear that in mind when considering exports.

In 1978, we had a £5 billion surplus on the balance of payments. Before this debate, I looked through some old Hansards for that time and noted that plenty of Conservative Members were worried that the surplus was so small.

In manufacturing, our trade performance has deteriorated dramatically, with 1983 marking the first year since the industrial revolution in which manufacturing imports by Britain exceeded our manufacturing exports. In 1989, our manufacturing deficit with West Germany was £9.6 billion, and with Japan it was approaching £5 billion. However, it seems that the Government are not prepared to look those figures squarely in the face and recognise that action is vital.

The hon. Member for Nuneaton (Mr. Stevens) gave some interesting figures about the growth in exports, but he took 1981 as his base year, and, as we all know, that was

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a very poor year for our economic performance. Therefore, that was a low base on which to give further figures.

There is considerable cause for concern when the figures are broken down into sectors. My hon. Friend the Member for Wallsend, (Mr. Garrett) mentioned the machine tool sector about which he is concerned. In that sector, 47 per cent. of our market was taken by imports, but in Japan the corresponding figure is only 7 per cent. The hon. Member for Erith and Crayford (Mr. Evennett) referred to old and new industries, the situation in both is very worrying. In some of our old industries, which I believe still have an important role to play, we are losing badly in terms of exports in comparison with other countries. One of the great sadnesses for me, coming from the north-east--I know that it is also a great sadness to my hon. Friends the Members for Jarrow (Mr. Dixon) and for Wallsend--is the demise of our shipbuilding industry and the fact that our yards are facing the bulldozers at a time when shipbuilding worldwide is experiencing a great boom.

To reinforce a point that I made to the hon. Member for Erith and Crayford, I believe that in shipbuilding the old and new industries can work very well together. It is foolish simply to dismiss older industries in which there are skilled workers and a great deal of expertise as industries in which we do not want to be involved, when it is clear that there will be a market for those products in future and those products also have important links with the high-technology sector.

The trade deficit in textiles, another of our older industries, was £1.5 billion in 1989. We are also concerned about the steel industry at the moment. It is sad that our steel industry is still considerably smaller than the steel industries in other European countries, particularly those of West Germany and Italy. Perhaps the Minister will comment on the prospects for high-technology investment in our steel industry.

In our recent debate on the future of the Ravenscraig steel plant, my hon. Friend the Member for Motherwell, South (Dr. Bray) said that Ravenscraig could be well placed to receive high technology investment along the lines of such investment in the United States and Italy. I hope that the Minister will refer to that. Solutions should be sought in the steel sector which can safeguard the help of all the existing steel plants and ensure that those plants can survive and prosper in future.

The hon. Member for Eastbourne said that perhaps we should not consider imports as basically evil and exports as basically good. I rather agree with him, but we want to see them to be in better balance. The imbalance and the size of our trade deficit are worrying us. Of course we need to import, just as we need to export, but we need a better balance between the two.

The trade figures are to be published today and I understand that there will be a drop in the current deficit from about £1.6 billion to £1.3 billion. While I strongly welcome any drop in our trade deficit, we are still dealing with a substantial deficit. In previous years, such a figure would have been greeted with absolute dismay instead of relief. The hon. Member for Eastbourne also tried to pour scorn on statistics generally as a convenient way of overlooking the scale of the problem. However, the weight

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of all the statistics taken cumulatively concerns me, not the fact that individual statistics may be less accurate than we would wish. I want now to consider the export services that the Government provide. I was glad that my hon. Friend the Member for Wallsend laid such stress on the importance of the future of the Export Credits Guarantee Department. He referred quite rightly to the real anxieties felt by industrialists at the Government's proposals for changing ECGD.

Although it is true that many people in industry have welcomed the Government's proposals to privatise the short-term insurance sector, there is now concern among industrialists that, if it is privatised in that way, it may fall prey to a takeover bid from its main competitor in this country. Perhaps the Minister will refer to that. Exporters are worried that a private monopoly might be created by such a takeover. That would not be in the interests of the services provided to exporters.

Obviously, if the Government go ahead with their proposals to privatise that part of ECGD, there will be discussions and presumably legislation which will be debated by both sides of the House. That might be the most appropriate time to consider the misgivings that have been raised over the common services provided both to the short-term side of ECGD and to the long-term project side. That will be the time to raise worries about whether those common services might be weakened as a result of the policy of privatisation which the Government seem to be pursuing. As we have such a huge trade deficit, now is not a good time to be reorganising, hiving off and weakening ECGD in that way. I can understand the concern of industry about that.

My hon. Friend the Member for Wallsend also referred to the project side of ECGD. Once again, industry has been vocal in expressing its fears to hon. Members on both sides of the House about that. My hon. Friends have told me that many firms in their constituencies have expressed concern about the future of the long-term project division and about the increases in premiums, some of which have already taken place and others of which seem likely because of the Government's commitment to the portfolio management system for ECGD.

None the less, we are grateful that the Government have decided to maintain a commitment to the project division of ECGD, because there were unpleasant rumours that certain Government Departments favoured the so-called zero option--taking support from the long-term project division. Industrialists greeted that suggestion with widespread alarm. That commitment to ECGD is very important.

In reply to a written question of mine this week, the Government said that they are now going to consult further before deciding whether finally to introduce the portfolio management system. I am glad to hear that. The reservations expressed to us by industrialists made us worry about prospects for exports if the system had been introduced in the way in which the Government originally envisaged. ECGD and the project side is not just some marginal benefit that is given to companies. It can mean the difference between winning and losing an order. Often fairly minor costs determine whether an order is won.

Mr. Ted Garrett : The Minister will agree that a question of morality is involved. Industrialists like to think that the Government are interested in what they are doing

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and that the Department in particular is very keen to help them. There has been a tendency to drift from that view. The Minister may challenge that remark, but manufacturers think that the Government are drifting from being interested in their interests.

Ms. Quin : My hon. Friend makes a valid point, and I reinforce it. Many people in industry feel that the avowedly non-interventionist, hands- off approach that the Department of Trade and Industry wants to espouse is not in the best interests of industry, particularly when it seems that many of our competitors are adopting a different approach.

The hon. Member for Nuneaton said that he felt strongly that the playing field should be level and that we should not be disadvantaged by the extra support that other countries might be giving. That reinforces my hon. Friend's point. Opposition Members are committed to ECGD and the short- and long-term aspects of its business. ECGD is not feather-bedding industry. It does not absolve companies in this country from going out and winning orders, complying with the technical requirements that may be laid down by overseas customers, and delivering in terms of quality and punctuality. Exporters must still comply with all those things, but they need the export credit assistance that seems to be available to our main competitors. Ministers have occasionally expressed the view that large companies in particular are sufficiently equipped to look after themselves, but I remind the Minister that large companies subcontract a great deal of their work to smaller companies, and the economic health of large and small companies is therefore linked. Measures that may be taken because large companies can stand on their own may have an unpleasant spin-off effect on smaller industries, and I hope that the Minister will bear that point in mind.

We do not want business to be deterred from winning export orders, particularly, as was mentioned by the hon. Member for Nuneaton, in the newly opened markets of eastern Europe and the Soviet Union. One of the worries that have been expressed to me is that the premiums for ECGD- supported business to the Soviet Union have increased considerably of late. Although, I understand that, in the changing situation in the Soviet Union, the commercial risk looks rather different from what it was in the past, the Soviet Union, whatever one thought of its regime, was a reliable customer and never defaulted. This is not the time to make it more difficult for companies to do business with the Soviet Union, particularly when, politically, we want to make the point that we support the reforms taking place in that country. We do not want to create more economic and political difficulties in that country. Although I can understand some of the commercial judgments behind the increase in premiums, the political aspect must be borne in mind.

Several hon. Members have mentioned the help that other countries give exporters. It is difficult to find accurate information on the level of export support that other countries give, but I was supplied with some figures from EEC sources in a publication entitled "First Survey of State Aids". It certainly seems as though France, in particular, and Italy spend a good deal more on state aid to trade and exports--2 billion ecu for France and 1 billion ecu for Italy, but only 749 million ecu for the United Kingdom.

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Mr. Cash : If the hon. Lady is seeking to suggest that state aids are good in the context of the single market, will she bear in mind the fact that the consequence of giving unfair subsidies in the form of state aids in any sector within the single market is bound to distort the market and, in turn, lead to a situation in which we do not have a level playing field? We will end up giving unfair advantages to one part of the community as against another. That is the way to destroy, not to improve, the benefits of the single market.

Ms. Quin : I do not know whether the hon. Gentleman is suggesting that we should stop state aids and let everybody else give state aids. If that were the outcome, our position would become even worse. There must be EEC and wider international agreement on a range of state aids and subsidies. Agreements already exist. Sometimes we understandably worry that those agreements are not always being properly respected, and we must pay attention to that matter also. It is not helpful to talk about state aid as a distortion when we are trying to tackle our economic and export performance at present.

Mr. Cash : It would certainly be true that, if agreements could be arrived at through GATT in which we eliminated the distortions, that would be fine. However, an unlevel playing field is the difficulty. That is the point that I was making.

Ms. Quin : We have all agreed on the need for a level playing field. The hon. Gentleman and I might disagree on what kind of EEC and international system of subsidies we might like. Many of us, including myself, regard regional assistance as an important element and think that it should allow for all countries in which there are clearly demonstrated regional difficulties. In the general sense of wanting a level playing field, I agree with the hon. Gentleman. We should examine the amount of direct aid to exports that other countries are giving and see whether we can learn something from the services that they provide. It is a matter not of criticising high levels of aid but of looking at the ways in which other companies are successful in promoting exports in certain sectors and across the board.

The Government have made some strange decisions lately regarding exports and our presence in trying to promote British commercial interests in events and exhibitions abroad. The Minister will know that we have had correspondence about the British Government's failure to accept the invitation to be partner nation at the Hanover trade fair in 1992. That trade fair has been described as Europe's biggest industrial marketplace. It is an honour to be chosen as partner nation. It would give us advantages in the number of exhibits and attention to us and our products.

It is most regrettable that the Government have decided not to take up the opportunity. I understand that the French were very keen to take the opportunity when we declined it. The decision seems to have been made for cost-cutting reasons rather than anything else. Perhaps the Minister will address that point.

There have also been reports, especially in The Guardian, about our strange attitude towards the Seville Expo in 1992. I stress that 1992 is an important year and our presence at those events should be as strong as

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possible. Perhaps the Minister will tell us in what ways Britain is hoping to maximise the benefits of the Seville event.

The hon. Member for Nuneaton referred to the Government's decision to introduce a range of export charges for firms that want various types of export advice. Although it is clear from the Minister's replies to my written questions that the introduction of the charges has had a mixed result, it seems as if they have acted as a deterrent in one or two sectors. Although it could be argued that, if people pay for something, they are committed to it and believe that they will get something worthwhile from it, I believe that export charges could deter casual inquirers, such as people who feel that the export business might be able to offer them something, but who are not sure. They are the very people we want to attract to exporting. We are all agreed on the need to improve industry's awareness of the export business, and I believe that charges could act as a deterrent in that respect.

I do not know the costs and benefits of the charges in terms of adminstration and collection. Perhaps the Minister could give us some details of that. However, there is little evidence that the charges have had a good effect, and some evidence that their effect has been negative.

There has also been a steep cut in support for export marketing research. I am not sure why the Government took that decision, but it certainly does not seem helpful at present.

In response to an intervention by my hon. Friend the Member for Wallsend, I referred to what has come to be known as the "non-interventionist, hands- off" approach of the Department of Trade and Industry. The Financial Times recently reported that the Secretary of State for Trade and Industry was considering whether the private sector should take over the Department's work of providing export support. It appeared as though the Department might get out of the job of export promotion altogether. I hope that the Minister will give us a clear assurance today that there is no possibility of that.

Hon. Members have referred to some of the campaigns run by the Department, such as the enterprise and export initiatives and the "Europe--Open for Business" initiative. Although such campaigns are important in promoting awareness--I am certainly not decrying them--they must be followed up. The Department should monitor the take-up to ascertain what can be done to improve it in those areas where it has been low.

I should be grateful if the Minister could concentrate on the role of the European accreditation centres, which are responsible for testing goods and certifying that they are in accordance with the EEC standards that were agreed under the 1992 programme. I have been told that there is a dramatic shortage of such facilities in this country and that some firms have to wait up to two years before receiving their certificates.

However, the Department of Trade and Industry recently said in reply to a written question that it did not have information about the average length of time that firms in different parts of the country had to wait for testing facilities. Perhaps the Minister can assure me that the Government now have that information and that, if

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firms in certain areas are having to wait an inordinate time for their products to be tested, the problem will be rectified quickly. A recent article in the Newcastle Journal, which is concerned about the shortage of European accreditation centres, pointed out that the testing facility is important for more than just exports. A company that operates in Gateshead and sells to another firm in another part of the north-east must meet those standards and be tested in accordance with them. Therefore, the testing facilities are important not only for our exports to other European countries but for our internal domestic trade. I hope that the Minister will take that point on board.

Perhaps the Minister could also direct the Government's attention to the role of the excellent Euro-information centres that were set up recently, which provide information, especially to small businesses, about events in the European Community, and directives and proposed directives that might affect them. There is an excellent Euro-information centre in Newcastle. I have also visited one in Birmingham and I know that both those centres, which were pilot centres under the EEC scheme, are worried that the temporary funding from the European Community is being phased out. They now have to rely on business sponsorship, which is proving difficult to get. It is important that the Government make a commitment to the future of those centres and to their valuable work, at least until 1992 but also thereafter, if at all possible. It would be helpful if the centres could know that for the next few years their finances will be on a sound footing, instead of having to worry every day about where the next penny is coming from. That will mean that they can provide a service and get on with the job of supplying the firms in their regions with the information that they have found--and I am sure, will continue to find--so useful.

I recognise that that is not directly the responsibility of the Department of Trade and Industry, as it involves small firms and comes within the purview of the Department of Employment. None the less, as it is so important to small firms and to exports, I hope that the Minister will bear in mind what I have said.

We need to learn from what many other countries, especially Japan and Korea, have done in targeting markets and co-ordinating various export promotion instruments to ensure that we can do better in various sectors and various markets in the future than has been the case in the recent past.

The hon. Member for Nuneaton referred to eastern Europe, which is obviously an important area for us in the future. I recognise that the countries of eastern Europe cannot buy expensive imports from west European countries with hard currency. However, given the importance of regenerating the economies of those countries and of tackling their severe environmental pollution, it is important that we consider a trade and aid package that would involve British firms in supplying much of the equipment needed, either to tackle environmental pollution or to help regenerate those economies. Again, perhaps the Minister will comment on that.

It is depressing to note that, last year, not only did we have a bad trade balance with most of the countries of western Europe but we had a negative one with East Germany, the Soviet Union, Czechoslovakia and

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Romania. The gloom was relieved only by the small surplus that we had with Hungary and Bulgaria. The figures for trade between western and eastern Europe show the domination of West Germany and the poor United Kingdom position. While we admire German success, it would not be healthy for the future balanced economic development of Europe if the figures for exports and imports remained as they are. As the House of Commons Select Committee on Trade and Industry noted, we have opportunities in eastern Europe, particularly as we have a language advantage, because in many of the eastern European countries, English is the most widely spoken foreign language. We should capitalise on that important asset.

The Labour party is keen to see an active and decentralised Department of Trade and Industry working with industry and firms in the regions, and providing them with regional export service. Such regional departments would co-ordinate with the other bodies concerned with export promotion, such as the chambers of commerce, which are increasingly active in this sector.

I strongly support what my hon. Friend the Member for Wallsend said about the need for a professional approach to the business of exporting. He quoted the interesting example of Taiwan, where it was clear that we were falling behind other countries in trade promotions. The need for a more professional service is as important as it ever was. We should encourage the recruitment into the Department of Trade and Industry or the Foreign Office export service of people who already have experience in exporting but who have not gone through the Civil Service career structure. Towards the end of the last Labour Government, proposals along these lines were introduced, but I believe that they have never been acted on. The Library has provided with me with some interesting information, which clearly shows that we run a substantial trade surplus in military equipment and identified defence equipment. As we know, there are concerns about the prospects of that export sector. That is why the Labour party believes that the arms diversification agency that we have suggested, which would encourage and assist firms to find new markets and move away from their traditional products, is vital.

I was perturbed to hear a Minister in the Department of Trade and Industry say recently during question time, in answer to my hon. Friend the Member for Denton and Reddish (Mr. Bennett), that firms were fully capable of changing their production and finding new markets. The Government must take a considerable and active interest in this sector to ensure that we do not lose. We do not want the surplus in the military trade to be lost and diversification in that sector to lead to an even more outrageous deficit on our balance of payments.

Mr. Grylls : What role does the hon. Lady see for the Government in this process of switch or diversification from military to civil work? How can they help firms to diversify? The real incentive to diversify is the firm's, because if it does not do so and its armament orders drop, it will go out of business.

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